Question

Lean Accounting Dashboard Inc. manufactures and assembles automobile instrument panels for both eCar Motors and Greenville Motors. The process consists of a lean product cell fo each customer's instrument assembly. The data that follow concern only the eCar lean cell. For the year, Dashboard Inc. budgeted the following costs for the eCar production cell: Conversion Cost Categories Budget Labor $800,000 Supplies 275,000 Utilities 325,000 Total $1,400,000 Dashboard Inc. plans 2,000 hours of production for the eCar cell for the year. The materials cost is $240 per instrument assembly. Each assembly requires 24 minutes of cell assembly time. There was no April 1 inventory for either Raw and In Process Inventory or Finished Goods Inventory. The following summary events took place in the eCar cell during April: a. Electronic parts and wiring were purchased to produce 450 instrument assemblies in April. b. Conversion costs were applied for the production of 400 units in April. c. 380 units were started, completed, and transferred to finished goods in April. d. 350 units were shipped to customers at a price of $800 per unit.
For #3, the Labels are: Accounts Payable, Accounts Receivable, Conversion Costs, Cost of Goods Sold, Finished Goods Inventory, Raw and In-Process Inventory, Raw Materials, Fixed Assets, Sales, Sales Returns and Allowances.

Answer 1

1
Budgeted cell conversion cost per hour	700	per hour	=1400000/2000
2
Budgeted cell conversion cost per unit	280.00	per unit	=700*(24/60)
3
Raw and in process inventory	108000		=450*240
Accounts Payable		108000
Raw and in process inventory	112000		=400*280
Conversion costs		112000
Finished goods inventory	197600		=380*(240+280)
Raw and in process inventory		197600
Accounts Receivable	280000		=350*800
Sales		280000
Cost of goods sold	182000		=350*(240+280)
Finished goods inventory		182000
4
Raw and In-Process Inventory	22400		=108000+112000-197600
Finished goods inventory	15600		=197600-182000
5
Lean accounting is different from traditional accounting because it is more simplified and uses minimal control. As a result, the number of transactions are reduced . In many lean operations, purchased materials are charged to a “raw and in process inventory” account . Direct labor is frequently included as a conversion cost of the cell . Often, nonfinancial performance measures, such as lead time or quality measures , are used to monitor performance.