Question

20.Sifton Electronics Corporation manufactures and assembles electronic motor drives for video cameras. The company assembles the motor drives for several accounts. The process consists of a lean cell for each customer. The following information relates only to one customer's lean cell for the coming year. Projected labor and overhead, $7,370,000; materials costs, $28 per unit. Planned production included 4,000 hours to produce 27,500 motor drives. Actual production for August was 1,600 units, and motor drives shipped amounted to 1,380 units.

From the foregoing information, determine the amount of the conversion costs charged to Raw and In Process Inventory during August.

a.$369,840

b.$408,480

c.$473,600

d.$428,800

Answer 1

Solution:

Projected conversion cost = $7,370,000

Planned production = 27500 motor drives

conversion cost per unit = $7,370,000 / 27500 = $268 per unit

Acutal production for August = 1600 units

Conversion cost charged to Raw and in process inventory during august = 1600 * $268 = $428,800

Hence option d is correct.