Question

Modern Lighting Inc. manufactures lighting fixtures, using lean manufacturing methods. Style Omega has a materials cost per unit of $135. The budgeted conversion cost for the year is $180,600 for 2,150 production hours. A unit of Style Omega requires 15 minutes of cell production time. The following transactions took place during June: 1. 2. 3. 4. Materials were acquired to assemble 600 Style Omega units for June. Conversion costs were applied to 600 Style Omega units of production. 585 units of Style Omega were completed in June. 575 units of Style Omega were sold in June for $186 per unit Required: a. Determine the budgeted cell conversion cost per hour. b. Determine the budgeted cell conversion cost per unit. c. Journalize the summary transactions (1)-(4) for June. Refer to the Chart of Accounts for exact wording of account titles. Chart of Accounts CHART OF ACCOUNTS Modern Lighting Inc. General Ledger

Answer 1

	ans a
	Budgeted cell conversion cost per hour
	180600/2150	$84	per hour
	ans b
	Conversion cost per unit	$21	per unit
	84*15/60
	ans c
Transation	Accounts title	Dr	Cr
1	Work In process Inventory	81000
	Raw material (600*135)		81000
2	Work In process Inventory	12285
	Conversion cost		12285
	(585*21)
3	Finished Goods Inventory	91260
	Work In process Inventory		91260
	585*(135+21)
4	Accounts receivable (575*18)	106950
	Sales		106950
	Cost of good sold	89700
	Finished Goods Inventory		89700
	575*(135+21)