Question

Lean Accounting The annual budgeted conversion costs for a lean cell are $180,000 for 1,000 production hours. Each unit produced by the cell requires 20 minutes of cell process time. During the month, 600 units are manufactured in the cell. The estimated materials costs are $30 per unit. (Do not round per unit cost. If required, round your answers to the nearest dollar.) Journalize the following entries for the month: a. Materials are purchased to produce 500 units. b. Conversion costs are applied to 600 units of production. c. The cell completes 450 units, which are placed into finished goods. If an amount box does not require an entry, leave it blank.

Answer 1

Lean Accounting

General Journal

Sr. No Particulars Debit Credit

1. Materials $ 15000 Dr

Cash (Accounts Payable) $ 15000 Cr

500 units* $30 per unit = $15000

2. Conversion Costs $ 36000 Dr

Work In Process $ 36000Cr

One unit require 20 minutes

600 units require= 600*20= 12000 minutes

There are 60 minutes in 1 hour

12000/60 = 200 hours

600 units require 200 hours

1 hour costs $180

Conversion Costs for 600 units= ($ 180,000/1000)*200= $ 36000

3. Finished Goods 40500 Dr

Work in Process 40500 Cr

Materials for 450 units = $30 * 450= $ 13500

Conversion for 450 units = $ 180 *( 450*20/60) = 150*180= $27000

Total Cost of 450 units completed= $ 13500+ $ 27000= $ 40 500