Question

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.)

Required:
1. 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

Answer: Please see in explanation column

Step-by-step explanation:

Budgeted Conversion Cost $ 180,000

Total Production hours = 1,000 hours

Conversion cost per production hour = 180,000/1,000 = $ 180 per hour

Production time per unit produce = 20 minutes

Conversion cost per unit -- first mins change to hrs

60min = 1 hour

20 min= 20/60=0.33hr

$ 180 x 0.333333 = $ 59.999per unit

Material cost per unit = $ 30 per unit

Total cost per unit production =

Material cost per unit+ conversion cost per unit = 30+ 59.999= $ 89.999per unit

a)Material Required per unit = $30 per unit

Material purchase for 500 units =30 x 500 = $15,000

b)Conversion cost per unit produce = $ 59.999 per unit

number of units for conversion= 600

Conversion Cost applied for 600 units =( 600 x 59.999 = $35,999.4 rounded to $36,000

Total cost of goods complete per unit = $ 89.999 per unit

Number of units completed = 450 units

Total Cost of Goods completed = 450 x 89.999= $ 40,499.55 =$40,500

A) JOURNAL ENTRY For purchase of raw material for 500 units at $30

Accounts title Debit Credit

Raw and In process Inventory 15,000

Accounts Payable 15,000

B)JOURNAL ENTRY For applied conversion cost to in process inventory for 600 units at $59.999

Raw and in process inventory $36,000

Conversion Cost $36,000

C)JOURNAL ENTRY For completing 450 units at a total cost of $89.999

Finished Goods Inventory $ 40,500

Raw and in Process Inventory $ 40,500