Question

Lean Accounting Vintage Audio Inc. manufactures audio speakers. Each speaker requires $92 per unit of direct materials. The speaker manufacturing assembly cell includes the following estimated costs for the period: Speaker assembly cell, estimated costs: Labor $31,880 Depreciation 4,280 Supplies 1,560 Power 1,160 $38,880 Total cell costs for the period The operating plan calls for 180 operating hours for the period. Each speaker requires 20 minutes of cell process time. The unit selling price for each speaker is $249. During the period, the following transactions occurred: 1. Purchased materials to produce 490 speaker units. 2. Applied conversion costs to production of 465 speaker units. 3. Completed and transferred 445 speaker units to finished goods. 4. Sold 425 speaker units. There were no inventories at the beginning of the period. a. Journalize the summary transactions (1)-(4) for the period. Do not round interim calculations. 1.

Answer 1

a	Transaction	Account Titles and Explanation	Debit	Credit
	1	Raw and In Process Inventory	$45,080
		Accounts Payable		$45,080	(490 units x $92)
	2	Raw and In Process Inventory	$33,480		(465 units x $216 x 1/3)
		Conversion Costs		$33,480
	3	Finished Goods Inventory	$72,980		(445 units x $164)
		Raw and In Process Inventory		$72,980
	4	Accounts Receivable	$105,825		(425 units x $249)
		Sales		$105,825
	4	Cost of Goods Sold	$69,700		(425 units x $164)
		Finished Goods Inventory		$69,700
b	Raw and In Process Inventory		$5,580
	Finished Goods Inventory		$3,280
	Working
		Predetermined rate for conversion cost =	Estimated conversion cost / Estimated operating hours
		=	$38,880 / 180
		=	$216	per hour
		Cost per unit of speaker =	Direct material + Conversion Costs
		=	$92 + $216 x 1/3
		=	$164