Question

Robo-Lawn is a lean manufacturer of robotic lawn mowers. Each mower requires $390 of raw materials. Estimated conversion costs to produce 1,600 units in the next year are $672,000. During a recent quarter the company produced 740 mowers and sold 710 mowers. Each mower is sold for $1,140. Required 1. Compute the conversion cost rate per mower. 2. Prepare journal entries to record (a) purchase of raw materials on credit, (b) applied conversion costs to production, (c) sale of mowers on credit, and (d) cost of goods sold and finished goods inventory. Complete this question by entering your answers in the tabs below. Required 1 Required 2 Compute the conversion cost rate per mower. Conversion cost rate per mower Required 1 Required 2

Answer 1

Answer

--Requirement 1

A	Estimated conversion cost	$672,000
B	Estimated production	1,600
C= A/B	Conversion cost per unit	$420	per mower ANSWER

--Requirment 2

Transaction	General Journal	Debit	Credit
a	Raw material inventory (740 x $ 390)	$288,600
	Accounts Payable		$288,600
	(purchase of material)
b	Work in Process Inventory (740 x $ 420)	$310,800
	Conversion cost		$310,800
	(to record applied cost)
c	Accounts receivables (710 x $ 1140)	$809,400
	Sales Revenue		$809,400
	(to record sale)
d	Cost of Goods Sold [($390 + 420) x 710 units]	$575,100
	Finished Goods Inventory		$575,100
	(to record cost of goods sold)