Question

Ever-Brite Lighting Inc. manufactures lighting fixtures, using lean manufacturing methods. Style BB-01 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 BB-01 requires 15 minutes of cell production time. The following transactions took place during December: Dec. 1Materials were acquired to assemble 600 Style BB-01 units for December 3 Conversion costs were applied to 600 Style BB-01 units of production 14 585 units of Style BB-01 were completed in December. 28 575 units of Style BB-01 were sold in December for $142 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 for December. Refer to the Chart of Accounts for exact wording of account titles.

Answer 1

$180,600 Budgeted conversion cost for the year Budgeted production hours for the year 2,150 $84 [$180600/ 2150 hours] Budgeted cell conversion cost per hour Requirement-(bl: $84 [As calculated in Part-(a)] Budgeted cell conversion cost per hour Minutes required per unit 15 Minutes per hour 60 $21 [$84 x (15/60)] Budgeted cell conversion cost per unit

Requirement- Date Account Titles and Explanation Debit Credit Dec. 1Direct materials $81,000 [600 units x $135] $81,000 Accounts payable To record materials purchased for production $12,600 [600 units x $21 (As calculated)] Dec. 3 Work in Process Inventory $12,600 Conversion Costs To record conversion costs applied to production) $91,260 [($81000 $12600) /600) x 585] Dec. 14 Finished Goods Inventory $91,260 Work in Process Inventory To record cost of goods transferred from WIP to FG $81,650 [575 units x $142] Dec. 28 Accounts receivable $81,650 Sale revenue To record DVR plavers sold $89,700 [($91260/585) x 575 units] Cost of Goods Sold $89,700 Finished Goods Inventory To record cost of DVR plavers sold