Question

Sifton Electronics Corporation manufactures and assembles electronic motor drives for video cameras. The company assembles the motor drives for several accounts. The process consists of a lean cell for each customer. The following information relates only to one customer's lean cell for the coming year. Projected labor and overhead, $5,504,700; materials costs, $34 per unit. Planned production included 5,664 hours to produce 17,700 motor drives. Actual production for August was 1,970 units, and motor drives shipped amounted to 1,430 units.

From the foregoing information, determine the amount of the conversion costs charged to Raw and In Process Inventory during August.

a.$612,670

b.$614,674

c.$258,439

d.$167,940

Answer 1

Correct Answer is (a) $ 612,670

Explanation :-

Conversion Cost per unit = Conversion Cost / Planned Units of production

= $ 5,504,700 / 17,700 units

= $ 311

Conversion Cost charged to Raw Material and In process Inventory during August = Conversion cost per unit * Actual units produced during August

= $ 311 * 1,970 units

= $ 612,670