a. To determine the budgeted cell conversion cost per hour, we need to divide the total budgeted conversion cost for the year by the total number of production hours.
The budgeted conversion cost per hour is $119,700 / 1,900 production hours = $63 per hour.
b. To determine the budgeted cell conversion cost per unit, we need to divide the total budgeted conversion cost for the year by the total number of units to be produced.
Since we are only given the number of units completed (680 units), we need to use this number.
The budgeted cell conversion cost per unit is $119,700 / 680 units = $176.03 per unit.
c. Journal entries for June:
1. Materials purchased:
Date | Accounts | Debit | Credit
-------|------------------------|----------|---------
| Raw Materials Inventory| $13,870 |
| Accounts Payable | | $13,870
2. Conversion costs applied:
Date | Accounts | Debit | Credit
-------|-----------------------|-----------|---------
| Work in Process Inventory | $45,960 |
| Cell Conversion Costs | | $45,960
3. Units completed:
Date | Accounts | Debit | Credit
-------|------------------------|-----------|---------
| Finished Goods Inventory| $36,480 |
| Work in Process Inventory| | $36,480
4. Units sold:
Date | Accounts | Debit | Credit
-------|------------------|----------|---------
| Accounts Receivable| $38,400 |
| Sales Revenue | | $38,400
| Cost of Goods Sold| $24,960 |
| Finished Goods Inventory| | $24,960
Modern Lighting Inc, manufactures lighting fixtures, using. lean manufacturing methods. Style Omega has a materials cost per unit of $19. The budgeted conversion cost for the year is $119,700 for 1,900 production hours. A unit of Style Omega requires 12 minutes of cell production time. The following transactions took place during June:
1. Materials were acquired to assemble 730 Style Omega units for June.
2. Conversion costs were applied to 730 Style Omega units of production.
3. 680 units of Style Omega were completed in June.
4. 640 units of Style Omega were sold in June for $60 per unit.
a. Determine the budgeted cell conversion cost per hour. If required, round to the nearest cent. per hour
b. Determine the budgeted cell conversion cost per unit. If required, round to the nearest cent. per unit
c. Journalize the summary transactions (1)-(4) for June. If required, round your answers to one decimal place, If an amount box does not require an entry, leave it blank.
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