Conan Electronics Corporation manufactures and assembles electronic motor drives

Question

Conan 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 year, planned labor and overhead was $80,000,000; materials costs, $25 per unit. Planned production included 9,600 hours to produce 76,800 motor drives. Actual production for the month of August was 5,200 units, and motor drives shipped amounted to 5,040 units. From the foregoing information, determine the budgeted cell conversion cost per hour.

Explanation / Answer

Budgeted cell conversion cost per hour = conversion cost/ planned hours

= 80,000,000/ 9,600

= $8,333 per hour

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