Ever-Brite Lighting Inc. manufactures lighting fixtures, using lean manufacturin

Question

Ever-Brite Lighting Inc. manufactures lighting fixtures, using lean manufacturing

Style BB-01 has a materials cost per unit of $125. The budgeted conversion cost

for the year is $171,600 for 1,950 production hours. A unit of Style BB-01 requires 15 minutes of cell production time.

The following transactions took place during December:

C. Journalize the summary transactions for December. Refer to the Chart of Accounts for exact wording of account titles.

Dec. 1 Materials were acquired to assemble 650 Style BB-01 units for December. 3 Conversion costs were applied to 650 Style BB-01 units of production. 14 635 units of Style BB-01 were completed in December. 28 610 units of Style BB-01 were sold in December for $142 per unit.

Explanation / Answer

Answer A The budgeted cell conversion cost per hour = Budgeted Conversion cost for the year / Total production hours = $171600 / 1950 hours = $88 per hour Answer B 1 unit of Style BB-01 requires 15 minutes of cell production time. It means that in 1 hour 4 units are produced. Budgeted cell conversion cost per unit = Cell Convesrion cost per hour / Production per hour = $88 / 4 units = $22 per unit Answer C Journal Entries Date Account Titles Debit Credit Dec-01 Raw and In Process Inventory $81,250.00 Accounts Payable $81,250.00 Dec-03 Raw and In Process Inventory $14,300.00 Salaries Payable $14,300.00 Dec-14 Finished Goods Inventory $93,345.00 Raw and in process Inventory $93,345.00 Dec-28 Cost of goods sold $89,670.00 Finished Goods Inventory $89,670.00 Dec-28 Accounts Receivables $86,620.00 Sales $86,620.00

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