Maxwell Dash Inc. manufactures and assembles automobile instrument panels for both eCar Motors and Greenville Motors. The process consists of a lean product cell for each customer’s instrument assembly. The data that follow concern only the eCar lean cell. For the year, Maxwell Dash Inc. budgeted the following costs for the eCar production cell: Conversion Cost Categories Budget Labor $800,000 Supplies 475,000 Utilities 325,000 Total $1,600,000 Maxwell Dash Inc. plans 2,000 hours of production for the eCar cell for the year. The materials cost is $250 per instrument assembly. Each assembly requires 24 minutes of cell assembly time. There was no April 1 inventory for either Raw and In Process Inventory or Finished Goods Inventory. The following summary events took place in the eCar cell during April: a. Electronic parts and wiring were purchased to produce 470 instrument assemblies in April. b. Conversion costs were applied for the production of 420 units in April. c. During April, 400 units were started, completed, and transferred to finished goods. d. Of the 400 units completed, 370 were shipped to customers at a price of $800 per unit. Required: Question Content Area 1. Determine the budgeted cell conversion cost per hour. fill in the blank 1 of 1$ per hour 2. Determine the budgeted cell conversion cost per unit. fill in the blank 1 of 1$ per unit Feedback Area Feedback 1. Cell Conversion Cost Rate = Budgeted Conversion Cost ÷ Planned Hours of Production 2. Conversion Cost Per Unit = Manufacturing Time × Cell Conversion Cost Rate Question Content Area 3. Journalize the summary transactions (a) through (d). If an amount box does not require an entry, leave it blank. Transaction Account Debit Credit a. Raw and In Process Inventory Raw and In Process Inventory Accounts Payable Accounts Payable b. Raw and In Process Inventory Raw and In Process Inventory Conversion Costs Conversion Costs c. Finished Goods Inventory Finished Goods Inventory Raw and In Process Inventory Raw and In Process Inventory d. Sale Accounts Receivable Accounts Receivable Sales Sales d. Cost Cost of Goods Sold Cost of Goods Sold Finished Goods Inventory Finished Goods Inventory Feedback Area Feedback 3. In lean manufacturing, there are fewer transactions to record, thus simplifying the accounting system. Some accounts are combined. For example, all in-process work is combined with raw materials to form a new account, Raw and In Process (RIP) Inventory and direct labor is also combined with other costs to form a new account titled Conversion Costs. Indirect labor is directly assigned to product cells; thus, less factory overhead is allocated to products. The cell conversion rate is similar to a predetermined factory overhead rate, except that it includes all conversion costs in the numerator. Question Content Area 4. Determine the ending balance in Raw and In Process Inventory and Finished Goods Inventory. Raw and In Process Inventory: fill in the blank 1 of 2$ Finished Goods Inventory: fill in the blank 2 of 2$
Process Costing
Process costing is a sort of operation costing which is employed to determine the value of a product at each process or stage of producing process, applicable where goods produced from a series of continuous operations or procedure.
Job Costing
Job costing is adhesive costs of each and every job involved in the production processes. It is an accounting measure. It is a method which determines the cost of specific jobs, which are performed according to the consumer’s specifications. Job costing is possible only in businesses where the production is done as per the customer’s requirement. For example, some customers order to manufacture furniture as per their needs.
ABC Costing
Cost Accounting is a form of managerial accounting that helps the company in assessing the total variable cost so as to compute the cost of production. Cost accounting is generally used by the management so as to ensure better decision-making. In comparison to financial accounting, cost accounting has to follow a set standard ad can be used flexibly by the management as per their needs. The types of Cost Accounting include – Lean Accounting, Standard Costing, Marginal Costing and Activity Based Costing.
Maxwell Dash Inc. manufactures and assembles automobile instrument panels for both eCar Motors and Greenville Motors. The process consists of a lean product cell for each customer’s instrument assembly. The data that follow concern only the eCar lean cell.
For the year, Maxwell Dash Inc. budgeted the following costs for the eCar production cell:
| Conversion Cost Categories | Budget |
|---|---|
| Labor | $800,000 |
| Supplies | 475,000 |
| Utilities | 325,000 |
| Total | $1,600,000 |
Maxwell Dash Inc. plans 2,000 hours of production for the eCar cell for the year. The materials cost is $250 per instrument assembly. Each assembly requires 24 minutes of cell assembly time. There was no April 1 inventory for either Raw and In Process Inventory or Finished Goods Inventory.
The following summary events took place in the eCar cell during April:
a. Electronic parts and wiring were purchased to produce 470 instrument assemblies in April.
b. Conversion costs were applied for the production of 420 units in April.
c. During April, 400 units were started, completed, and transferred to finished goods.
d. Of the 400 units completed, 370 were shipped to customers at a price of $800 per unit.
Required:
Question Content Area
1. Determine the budgeted cell conversion cost per hour.
fill in the blank 1 of 1$ per hour
2. Determine the budgeted cell conversion cost per unit.
fill in the blank 1 of 1$ per unit
Feedback Area
1. Cell Conversion Cost Rate = Budgeted Conversion Cost ÷ Planned Hours of Production
2. Conversion Cost Per Unit = Manufacturing Time × Cell Conversion Cost Rate
Question Content Area
3. Journalize the summary transactions (a) through (d). If an amount box does not require an entry, leave it blank.
| Transaction | Account | Debit | Credit |
|---|---|---|---|
| a. |
|
Raw and In Process Inventory | Raw and In Process Inventory |
|
|
Accounts Payable | Accounts Payable | |
| b. |
|
Raw and In Process Inventory | Raw and In Process Inventory |
|
|
Conversion Costs | Conversion Costs | |
| c. |
|
Finished Goods Inventory | Finished Goods Inventory |
|
|
Raw and In Process Inventory | Raw and In Process Inventory | |
| d. Sale |
|
Accounts Receivable | Accounts Receivable |
|
|
Sales | Sales | |
| d. Cost |
|
Cost of Goods Sold | Cost of Goods Sold |
|
|
Finished Goods Inventory | Finished Goods Inventory |
Feedback Area
3. In lean manufacturing, there are fewer transactions to record, thus simplifying the accounting system. Some accounts are combined. For example, all in-process work is combined with raw materials to form a new account, Raw and In Process (RIP) Inventory and direct labor is also combined with other costs to form a new account titled Conversion Costs. Indirect labor is directly assigned to product cells; thus, less factory overhead is allocated to products. The cell conversion rate is similar to a predetermined factory overhead rate, except that it includes all conversion costs in the numerator.
Question Content Area
4. Determine the ending balance in Raw and In Process Inventory and Finished Goods Inventory.
Raw and In Process Inventory: fill in the blank 1 of 2$
Finished Goods Inventory: fill in the blank 2 of 2$
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