Question
Lean Accounting Maxwell Dash Inc. manufactures and assembles automobile instrument panels for both eCar Motors and Greenville Motors. The process consists of a lean product
Lean Accounting
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 customers 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. _______
2. Determine the budgeted cell conversion cost per unit. _______
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. | Accounts PayableConversion CostsCost of Goods SoldFinished Goods InventoryRaw and In Process InventoryRaw Materials | ||
b. | |||
c. | |||
d. Sale | |||
d. Cost | |||
Question Content Area
4. Determine the ending balance in Raw and In Process Inventory and Finished Goods Inventory. Raw and In Process Inventory: _____ Finished Goods Inventory: _____
5. Lean accounting is different from traditional accounting because it is more complex or simplified and maximum or minimal
control. As a result, the number of transactions are increased or reduced. In many lean operations, purchased materials are charged to a
raw and in process inventory account or materials and indirect labor account. Direct labor is included as a conversion cost of the cell or disregarded in the cost allocation process. Often, nonfinancial performance measures, such as lead time or quality measures over and under production rates, are used to monitor performance.
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