PROBLEM #2

Instructions Chart of Accounts Starting Questions Journal Instructions Modern Lighting Inc. manufactures lighting fixtures, using lean manufacturing methods. Style Omega 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 Omega requires 15 minutes of cell production time. The following transactions took place during June: 1. Materials were acquired to assemble 650 Style Omega units for June. 2. Conversion costs were applied to 650 Style Omega units of production. 3. 635 units of Style Omega were completed in June. 4. 610 units of Style Omega were sold in June for $177 per unit. Required: a. Determine the budgeted cell conversion cost per hour. b. Determine the budgeted cell conversion cost per unit. c. Journalize the summary transactions (1)-(4) for June. Refer to the Chart of Accounts for exact wording of account titles. CHART OF ACCOUNTS Modern Lighting Inc. General Ledger ASSETS REVENUE 110 Cash 410 Sales 120 Accounts Receivable 125 Notes Receivable EXPENSES 140 Office Supplies 510 Cost of Goods Sold 141 Store Supplies 511 Conversion Costs 142 Prepaid Insurance 521 Advertising Expense 450 Douandin Dranssa lauantan, 523 Danreciation Evnense.Equinment Chart of Accounts 140 Office Supplies 510 Cost of Goods Sold 141 Store Supplies 511 Conversion Costs 142 Prepaid Insurance 521 Advertising Expense 150 Raw and In Process Inventory 523 Depreciation Expense-Equipment 151 Finished Goods Inventory 526 Salaries Expense 180 Land 531 Rent Expense 190 Equipment 533 Insurance Expense 191 Accumulated Depreciation-Equipment 534 Store Supplies Expense 535 Office Supplies Expense LIABILITIES 536 Credit Card Expense 210 Accounts Payable 539 Miscellaneous Expense 216 Salaries Payable 710 Interest Expense Chart of Accounts LINDILITILU vi vuit vuu Lapis 210 Accounts Payable 539 Miscellaneous Expense 216 Salaries Payable 710 Interest Expense 218 Sales Tax Payable 219 Customers Refunds Payable 221 Notes Payable EQUITY 31 Common Stock 32 Retained Earnings 33 Dividends 34 Income Summary Starting Questions a. Determine the budgeted cell conversion cost per hour. $ per hour b. Determine the budgeted cell conversion cost per unit. $ per unit PAGE 10 JOURNAL DATE DESCRIPTION POST. REF. DEBIT CREDIT 1 2 3 4 5 6 7 Lean Accounting Vintage Audio Inc. manufactures audio speakers. Each speaker requires $104 per unit of direct materials. The speaker manufacturing assembly cell includes the following estimated costs for the period: Speaker assembly cell, estimated costs: Labor $37,200 Depreciation 4,990 Supplies 1,810 Power 1,360 Total cell costs for the period $45,360 The operating plan calls for 140 operating hours for the period. Each speaker requires 15 minutes of cell process time. The unit selling price for each speaker is $281. During the period, the following transactions occurred: 1. Purchased materials to produce 545 speaker units. 2. Applied conversion costs to production of 520 speaker units. 3. Completed and transferred 495 speaker units to finished goods. 4. Sold 475 speaker units. There were no inventories at the beginning of the period. a. Journalize the summary transactions (1)-(4) for the period. Round the per unit cost to the nearest cent and use in subsequent computations. If an amount box does not require an entry, leave it blank. 1. 2. 3. a. Journalize the summary transactions (1)-(4) for the period. Round the per unit cost to the nearest cent and use in subsequent computations. If an amount box doe not require an entry, leave it blank. 1. 2. 3. 4. Sale 4. Cost b. Determine the ending balance of raw and in process inventory and finished goods inventory. Raw and In Process Inventory, ending balance Finished Goods Inventory, ending balance Cost of Quality and Value-Added/Non-Value Added Reports for a Service Company Three Rivers Inc. provides cable TV and Internet service to the local community. The activities and activity costs of Three Rivers are identified as follows: a. Identify the cost of quality classification for each activity and whether the activity is value-added or non-value-added. Activity Quality Cost Cost Classification Value-Added/ Non-Value-Added Classification Quality Control Activities Billing error correction $24,500 External failure Non-value-added 91,800 Appraisal Value-added Cable signal testing Reinstalling service (installed incorrectly the first time) 52,600 External failure Non-value-added Repairing satellite equipment 35,700 Internal failure Non-value-added Repairing underground cable connections to the customer 15,900 External failure Non-value-added Replacing old technology cable with higher quality cable 109,200 Prevention Value-added Replacing old technology signal switches with higher quality switches 124,800 Prevention Value-added 29,400 External failure Non-value-added Responding to customer home repair requests Training employees 26,100 Prevention Value-added Total activity cost $510,000 Feedback Check My Work Feedback Check My Work Correct b. Prepare a cost of quality report. Assume that sales are $2,550,000. If required, round percentages to one decimal place. Three Rivers Inc. Cost of Quality Report Percent of Total Quality Cost Quality Cost Quality Cost Classification Percent of Total Sales Prevention % % Appraisal % % Internal failure % % External failure % % Total % % Feedback Check My Work b. Classify each activity as either prevention, appraisal, internal failure or external failure. List the total costs of each of these four categories in a column called C. Prepare a value-addedon-value-added analysis. Three Rivers Inc. Value-Added/Non-Value Added Activity Analysis Category Amount Percent Value-added % Non-value-added % Total % Instructions Chart of Accounts Starting Questions Journal Instructions Modern Lighting Inc. manufactures lighting fixtures, using lean manufacturing methods. Style Omega 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 Omega requires 15 minutes of cell production time. The following transactions took place during June: 1. Materials were acquired to assemble 650 Style Omega units for June. 2. Conversion costs were applied to 650 Style Omega units of production. 3. 635 units of Style Omega were completed in June. 4. 610 units of Style Omega were sold in June for $177 per unit. Required: a. Determine the budgeted cell conversion cost per hour. b. Determine the budgeted cell conversion cost per unit. c. Journalize the summary transactions (1)-(4) for June. Refer to the Chart of Accounts for exact wording of account titles. CHART OF ACCOUNTS Modern Lighting Inc. General Ledger ASSETS REVENUE 110 Cash 410 Sales 120 Accounts Receivable 125 Notes Receivable EXPENSES 140 Office Supplies 510 Cost of Goods Sold 141 Store Supplies 511 Conversion Costs 142 Prepaid Insurance 521 Advertising Expense 450 Douandin Dranssa lauantan, 523 Danreciation Evnense.Equinment Chart of Accounts 140 Office Supplies 510 Cost of Goods Sold 141 Store Supplies 511 Conversion Costs 142 Prepaid Insurance 521 Advertising Expense 150 Raw and In Process Inventory 523 Depreciation Expense-Equipment 151 Finished Goods Inventory 526 Salaries Expense 180 Land 531 Rent Expense 190 Equipment 533 Insurance Expense 191 Accumulated Depreciation-Equipment 534 Store Supplies Expense 535 Office Supplies Expense LIABILITIES 536 Credit Card Expense 210 Accounts Payable 539 Miscellaneous Expense 216 Salaries Payable 710 Interest Expense Chart of Accounts LINDILITILU vi vuit vuu Lapis 210 Accounts Payable 539 Miscellaneous Expense 216 Salaries Payable 710 Interest Expense 218 Sales Tax Payable 219 Customers Refunds Payable 221 Notes Payable EQUITY 31 Common Stock 32 Retained Earnings 33 Dividends 34 Income Summary Starting Questions a. Determine the budgeted cell conversion cost per hour. $ per hour b. Determine the budgeted cell conversion cost per unit. $ per unit PAGE 10 JOURNAL DATE DESCRIPTION POST. REF. DEBIT CREDIT 1 2 3 4 5 6 7 Lean Accounting Vintage Audio Inc. manufactures audio speakers. Each speaker requires $104 per unit of direct materials. The speaker manufacturing assembly cell includes the following estimated costs for the period: Speaker assembly cell, estimated costs: Labor $37,200 Depreciation 4,990 Supplies 1,810 Power 1,360 Total cell costs for the period $45,360 The operating plan calls for 140 operating hours for the period. Each speaker requires 15 minutes of cell process time. The unit selling price for each speaker is $281. During the period, the following transactions occurred: 1. Purchased materials to produce 545 speaker units. 2. Applied conversion costs to production of 520 speaker units. 3. Completed and transferred 495 speaker units to finished goods. 4. Sold 475 speaker units. There were no inventories at the beginning of the period. a. Journalize the summary transactions (1)-(4) for the period. Round the per unit cost to the nearest cent and use in subsequent computations. If an amount box does not require an entry, leave it blank. 1. 2. 3. a. Journalize the summary transactions (1)-(4) for the period. Round the per unit cost to the nearest cent and use in subsequent computations. If an amount box doe not require an entry, leave it blank. 1. 2. 3. 4. Sale 4. Cost b. Determine the ending balance of raw and in process inventory and finished goods inventory. Raw and In Process Inventory, ending balance Finished Goods Inventory, ending balance Cost of Quality and Value-Added/Non-Value Added Reports for a Service Company Three Rivers Inc. provides cable TV and Internet service to the local community. The activities and activity costs of Three Rivers are identified as follows: a. Identify the cost of quality classification for each activity and whether the activity is value-added or non-value-added. Activity Quality Cost Cost Classification Value-Added/ Non-Value-Added Classification Quality Control Activities Billing error correction $24,500 External failure Non-value-added 91,800 Appraisal Value-added Cable signal testing Reinstalling service (installed incorrectly the first time) 52,600 External failure Non-value-added Repairing satellite equipment 35,700 Internal failure Non-value-added Repairing underground cable connections to the customer 15,900 External failure Non-value-added Replacing old technology cable with higher quality cable 109,200 Prevention Value-added Replacing old technology signal switches with higher quality switches 124,800 Prevention Value-added 29,400 External failure Non-value-added Responding to customer home repair requests Training employees 26,100 Prevention Value-added Total activity cost $510,000 Feedback Check My Work Feedback Check My Work Correct b. Prepare a cost of quality report. Assume that sales are $2,550,000. If required, round percentages to one decimal place. Three Rivers Inc. Cost of Quality Report Percent of Total Quality Cost Quality Cost Quality Cost Classification Percent of Total Sales Prevention % % Appraisal % % Internal failure % % External failure % % Total % % Feedback Check My Work b. Classify each activity as either prevention, appraisal, internal failure or external failure. List the total costs of each of these four categories in a column called C. Prepare a value-addedon-value-added analysis. Three Rivers Inc. Value-Added/Non-Value Added Activity Analysis Category Amount Percent Value-added % Non-value-added % Total %