Textbook Problem

Lean accounting

Com-Tel Inc. manufactures and assembles two models of .smartphones—the Tiger Model and the Lion Model. The process consists of a lean cell for each product. The data that follow concern only the Lion Model lean cell.

For the year, Com-Tel Inc. budgeted these costs for the Lion Model production cell:

Conversion Cost Categories	Budget
Labor	$122,000
Supplies	49,000
Utilities	18,000
Total	$189,000

Com-Tel plans 2,100 hours of production for the Lion Model cell for the year. The materials cost is $185 per unit. Each assembly requires 12 minutes of cell assembly time. There was no May 1 inventory- for either Raw and In Process Inventory- or Finished Goods Inventory.

The following summary events took place in the Lion Model cell during May.

A. Electronic parts were purchased to produce 900 Lion Model assemblies in May.

B. Conversion costs were applied for 875 units of production in May.

C. 850 units were completed and transferred to finished goods in May.

D. 800 units were shipped to customers at a price of $500 per unit.

Instructions

1. Determine the budgeted cell conversion cost per hour.

2. Determine the budgeted cell conversion cost per unit.

3. Journalize the summary transactions (A) through (D).

4. Determine the ending balance in Raw and In Process Inventory and Finished Goods Inventory.

5. How does the accounting in a lean environment differ from traditional accounting?