Question

Lean AccountingCom-Tel Inc. manufactures and assembles two models of smartphones-the Tiger Model and the Lion Model. The processconsists 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 BudgetLabor $166,300 Supplies 63,000 Utilities 22,700 Total $252,000 Com-Tel plans 3,000 hours of production for the Lion Model cell for the year. The materials cost is $71 per unit. Each assembly requires 18 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:Electronic parts were purchased to produce 10,200 Lion Model assemblies in May.Conversion costs were applied for 9,700 units of production in May.9,510 units were completed and transferred to finished goods in May.9,220 units were shipped to customers at a price of $336 per unit.If required, round your answers to the nearest cent.Required:1. Determine the budgeted cell conversion cost per hour.$ per hour2. Determine the budgeted cell conversion cost per unit.

Answer 1

Answer: 1. $84 per hour

2. $25.20 per unit

Explanation:

The conversion costs are manufacturing or the production costs that are necessary to convert raw materials into final products.

1. The budgeted cell conversion cost per hour will be:

= Budgeted Conversion Cost/Planned Hours of Production

= $252,000 ÷ 3000

= $84 per hour

2. The budgeted cell conversion cost per unit will be:

= Manufacturing Time × Cell Conversion Cost Rate

= 18/60 × $84

= $25.20 per unit