The Kwanika Co. operates in a lean manufacturing environment.
During its first year of operations, Kwanika budgeted for 40,000 hours in the production of 100,000 units in its cell X-22. Material costs were $7 per unit.
Cell X-22 conversion costs were budgeted for the year as follows:
| Direct and indirect labor |
$ 900,000
|
| Machine depreciation |
125,000
|
| Maintenance and supplies |
375,000
|
| Utilities |
225,000
|
| Total |
$1,625,000
|
During January, material for 8,400 units was purchased on account.
There were 8,200 units manufactured and 8,000 were sold shipped to customers for $35 each. Journalize:
(a) the material purchases;
(b) the application of conversion costs;
(c) the transfer from work in process to finished goods; and
(d) the sales (were made on account) and associated cost of goods sold for the month of January.