Sifton Electronics Corporation manufactures and assembles electronic motor drives for video cameras. The company assembles the motor drives for several accounts. The process consists of a just-in-time cell for each customer. The following information relates only to one customer's just-in-time cell for the coming year. Projected labor and overhead, $7,370,000; materials costs, $28 per unit. Planned production included 4,000 hours to produce 27,500 motor drives. Actual production for August was 1,600 units, and motor drives shipped amounted to 1,380 units. From the foregoing information, determine the budgeted cell conversion cost per unit.
A) $240.00
B) $268.00
C) $296.00
D) $1,842.50

Question

Quizplus · Accepted Answer

First, calculate the total materials cost: 
Materials cost per unit x Number of units produced = $28 x 1,600 = $44,800

Next, calculate the total conversion cost: 
Projected labor and overhead / Planned production hours = $7,370,000 / 4,000 = $1,842.50 per hour 
Total conversion cost = Planned production hours x Hourly conversion cost = 4,000 x $1,842.50 = $7,370,000

Finally, calculate the budgeted cell conversion cost per unit: 
Total conversion cost / Number of units produced = $7,370,000 / 27,500 = $268.

Therefore, the budgeted cell conversion cost per unit is $268.00.

Sifton Electronics Corporation Manufactures and Assembles Electronic Motor Drives for Video