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 lean cell for each customer. The following information relates only to one customer's lean 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, we need to calculate the total cell conversion cost for the year.

Projected labor and overhead = $7,370,000

Divide this by the planned production hours:

$7,370,000 ÷ 4,000 hours = $1,842.50 per hour

To calculate the cell conversion cost per unit, we need to multiply the per hour cost by the number of hours required to produce one unit:

$1,842.50 × (27,500 units ÷ 4,000 hours) = $12.66 per unit

Finally, we need to add the materials cost:

$12.66 + $28 = $40.66 per unit

Therefore, the budgeted cell conversion cost per unit is $40.66, which is closest to option B.

Sifton Electronics Corporation Manufactures and Assembles Electronic Motor Drives for Video