First Display Inc. manufactures and assembles automobile instrument panels for both Yokohama Motors and Detroit Motors. The process consists of a just-in-time product cell for each customer’s instrument assembly. The data that follow concern only the Yokohama just-in-time cell. For the year, First Display Inc. budgeted the following costs for the Yokohama production cell:

Conversion Cost Categories Budget

Labor .............$642,000

Supplies ..............112,000

Utilities ..............26,000

Total .............$ 780,000

First Display Inc. plans 3,000 hours of production for the Yokohama cell for the year. The materials cost is $125 per instrument assembly. Each assembly requires 24 minutes of cell assembly time. There was no October 1 inventory for either Raw and In Process Inventory or Finished Goods Inventory.

The following summary events took place in the Yokohama cell during October:

a. Electronic parts and wiring were purchased to produce 7,600 instrument assemblies in October.

b. Conversion costs were applied for the production of 7,500 units in October.

c. 7,420 units were started, completed, and transferred to finished goods in October.

d. 7,300 units were shipped to customers at a price of $400 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 JIT environment differ from traditional accounting?