Biology Forums - Study Force

Lehman Pottery Company manufactures clay molded pottery on an assembly line. Its standard costing system uses two cost categories, direct materials and conversion costs. Each product must pass through the Assembly Department and the Finishing Department. Direct materials are added at the beginning of the production process. Conversion costs are allocated evenly throughout production.

Data for the Assembly Department for August 2015 are:
   Work in process, beginning inventory:   800 units
   Direct materials (100% complete)
   Conversion costs (40% complete)

   Units started during August   450 units

   Work in process, ending inventory:   300 units
   Direct materials (100% complete)
   Conversion costs (60% complete)

Costs for August:
   Standard costs for Assembly:
   Direct materials   $30 per unit
   Conversion costs   $55 per unit

   Work in process, beginning inventory:
   Direct materials   $22,000
   Conversion costs   $16,500
Required:

Prepare general journal entries to record:

1.   The actual Assembly Department's conversion costs for the month assuming conversion costs are 10 percent higher than expected.
2.   The assignment of conversion costs to work-in-process inventory, and the conversion-cost variances of the Assembly Department assuming that conversion costs are 10 percent higher than expected.
3.   The direct materials requisitions for the work-in-process inventory and direct materials variances assuming that the Assembly department used 10 percent less materials than expected.

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