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Lehman Pottery Company

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 2008 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

11) Which of the following journal entries records the Assembly Department's conversion costs for the month, assuming conversion costs are 10% higher than expected?

A) Assembly Department Conversion Cost Control 39,325
Various accounts 39,325
B) Materials Inventory 39,325
Assembly Department Conversion Cost Control 39,325
C) Assembly Department Conversion Cost Control 49,005
Various accounts 49,005
D) Materials Inventory 49,005
Work in Process Assembly 49,005

24) The Lancaster Corporation has an annual cash inflow from operations from its investment in a capital asset of $11,000 each year for five years. The corporation's income tax rate is 25%. Calculate the five years' total after-tax cash inflow from operations.

A) $5,000
B) $41,250
C) $44,000
D) $55,000

Solution Preview

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 2008 are:
Work in process, beginning inventory: 800 units
Direct materials (100% complete)
Conversion costs (40% complete)

Units started during ...

Solution Summary

This solution is comprised of a detailed explanation to answer which of the following journal entries records the Assembly Department's conversion costs for the month, assuming conversion costs are 10% higher than expected.

$2.19