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6 May, 23:42

Kilbuck Company operates in a lean manufacturing environment. Kilbuck applies conversion costs at a rate of $25 per unit. Kilbuck produced 12,000 units during May. Kilbuck's actual conversion costs for the month of May were:

Direct and indirect labor $150,000

Machine depreciation 85,000

Maintenance and supplies 60,000

Total conversion costs $295,000

The journal entry to record applied conversion costs for May will include a:

A. credit to Work in Process Inventory for $300,000.

B. debit to Conversion Costs for $300,000.

C. credit to Raw and In Process Inventory for $295,000.

D. debit to Raw and In Process Inventory for $300,000.

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Answers (2)
  1. 7 May, 01:54
    0
    D. debit to Raw and In Process Inventory for $300,000.

    Explanation:

    Total applied conversion cost = Conversion cost per unit * Units produced = $25 * $12,000 = $300,000

    Therefore, the correct option is D. That is, the journal entry to record applied conversion costs for May will include debit to Raw and In Process Inventory for $300,000.
  2. 7 May, 02:47
    0
    The journal entry to record applied conversion costs for May will include a debit to raw and in-process inventory for $300,000.

    Explanation:

    Raw materials of all kinds are measured at the start and recorded into a list plus account, with a credit to the accounts collectible account, and a debit to the raw materials inventory account.

    The accounting treatment will vary when raw materials are consumed speculating on their standard as direct or indirect materials.

    Thus, the journal entry to record applied conversion costs for May will include a debit to raw and in-process inventory for $300,000.
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