The Kwanika Co During January, Material for 8,400 Units Was Purchased on Account

Essay

The Kwanika Co. operates in a lean manufacturing environment. During its first year of operations, Kwanika budgeted for 40,000 hours in the production of 100,000 units in its cell X-22. Material costs were $7 per unit. Cell X-22 conversion costs were budgeted for the year as follows: $\begin{array}{ll}\text { Direct and indirect labor } & \$ 900,000 \\\text { Machine depreciation } & 125,000 \\\text { Maintenance and supplies } & 375,000 \\\text { Utilities } & 225,000\\\text { Total }&\$1,625,000\end{array}$ During January, material for 8,400 units was purchased on account. There were 8,200 units manufactured and 8,000 were sold shipped to customers for $35 each. Journalize: a) the material purchases; b) the application of conversion costs; c) the transfer from work in process to finished goods; and d) the sales were made on account) and associated cost of goods sold for the month of January.