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. Materials costs were $7.00 per unit. Cell X-22 conversion costs were budgeted for the year as follows: Direct and indirect labor $900,000 125,000 Machine depreciation Maintenance and supplies 375,000 Utilities 225,000 Total $1,625,000 During January, materials for 8,400 units were purchased on account. There were 8,200 units manufactured and 8,000 were sold and shipped to customers for $35 each. Conversion costs are applied based on units of production. a. Journalize the materials purchases. 8 b. Journalize the application of conversion costs. c. Journalize the transfer from work in process to finished goods. d. Journalize the sales (all made on account) and associated cost of goods sold for the month of January. 8
