Question

Click, Inc. is a manufacturer of digital cameras. It has two departments: assembly and testing. In January 2017, the company incurred $725,000 on direct materials and $805,000 on conversion costs, for a total manufacturing cost of $1,530,000. Read the requirements Requirement 1. Assume there was no beginning inventory of any kind on January 1, 2017. During January, 5,000 cameras were placed into production and all 5,000 were fully completed at the end of the month. What is the unit cost of an assembled camera in January? (Round your answers to the nearest cent.) Direct materials cost per unit 145 161 Conversion cost per unit 306 Assembly department cost per unit Requirement 2. Assume that during February 5,000 cameras are placed into production. Further assume the same total assembly costs for January are also incurred in February, but only 4,000 cameras are fully completed at the end of the month. All direct materials have been added to the remaining 1,000 cameras. However, on average, these remaining 1,000 cameras are only 25% complete as to conversion costs. (a) What are the equivalent units for direct materials and conversion costs and their respective costs per equivalent unit for February? (b) What is the unit cost of an assembled camera in February 2017? (a) What are the equivalent units for direct materials and conversion costs and their respective costs per equivalent unit for February? First calculate the equivalent units. Equivalent Units Direct Materials Conversion Costs Completed and transferred out in current period Work in process, ending Work done in current period Now calculate the direct materials and conversion costs per equivalent unit for February. (Round your answers to the nearest cent.) Direct Materials Conversion Costs

Answer 1

Requirement 2. Equivalent units   

a)    Direct material. Conversion cost

completed and transferred out in current period. 4000. 4000

Work in progress ending. 1000. 250(1000*25%)

Work done in current period. Units    5000. 4250

Direct Material. Conversion Cost

Cost incurred during the period. 725000. 805000

Equivalent unit of work done in current period. 5000. 4250

cost per Equivalent units $145. $189.41(approx )

b) assembly department cost per unit =$145 +$189.41 =$334.41

Requirement 3

1. Less

2. Direct Material and conversion cost

3. Direct Material

4.4250 Equivalent units

5. Conversion cost

6. $334.41

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