Question

Ferdon Watches, Inc., makes four models of watches, Gag-Gift, Commuter, Sport, and Retirement. Ferdon manufactures the watches in four departments: Assembly, Polishing, Special Finishing, and Packaging. All four models are started in Assembly where all material is assembled. The Gag-Gift is transferred to Packaging, where it is packaged and transferred to finished goods inventory. The Commuter and Sport are assembled, then transferred to Polishing. Once the polishing process is completed, they are transferred to Packaging and then finished goods. The Retirement model is assembled and then transferred to Special Finishing, and then Packaging. When packaged, it is transferred to finished goods. Data for October are shown in the following table. Conversion costs are allocated based on the number of units processed in each department. Retirement (2,200 units) Commuter (10,200 units) Gag-Gift (5,200 units ) Sport (13,400 units) Total $201,000 $66,000 $382,000 $13,000 $102,000 Materials Conversion costs: $155,000 94,400 24,200 Assembly Polishing Special Finishing Packaging 124,000 $397,600 Total conversion costs Required: b. What is the cost per unit transferred to finished goods inventory for each of the four watches in October? (Round "Cost Per Unit" to 2 decimal places.) Cost Per Unit Gag-Gift Commuter Sport Retirement

Answer 1

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	Total	Gag-Gift	Commuter	Sport	Retirement
		(5,200 units)	(10,200 units)	(13,400 units)	(2,200 units)
Materials	$   382,000	$               13,000	$               102,000	$               201,000	$               66,000
Conversion
Assembly	$   155,000	$               26,000	$                 51,000	$                 67,000	$               11,000
Polishing	$      94,400	$                        -	$                 40,800	$                 53,600	$                        -
Special Finishing	$      24,200	$                        -	$                           -	$                           -	$               24,200
Packaging	$   124,000	$               20,800	$                 40,800	$                 53,600	$                 8,800
Total conversion	$   397,600	$               46,800	$               132,600	$               174,200	$               44,000
Total Product Cost	$   779,600	$               59,800	$               234,600	$               375,200	$            110,000
Number of Units		5,200	10,200	13,400	2,200
Cost per unit		$                 11.50	$                    23.00	$                    28.00	$                 50.00
Per unit:	Cost	Unit	Per unit
Assembly	$   155,000	31,000.0	$                      5.00
Polishing	$      94,400	23,600.0	$                      4.00
Special Finishing	$      24,200	2,200.0	$                    11.00
Packaging	$   124,000	31,000.0	$                      4.00