Question

S. Lee Enterprises produces two models of lawn tractor: SL1 and SL2. The models are both produced in the company’s Louisville factory and go through identical assembly operations. The difference is in the quality (hence, cost) of the parts used. The following data are available for November, the latest month for which information is available:

	SL1			SL2			Total
Number assembled		1,450			1,950			3,400
Materials cost per tractor	$	1,900		$	2,400
Other costs:
Direct labor							$	2,200,000
Supplies								680,000
Other overhead								3,580,000

Required:

S. Lee Enterprises uses operations costing and assigns conversion costs based on the number of units assembled. Compute the cost of each model assembled in November.

SL1 SL2 Total $

Operation Cost

Materials Cost

Total Cost

Number of Units

Unit Cost

Answer 1

	SL1	SL2	Total
Operation Cost	2755000	3705000	6460000
Materials Cost	2755000	4680000	7435000
Total Cost	5510000	8385000	13895000
Number of Units	1450	1950	3400
Unit Cost	3800	4300	8100

Workings:
Total conversion cost	6460000	=2200000+680000+3580000
Divide by Total units assembled	3400
Conversion cost per unit	1900
Conversion cost allocated:
SL1	2755000	=1450*1900
SL2	3705000	=1950*1900
Materials costs:
SL1	2755000	=1450*1900
SL2	4680000	=1950*2400