a. Cost per unit transferred to finished goods
Basic | Photo | UrLife | ||
Total | (20,000 units) | (20,000 units) | (10,000 units) | |
Materials | 2,300,000 | 490,000 | 1,210,000 | 600,000 |
Conversion cost: | ||||
Assembly | 2,127,500 | 851,000 | 851,000 | 425,500 |
Special packaging | 610,000 | 610,000 | ||
Total Conversion cost | 2,737,500 | 851,000 | 851,000 | 1,035,500 |
Total product cost | 5,037,500 | 1,341,000 | 2,061,000 | 1,635,500 |
Number of units | 20,000 | 20,000 | 10,000 | |
Cost per unit | 67.05 | 103.05 | 163.55 |
b1.Conversion cost allocated on the basis of material cost
Basic | Photo | UrLife | ||
Total | (20,000 units) | (20,000 units) | (10,000 units) | |
Materials | 2,300,000 | 490,000 | 1,210,000 | 600,000 |
Conversion cost: | ||||
Assembly | 2,127,500 | 453,250 | 1,119,250 | 555,000 |
Special packaging | 610,000 | 610,000 | ||
Total Conversion cost | 2,737,500 | 453,250 | 1,119,250 | 1,165,000 |
Total product cost | 5,037,500 | 943,250 | 2,329,250 | 1,765,500 |
Number of units | 20,000 | 20,000 | 10,000 | |
Cost per unit | 47.1625 | 116.4625 | 176.5 |
b2. I f the conversion costs are not rerlated to material dollars then It will not be ethical. It is done simply to shift costs. In modern cost methods, conversion costs are appoortioned based on cost drivers which is very essential to decide proper costing.
A) total 20,000+ 20,000+ 10,000= 50,000 units
total assembly 2,127,500/50000= 42.55
total production cost 2,300,000+2,737,500= 5,037,500
basic assembly 42.55*20,000= 851,000
photo assembly 42.55*20,000= 851,000
urlife assembly 42.55*10,000= 425,500
cost per unit: total produc cost/ number of units
Brokia Electronics manufactures three cell phone models, which differ only in the components included: Basic, Photo,...
Brokia Electronics manufactures three cell phone models, which differ only in the components included: Basic, Photo, and UrLife. Production takes place in two departments, Assembly and Special Packaging. The Basic and Photo models are complete after Assembly. The UrLife model goes from Assembly to Special Packaging and is completed there. Data for July are shown in the following table. Conversion costs are allocated based on the number of units produced. There are no work-in-process inventories. Total $2,330,000 Basic (40,000 units)...
Help ercises i Brokia Electronics manufactures three cell phone models, which differ only in the components included: Basic, Photo, and UrLife. Production takes place in two departments, Assembly and Special Packaging. The Basic and Photo models are complete after Assembly. The UrLife model goes from Assembly to Special Packaging and is completed there. Data for July are shown in the following table. Conversion costs are allocated based on the number of units produced. There are no work-in-process inventories Total $2,240,000...
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