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		1,650			2,150			3,800
Materials cost per tractor	$	1,250		$	1,750
Other costs:
Direct labor							$	1,550,000
Supplies								550,000
Other overhead								2,840,000

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.

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		1,650			2,150			3,800
Materials cost per tractor	$	1,250		$	1,750
Other costs:
Direct labor							$	1,550,000
Supplies								550,000
Other overhead								2,840,000

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.

operation cost    sl1 ?    sl2?    total    ?
materials cost    sl1    ?    sl2? total ?
total cost sl1 ?    sl2? total ?
number of units sl1    ? sl2 ? total    ?
unit cost    sl1 ? sl2 ?    total    ?

answers are required for all sl1    sl2    and total for each one

Answer 1

Computation of total material cost
Particulars		SL1	SL2	Total
No of assembled (1)		1650	2150	3800
material cost per tractor (2)		1250	1750
total material cost (1)*(2)		2062500	3762500	5825000
Conversion cost per tractor = total conversion costs/no of unit
total conversion cost = direct labor+supplies+other overhead
total conversion cost = 1550000+550000+2840000
total conversion cost = 4940000
Conversion cost per tractor = 4940000/3800 =1300
total operational cost
SL1 = 1650*1300 = 2145000
SL2 = 2150*1300 = 2795000
Computation of cost of each model assembled in november
Particulars		SL1	SL2
Operational cost		2145000	2795000	4940000
material cost		2062500	3762500	5825000
total cost (A)		4207500	6557500	10765000
no of units (B)		1650	2150	3800
unit cost (A)/(B)		2550	3050	5600