Question

Ferdon Watches, Inc., makes four models of watches, Gag-Gift, Commuter, Sport, and Retirement. Ferdon manufactures the...

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.

Total Gag-Gift
(6,000 units)
Commuter
(11,000 units)
Sport
(15,000 units)
Retirement
(3,000 units)
Materials $ 342,000 $ 15,000 $ 99,000 $ 162,000 $ 66,000
Conversion costs:
Assembly $ 245,000
Polishing 156,000
Special Finishing 39,000
Packaging 210,000
Total conversion costs $ 650,000

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
Sports
Retirement
0 0
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Answer #1
Gag-Gift Commuter Sport Retirement
Materials 15000 99000 162000 66000
Conversion cost allocation :

Assembly [ ( 6000 : 11000 : 15000 : 3000 ) Total units - 35000 ]

42000

[ 245000*6000/35000 ]

77000

[ 245000*11000/35000 ]

105000

[ 245000*15000/35000 ]

21000

[ 245000*3000/35000 ]

Polishing [ ( 0 : 11000 : 15000 : 0 ) Total units - 26000 ]

0

66000

[ 156000*11000/26000 ]

90000

[ 156000*15000/26000 ]

0

Special furnishing [ ( 0 : 0 : 0 : 3000 ) Total units - 3000 ]

0

0

0

39000

Packaging [ ( 6000 : 11000 : 15000 : 3000 ) Total units - 35000 ]

36000

[ 210000*6000/35000 ]

66000

[ 210000*11000/35000 ]

90000

[ 210000*15000/35000 ]

18000

[ 210000*3000/35000 ]

Total cost 93000 308000 447000 144000
(/) Number of units produced 6000 11000 15000 3000
Cost per unit 15.50 28.00 29.80 48.00
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