Assume that you are the production manager of the Assembly Department illustrated on pages 817-822 of this chapter (Metal Products, Inc.). One of your responsibilities is to determine whether costs are remaining relatively stable from month to month. Assume that the $29,500 associated with the 1,000 units is process on March 1 (see Exhibit 18-5, page 820) is comprised of the following:
Cut materials transferred from the Cutting Department in February | $25,000 |
Direct materials added in the Assembly Department in February | 0 |
Conversion added in the Assembly Department in February | 4,500 |
Total cost associated with beginning inventory on March 1 | $29,500 |
The cost per equivalent unit of input resource used by the Assembly Department in March is as follows (see Exhibit 18-7, page 821):
Cut materials transferred from the Cutting Department in March | $20 |
Direct materials added in the Assembly Department in March | 4 |
Conversion added in the Assembly Department in March | 25 |
Cost per equivalent unit of input resource used in March | $49 |
Instructions
a. By how much did the cost per equivalent unit of cut material transferred in from the Cutting Department in February differ from the cost per equivalent unit of cut material transferred to the Assembly Department in March?
b. By how much did the cost per equivalent unit of conversion for the Assembly Department in February differ front the cost per equivalent unit of conversion for the Assembly Department in March?
c. Speculate as to why the cost per equivalent unit of input resource (cut materials and conversion) may have changed from February to March.
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