Problem

One of Mow-Town Manufacturing's products is a small lawnmower. Two processing departme...

One of Mow-Town Manufacturing's products is a small lawnmower. Two processing departments are involved in the mower's production. The deck is assembled in one department, and a second department assembles and installs the engine. There is no beginning or ending work in process in either department. During May, the company incurred the following costs in the manufacture of 6.000 lawnmowers:

 

Deck Department

Engine Department

Direct materials

$192,000

$480,000

Direct labor

48,000

108.000

Manufacturing overhead

54,000

66.000

Instructions

a.   Compute the following per-unit costs for the month of May.

1.     A deck assembly transferred to the Engine Department.

2.     Assembling an engine and installing it.

3.     A completed lawnmower.

4.     Materials used in assembling a deck.

5.    Direct labor cost of assembling and installing an engine.


b.   Which of these unit costs would be most useful to management in evaluating the overall monthly efficiency of the Engine Department? Explain your reasoning.

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