In: Accounting
Candid, Inc., is a manufacturer of digital cameras. It has two departments: assembly and testing. In January 2020, the company incurred $800,000 on direct materials and $805,000 on conversion costs, for a total manufacturing cost of $1,605,000.
Unit Costs= Total Costs/ No of Units= $ 321
2)The unit cost of an assembled camera in February 2014 $ 335
Explanation:
Candid, Inc.
Direct materials $800,000
Conversion costs, $805,000
Total manufacturing cost $1,605,000.
We find the unit costs by dividing the total cost with the number of units produced.
Units Produced 5,000
1) Unit Costs= Total Costs/ No of Units= $1,605,000 /5,000= $ 321
2) Particulars Units % of Completion Equivalent Units
D. Materials C.C D. Mat C. Costs
Production 4000 100 100 4000 4000
Still in Process 1000 100 60 1000 600
Total Equivalent Units 5000 4600
We find the number of Equivalent units to find the exact costs incurred.
Feb Equivalent units for direct materials = 5000
Feb Equivalent units for conversion costs = 4600
Direct materials costs per Equivalent units = $800,000 /5000= $160
Conversion costs per Equivalent units = $805,000/4600= $ 175
2-b) The unit cost of an assembled camera in February 2014= $160 + $ 175= $ 335
3) There is a difference in the unit costs of 1 and 2 because in situation 1 5000 units were completed and in situation 2 only 4600 units were completed with the same costs. There's a difference of $ 14 . The Feb costs are $ 14 more because of the difference in number of units