Question

.jack Coop is a manufacturer of cameras. The company has two departments: assembly and testing. In 2019 the company incurred $800,000 in direct materials and $ 805,000 in conversion costs (direct materials and direct labor) for a total manufacturing cost of $1,805,000. Required:  Assume that the work in process, beginning =-0- on January 1, 2019.  During January 5,000 were placed into production and 5,000 units were fully completed at the end of the month. What is the unit cost of the assembled camera in January?  Assume that during February 5,000 units were placed into production. Further assume the same assembly costs for January and February. In addition 4,000 units were fully completed at the end of February. Work in process of the remaining 1,000 units were 100% completed as to direct materials and only 60% completed as to conversion costs. a) What are the equivalent units as to direct materials and conversion costs and the cost per equivalent unit in February? b) What is the unit cost of the assembled camera in February 2019?

Answer 1

1)

Particulars	Materials	Conversion	Total
Expenses during January	800000	805000	1605000
Camera started and transferred out	5000	5000	5000
Coat per unit of Camera (Expense/Equivalents units)	160	161	321

2)

a)

Calculation of Equivalent units for February month

	Physical
Particulars	Units	Materials	Conversion
Beginning WIP transferred out	0	0	0
Units completed and transferred out	4000	4000	4000
Units in ending WIP inventory	1000	1000	600(1000*60%)
Total Equivalent units	5000	5000	4600

Calculation of Materials Cost and Conversion cost per unit of equivalent units.

Particulars	Materials	Conversion
Cost incurred during month	800000	805000
Equivalent units	5000	4600
Cost per equivalent units	160	175

b)

Calculation of unit of assembled camera

Unit cost of assembled camera = Total cost of transferred out camera/Total transferred out units

= 4000*335/4000

= 335