Question

DiDonato Supplies manufactures two versions of presentation remotes: Basic and Laser. Both models go through the same assembly process and are produced in the same plant. The difference between the models is in the additional parts for the laser model as well as the cost of the parts themselves. The following data are available for the year just ended:

	Basic	Laser		Total
Number of units	290,000	80,000		370,000
Parts cost per unit	$12	$25
Other costs:
Direct labor			$	832,000
Indirect materials				219,500
Overhead				891,000
Total			$	1,942,500

Required:

DiDonato uses operations costing and assigns conversion costs based on the number of units assembled. Compute the cost per unit of the Basic and Laser models for the year just ended. (Do not round intermediate calculations. Round "Unit cost" to 2 decimal places.)

Answer 1

Step-1:	Assignment of conversion cost
a.	Calculation of assignment rate;
	Direct Labor				$   8,32,000
	Indirect Material				$   2,19,500
	Other Overhead				$   8,91,000
	Total Conversion costs				$ 19,42,500
	÷ Total number of units produced				3,70,000
	Cost per unit				$ 5.25
b.	Calculation of cost asignment to each prooduct
			Number of units produced			Cost per unit		Cost assigned
				a		b		a*b
	Basic			2,90,000		$               5.25		$     15,22,500
	Laser			80,000		$               5.25		$       4,20,000
Step-2:	Calculation of cost per unit of each product
				Basic		Laser
	Conversion cost			$ 15,22,500		$       4,20,000
	Material cost			$ 34,80,000		$     20,00,000
	Total cost			$ 50,02,500		$     24,20,000
	Number of units			2,90,000		80,000
	Cost per unit			$         17.25		$             30.25
	Working:
	Calculation of Material cost of each product:
				Basic		Laser
	Units produced			2,90,000		80,000
	Material cost per unit			$         12.00		$             25.00
	Total Material cost			$ 34,80,000		$     20,00,000