Question

Equivalent units, zero beginning inventory.

Candid, Inc., is a manufacturer of digital cameras. It has two departments: assembly and testing. In January 2014, the company incurred $800,000 on direct materials and $805,000 on conversion costs, for a total manufacturing cost of $1,605,000. 1. Assume there was no beginning inventory of any kind on January 1, 2014. During January, 5,000 cam-eras were placed into production and all 5,000 were fully completed at the end of the month. What is the unit cost of an assembled camera in January? 2. Assume that during February 5,000 cameras are placed into production. Further assume the same total assembly costs for January are also incurred in February, but only 4,000 cameras are fully com-pleted at the end of the month. All direct materials have been added to the remaining 1,000 cameras. However, on average, these remaining 1,000 cameras are only 60% complete as to conversion costs. (a) What are the equivalent units for direct materials and conversion costs and their respective costs per equivalent unit for February? (b) What is the unit cost of an assembled camera in February 2014? 3. Explain the difference in your answers to requirements 1 and 2.

Answer 1

The answer has been presented in the supporting sheet. For detailed answer refer to the supporting sheet.