Question

Inc. is a manufacturer of digital cameras. It has two​ departments: assembly and testing. In January 2014​, the company incurred $725,000 on direct materials and $825,000 on conversion​ costs, for a total manufacturing cost of $1,550,000.

Requirements

1.	Assume there was no beginning inventory of any kind on January​ 1, 2014. During​ January, 20,000 cameras were placed into production and all 20,000 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 20,000 cameras are placed into production. Further assume the same total assembly costs for January are also incurred in​ February, but only 19,000 cameras are fully completed 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 25​% 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.

Requirement 1. Assume there was no beginning inventory of any kind on January​ 1, 2014. During​ January, 20,000 cameras were placed into production and all 20,000 were fully completed at the end of the month. What is the unit cost of an assembled camera in​ January? ​(Round your answers to the nearest​ cent.)

Direct materials cost per unit
Conversion cost per unit
Assembly department cost per unit

Answer 1

1.

Direct material cost per unit	$36.25
Conversion cost per unit	$41.25
Assembly cost per unit	$77.50

Working:

For January, 2014
	Total	Per unit
Direct material cost	725000	36.25
Conversion cost	825000	41.25
Total Cost	1550000	77.50

2.

	Material	Conversion	Total
Finished Goods	688750	814286	1503036
Ending Inventory	36250	10714	46964

Working:

For February
		Direct Material		Conversion
		%	Eq.Units	%	Eq.Units
Finished goods	19000	100%	19000	100%	19000
Ending Inventory	1000	100%	1000	25%	250
Total	20000		20000		19250
Total Cost			725000		825000
Cost per equivalent Units			36.25		42.86