Question

Ferdon Watches, Inc., makes four models of watches, Gag-Gift, Commuter, Sport, and Retirement. Ferdon manufactures the watches in four departments: Assembly, Polishing, Special Finishing, and Packaging. All four models are started in Assembly where all material is assembled. The Gag-Gift is transferred to Packaging, where it is packaged and transferred to finished goods inventory. The Commuter and Sport are assembled, then transferred to Polishing. Once the polishing process is completed, they are transferred to Packaging and then finished goods. The Retirement model is assembled and then transferred to Special Finishing, and then Packaging. When packaged, it is transferred to finished goods. Data for October are shown in the following table. Conversion costs are allocated based on the number of units processed in each department. Total Gag-Gift (6,400 units) Commuter (11,400 units) Sport (15,800 units) Retirement (3,400 units) Materials $ 435,000 $ 16,000 $ 114,000 $ 237,000 $ 68,000 Conversion costs: Assembly $ 222,000 Polishing 136,000 Special Finishing 40,800 Packaging 185,000 Total conversion costs $ 583,800 ________________________________________ Required: b. What is the cost per unit transferred to finished goods inventory for each of the four watches in October? (Round "Cost Per Unit" to 2 decimal places.)

Answer 1

Conversion costs allocation:
	Gag-Gift	Commuter	Sport	Retirement	Total
Units	6400	11400	15800	3400	37000
Conversion Cost ( 64:114:158:34)
Assembly	$38,400	$68,400	$94,800	$20,400	$222,000
Polishing	$23,524	$41,903	$58,076	$12,497	$136,000
Special Finishing	$7,057	$12,571	$17,423	$3,749	$40,800
Packing	$32,000	$57,000	$79,000	$17,000	$185,000
Total Conversion Cost Allocated (1)	$100,982	$179,874	$249,298	$53,646	$583,800
Materials Cost (2)	$16,000	$114,000	$237,000	$68,000	$435,000
Total costs (3=1+2)	$116,982	$293,874	$486,298	$121,646	$1,018,800
Units (4)	6400	11400	15800	3400	37000
Unit cost (3/4)	$18.28	$25.78	$30.78	$35.78