Question

Assume that you are the production manager of the Assembly Department illustrated on pages 807–810 of this chapter (Metal Products, Inc.).

One of your responsibilities is to determine whether costs are remaining relatively stable from month to month. Assume that the $29,500 associated with the 1,000 units in process on March 1 is comprised of the following:
Cut materials transferred from the Cutting Department in February . . $25,000
Direct materials added in the Assembly Department in February . . . . 0
Conversion added in the Assembly Department in February . . . . . . . . 4,500
Total cost associated with beginning inventory on March 1 . . . . . . . . $29,500

In Exhibit 18–5
Beginning work in process (March 1) . . . . . . . . . . . . . . . . . . . . . . . $ 29,500
Cut materials transferred from Cutting Department in March... .. 2 00,000
Trim materials added in March . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44,000
Direct labor incurred in March . . . . . . . . . . . . . . . . . . . . . . . . . .. 105,000
Overhead incurred in March . . . . . . . . . . . . . . . . . . . . . . . . ..... 147,500
Total costs to account for in March . . . . . . . . . . . . . . . . . . . . .... $526,000
The cost per equivalent unit of input resource used by the Assembly Department in March is as follows (see Exhibit 18–7, page 809):
Cut materials transferred from the Cutting Department in March . . . . . . . $20
Direct materials added in the Assembly Department in March . . . . . . . . 4
Conversion added in the Assembly Department in March . . . . . . . . . . 25
Cost per equivalent unit of input resource used in March . . . . . . . . . $49
In Exhibit 18–7


Instructions
a. By how much did the cost per equivalent unit of cut material transferred in from the Cutting Department in February differ from the cost per equivalent unit of cut material transferred to the Assembly Department in March?
b. By how much did the cost per equivalent unit of conversion for the Assembly Department in February differ from the cost per equivalent unit of conversion for the Assembly Department in March?
c. Speculate as to why the cost per equivalent unit of input resource (cut materials and conversion) may have changed from February toMarch.


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  • CreatedApril 17, 2014
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