Parandah Electronics Ltd located in England assembles a standard electrical
Parandah Electronics Ltd., located in England, assembles a standard electrical component from parts it purchases from various suppliers. The production process consists of several steps, starting with assembly, which takes place in the Assembly Department. The company recently hired a new accountant, who prepared the following report for the department for May, using the weighted-average method:
The company’s management would like some additional information about May’s operation in the Assembly Department. (The currency in England is the pound, denoted by the symbol £.)
1. How many units were started and completed during May?
2. What were the equivalent units for May for materials and conversion costs?
3. What were the costs per equivalent unit for May? The following additional data are available concerning the department’s costs:
4. Verify the accountant’s ending work in process inventory figure (£12,450) given in the report.
5. The new manager of the Assembly Department is asked to estimate the incremental cost of processing an additional 1,000 units through the department. He takes the unit cost for an equivalent whole unit that you computed in (3) above and multiplies this figure by 1,000. Will this method yield a valid estimate of incremental cost? Explain.
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