Eyes R Us makes and sells eyeglasses for the consumer market. The three main products are...
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Eyes R Us makes and sells eyeglasses for the consumer market. The three main products are reading glasses, opera glasses, and sunglasses. Each product is manufactured in the company's two departments: assembly and grinding. All materials are added at the beginning of the manufacturing process. All three models require assembly but only the opera glasses and reading glasses are sent to grinding. There are no WIP inventory balances at the beginning of the month. Ending work-in-process is 25 percent complete in Assembly and 50 percent complete in Grinding. Data for the month's production is as follows: Reading Glasses Units started Units completed in Assembly Units completed in Grinding Materials Conversion costs: Assembly Grinding Total conversion costs 450 390 340 $202,500 Opera Glasses 300 270 250 $360,000 Sunglasses 750 600 $112,500 Total $675,000 $396,000 63,000 $459,000 Required: a) What is the unit cost of each model transferred to finished goods during the month? b) What is the balance of work-in-process inventory at month-end for the Assembly department? c) What is the balance of work-in-process inventory at month-end for the Grinding department? d) The company has excess capacity. If an additional 150 units of Reading Glasses and an additional 250 units of Sunglasses had been put into production during the month, what would be the unit production cost of each model transferred to finished goods during the month? Of the additional units put into production, assume that 130 units of Reading Glasses and 200 units of Sunglasses were completed in Assembly, and that an additional 110 units of Reading Glasses were completed in Grinding. The percentages of completion in WIP inventories continue to be accurate. Materials costs will increase proportionally. Assembly and Grinding costs are fixed. e) Compare and contrast the prices in parts (a) and (d). What causes prices to change at all? Why does the unit price for Opera Glasses change when the quantity for that product line was not assumed to change? What would be the effect of additional production on reported profits and why? What concerns would you have if you observed this behavior? Eyes R Us makes and sells eyeglasses for the consumer market. The three main products are reading glasses, opera glasses, and sunglasses. Each product is manufactured in the company's two departments: assembly and grinding. All materials are added at the beginning of the manufacturing process. All three models require assembly but only the opera glasses and reading glasses are sent to grinding. There are no WIP inventory balances at the beginning of the month. Ending work-in-process is 25 percent complete in Assembly and 50 percent complete in Grinding. Data for the month's production is as follows: Reading Glasses Units started Units completed in Assembly Units completed in Grinding Materials Conversion costs: Assembly Grinding Total conversion costs 450 390 340 $202,500 Opera Glasses 300 270 250 $360,000 Sunglasses 750 600 $112,500 Total $675,000 $396,000 63,000 $459,000 Required: a) What is the unit cost of each model transferred to finished goods during the month? b) What is the balance of work-in-process inventory at month-end for the Assembly department? c) What is the balance of work-in-process inventory at month-end for the Grinding department? d) The company has excess capacity. If an additional 150 units of Reading Glasses and an additional 250 units of Sunglasses had been put into production during the month, what would be the unit production cost of each model transferred to finished goods during the month? Of the additional units put into production, assume that 130 units of Reading Glasses and 200 units of Sunglasses were completed in Assembly, and that an additional 110 units of Reading Glasses were completed in Grinding. The percentages of completion in WIP inventories continue to be accurate. Materials costs will increase proportionally. Assembly and Grinding costs are fixed. e) Compare and contrast the prices in parts (a) and (d). What causes prices to change at all? Why does the unit price for Opera Glasses change when the quantity for that product line was not assumed to change? What would be the effect of additional production on reported profits and why? What concerns would you have if you observed this behavior?
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a To calculate the unit cost of each model transferred to finished goods during the month we need to use the weighted average method Unit Cost Total M... View the full answer
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Investments
ISBN: 978-0071338875
8th Canadian Edition
Authors: Zvi Bodie, Alex Kane, Alan Marcus, Stylianos Perrakis, Peter
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