Question

The Sedona Company is dedicated to making products that meet the needs of customers in a sustainable manner. Sedona is best known for its KLN water bottle, which is a BPA-free, dishwasher-safe, bubbly glass bottle in a soft silicone sleeve.
The production process consists of three basic operations. In the first operation, the glass is formed by remelting cullets (broken or refuse glass). In the second operation, the glass is assembled with the silicone gasket and sleeve. The resulting product is finished in the final operation with the addition of the polypropylene cap.
Consulting studies have indicated that of the total conversion costs required to complete a finished unit, the forming operation requires 60%, the assembly 30%, and the finishing 10%.
The following data are available for March 2014 (there is no opening inventory of any kind):
Cullets purchased ................ $ 67,500
Silicone purchased ............... $ 24,000
Polypropylene used .............. $ 6,000
Total conversion costs incurred .......... $ 68,850
Ending inventory, cullets ............ $ 4,500
Ending inventory, silicone ............. $ 3,000
Number of bottles completed and transferred .... 12,000
Inventory in process at the end of the month:
Units formed but not assembled ......... 4,000
Units assembled but not finished .......... 2,000

Required
1. What is the cost per equivalent unit for conversion costs for KLN bottles in March 2014?
2. Compute the cost per equivalent unit with respect to each of the three materials: cullets, silicone, and polypropylene.
3. What is the cost of goods completed and transferred out?
4. What is the cost of goods formed but not assembled?
5. What is the cost of goods assembled but not finished?


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  • CreatedMay 14, 2014
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