Assume that you are the production manager of the Assembly Department illustrated on pages 807810 of this

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.

Transcribed Image Text:

Cut Materials Transferred in Materials Conversion Trim Total cost of resources used in March (from Exhibit 18-5) . Equivalent units of resource inputs in March (from Exhibit 18–6) . Cost per equivalent unit of resource inputs in March $252,500 $200,000 $44,000 10,000 20 11,000 24 10,100 25