Panoramic, Inc. is a manufacturer of digital cameras. It has two departments: assembly and testing. In January 2017, the company incurred $725,000 on direct materials and $785,000 on conversion costs, for a total manufacturing cost of $1,510,000.

Requirement:

1. Assume there was no beginning inventory of any kind on January 1, 2017. During January, 10,000 cameras were placed into production and all 10,000 were fully completed at the end of the month. What is the unit cost of an assembled camera in January? (Round your answers to the nearest cent.)

Direct materials cost per unit
Conversion cost per unit
Assembly department cost per unit

Requirement:

2. Assume that during February 10,000 cameras are placed into production. Further assume the same total assembly costs for January are also incurred in February, b 8,000 cameras are fully completed at the end of the month. All direct materials have been added to the remaining 2,000 cameras. However, on average, these remaining 2,000 cameras are only 60%

complete as to conversion costs. (a) What are the equivalent units for direct materials and conversion costs and their respective costs per equivalent unit for February? (b) What is the unit cost of an assembled camera in February

2017?

(a) What are the equivalent units for direct materials and conversion costs and their respective costs per equivalent unit for February? First calculate the equivalent units.

	Equivalent Units
	Direct Materials	Conversion Costs
Completed and transferred out in current period
Work in process, ending
Work done in current period

Now calculate the direct materials and conversion costs per equivalent unit for February. (Round your answers to the nearest cent.)

	Direct Materials	Conversion Costs
Costs incurred during the period
Equivalent units of work done in current period
Cost per equivalent unit

(b) What is the unit cost of an assembled camera in February 2017?

(Round your answers to the nearest cent.)

Assembly department cost per unit

Requirement:

3. Explain the difference in your answers to requirements 1 and 2.

The difference in the assembly department cost per unit calculated in requirements 1 and 2 arises because the costs incurred in January and February are the same but

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fewer more equivalent units of work are done in February relative to January. In January, all 10,000 units introduced are fully completed resulting in 10,000 equivalent units of work done with respect to

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conversion costs

direct materials

direct materials and conversion costs .

In February, of the 10,000 units introduced, 10,000 equivalent units of work is done with respect to
	but only		equivalent units of work is done with respect to
	. The assembly department cost per unit is, therefore,

Answer rating: 100% (QA)

a Per unit Direct Material Cost 72500000 7250 Conversion Cost 78500000 7850 Assembly department cost ... View the full answer