Problem $6-72($Algo$)$ Operations Costing and Two$-$Stage Systems $($LO $6-3,4)$

Lindsay Mobility manufactures two versions of e$-$scooters: L$-4$ and L$-36.$ Both models go through the same assembly process and are produced in the same plant. The difference between the models is in quality and cost of the parts $($direct materials$).$ The following data represent expected operations for the next month:

L$-4$ L$-36$ Total

Number of units

$400$

$100500$

Parts cost per unit $ $125$ $ $400$

Conversion costs:

Direct labor $ $65,500$

Overhead $49,500$

Total $ $115,000$

Required:

Lindsay Mobility uses operations costing and assigns conversion costs based on the number of units assembled. Compute the cost per unit of the L$-4$ and L$-36$ models for the upcoming month.

After attending a seminar on finance and accounting, the marketing director at Lindsay has asked the controller whether the company should use a two$-$stage system to calculate the product cost of the two models. The controller agrees to do this and to assign direct labor cost based on the number of units produced and overhead cost based on direct materials cost. Compute the cost per unit of the L$-4$ and L$-36$ models for the upcoming month using the controller's design.