Laredo Leather Company manufactures high-quality leather goods. The company's profits have declined during the past nine months. In an attempt to isolate the causes of poor profit performance, management is investigating the manufacturing operations of each of its products. One of the company's main products is leather belts. The belts are produced in a single, continuous process in the Dallas plant. During the process, leather strips are sewn, punched, and dyed. The belts then enter a final finishing stage to conclude the process. Labor and overhead are applied continuously during the manufacturing process. All materials, leather strips, and buckles are introduced at the beginning of the process. The firm uses the weighted-average method to calculate its unit costs. The leather belts produced at the Dallas plant are sold wholesale for $9.95 each. Management wants to compare the current manufacturing costs per unit with market prices for leather belts. The top management has asked the Dallas plant controller to submit data on the cost of manufacturing the leather belts for the month of October. These cost data will be used to determine whether modifications in the production process should be initiated or whether an increase in the selling price of the belts is justified. The cost per belt used for planning the control is $5.35. The work-in-process inventory consisted of 400 partially completed units on October 1. The belts were 25 percent complete as to conversion. The costs included in the inventory on October 1 were as follows: Leather strips $990 Buckles $260 Conversion costs $300 Total $1,550 During October 7,600 leather strips were placed into production. A total of 7,000 leather belts were completed. The work-in-process inventor on October 31 consisted of 1,000 belts, which were 50 percent complete as to conversion. The costs charged to the production during October were as follows: Leather strips $19,900 Buckles $5,250 Conversion Costs $20,700 Total $45,850 In order to provide cost data regarding the manufacture of leather belts in the Dallas Plant to the top management of Laredo Leather Company, compute the following amounts for the month of October. 1) The weighted-average unit cost of leather belts completed and transferred to finished goods. Comment on the company's cost per belt used for planning and control.
Laredo Leather Company manufactures high-quality leather goods. The company's profits have declined during the past nine months. In an attempt to isolate the causes of poor profit performance, management is investigating the manufacturing operations of each of its products.
One of the company's main products is leather belts. The belts are produced in a single, continuous process in the Dallas plant. During the process, leather strips are sewn, punched, and dyed. The belts then enter a final finishing stage to conclude the process. Labor and
The leather belts produced at the Dallas plant are sold wholesale for $9.95 each. Management wants to compare the current
The work-in-process inventory consisted of 400 partially completed units on October 1. The belts were 25 percent complete as to conversion. The costs included in the inventory on October 1 were as follows:
| Leather strips | $990 |
| Buckles | $260 |
| Conversion costs | $300 |
| Total | $1,550 |
During October 7,600 leather strips were placed into production. A total of 7,000 leather belts were completed. The work-in-process inventor on October 31 consisted of 1,000 belts, which were 50 percent complete as to conversion.
The costs charged to the production during October were as follows:
| Leather strips | $19,900 |
| Buckles | $5,250 |
| Conversion Costs | $20,700 |
| Total | $45,850 |
In order to provide cost data regarding the manufacture of leather belts in the Dallas Plant to the top management of Laredo Leather Company, compute the following amounts for the month of October.
1) The weighted-average unit cost of leather belts completed and transferred to finished goods. Comment on the company's cost per belt used for planning and control.
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