Larned Recreational builds two models of dune buggies: Sport and Custom. Both models require the same assembly and finishing process and are assembled in the same factory. They differ in the quality and detail of the materials. The following data reflect expected operations for the upcoming year. SportCustomTotalNumber of units3,2001,8005,000Direct materials cost per unit$ 400$ 1,100 Conversion costs: Direct labor $ 1,832,000Overhead 2,608,000Total $ 4,440,000Required:Larned Recreation uses operations costing and assigns conversion costs based on the number of units assembled. Compute the cost per unit of the Sport and Custom models for the upcoming year.The financial team at Larned suggests that a two-stage system be used to compute the product cost of the two models. Their recommendation is to assign direct labor cost based on the number of units and overhead cost based on direct materials cost. Compute the cost per unit of the Sport and Custom models for the upcoming year using the team's recommendation. Required A Required BLarned Recreation uses operations costing and assigns conversion costs based on the number of units assembled. Computethe cost per unit of the Sport and Custom models for the upcoming year.SportConversion costMaterial costTotal costUnit costCustom< Required ATotalRequired B> Required A Required BThe financial team at Larned suggests that a two-stage system be used to compute the product cost of the two models. Theirrecommendation is to assign direct labor cost based on the number of units and overhead cost based on direct materials cost.Compute the cost per unit of the Sport and Custom models for the upcoming year using the team's recommendation.Note: Do not round intermediate calculations. Round "Unit cost" to 2 decimal places.Conversion costDirect laborOverheadMaterial costTotal costUnit costSportCustom< Required ATotalRequired B >Show less ▲

An important factor in calculating a product's total manufacturing cost is conversion expenses. They…

Answered: Larned Recreational builds two models…

Managerial Accounting

15th Edition

ISBN:9781337912020

Author:Carl Warren, Ph.d. Cma William B. Tayler

Publisher:Carl Warren, Ph.d. Cma William B. Tayler

Chapter7: Variable Costing For Management analysis

Section: Chapter Questions

Problem 18E: Variable costing income statement for a service company The actual and planned data for Underwater...

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	Sport	Custom	Total
Number of units	3,200	1,800	5,000
Direct materials cost per unit	$ 400	$ 1,100
Conversion costs:
Direct labor			$ 1,832,000
Overhead			2,608,000
Total			$ 4,440,000

Required:

Larned Recreation uses operations costing and assigns conversion costs based on the number of units assembled. Compute the cost per unit of the Sport and Custom models for the upcoming year.
The financial team at Larned suggests that a two-stage system be used to compute the product cost of the two models. Their recommendation is to assign direct labor cost based on the number of units and overhead cost based on direct materials cost. Compute the cost per unit of the Sport and Custom models for the upcoming year using the team's recommendation.

Required A Required B
The financial team at Larned suggests that a two-stage system be used to compute the product cost of the two models. Their
recommendation is to assign direct labor cost based on the number of units and overhead cost based on direct materials cost.
Compute the cost per unit of the Sport and Custom models for the upcoming year using the team's recommendation.
Note: Do not round intermediate calculations. Round "Unit cost" to 2 decimal places.
Conversion cost
Direct labor
Overhead
Material cost
Total cost
Unit cost
Sport
Custom
< Required A
Total
Required B >
Show less ▲

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