Required: What is the cost per unit transferred to finished goods inventory for each of the three models in November?
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Coastal Cycles makes three models of electric bicycles: E20, E35, and E60. The models differ by the size of the battery and the quality of the components. The bicycles are produced in two departments. The Assembly Department purchases components from vendors and assembles them into bicycles. The models E20 and E35 are complete and ready for sale after completing the assembly process. The model E60 undergoes further process in Customization Department, which is actually just a small area in the same building as the Assembly Department.
Conversion costs in both the Assembly Department and Customization Department are based on the number of units produced. There are never any work-in-process inventories. Data for production in November are shown in the following table.
| Total | E20 | E35 | E60 | ||||||||||
| Units produced | 13,000 | 5,000 | 4,500 | 3,500 | |||||||||
| Materials cost | $ | 9,820,000 | $ | 2,500,000 | $ | 3,420,000 | $ | 3,900,000 | |||||
| Conversion costs | |||||||||||||
| Assembly | 8,710,000 | ||||||||||||
| Customization | 825,000 | ||||||||||||
| Total conversion costs | $ | 9,535,000 | |||||||||||
Required:
What is the cost per unit transferred to finished goods inventory for each of the three models in November?
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- Coastal Cycles makes three models of electric bicycles: E20, E35, and E60. The models differ by the size of the battery and the quality of the components. The bicycles are produced in two departments. The Assembly Department purchases components from vendors and assembles them into bicycles. The models E20 and E35 are complete and ready for sale after completing the assembly process. The model E60 undergoes further process in Customization Department, which is actually just a small area in the same building as the Assembly Department. Conversion costs in both the Assembly Department and Customization Department are based on the number of units produced. There are never any work-in-process inventories. Data for production in November are shown in the following table. Total E20 E35 E60 Units produced 11,500 4,500 4,000 3,000 Materials cost $ 8,395,000 $ 2,250,000 $ 2,845,000 $ 3,300,000 Conversion costs…Boulder Toys manufactures powered, ride-on tractors and other equipment for children. There are three models, increasing in features and detail: XL, XLS, and XLT. All three models start in the Assembly Department, where the raw material is shaped and components, such as tires and motor, are assembled. The XL and XLS model are then sent to the Packaging Department where they are made ready for delivery to dealers. The XLT model is sent from the Assembly Department to the Customization Department where it is detailed with various special order paints and logos. Boulder Toys uses operations costing and conversion costs are allocated to products based on the number of units produced. No work-in-process inventories exist in any of the three departments. Data for October follow: Total Units produced 3,800 XL 1,800 XLS XLT 1,350 650 Costs: Materials $ 559,150 $156,600 $ 180,900 $221,650 Conversion costs Assembly $ 307,800 Customization: Packaging Total conversion cost Required: 27,950 72,200…McCourt Company produces two types of leather purses: standard and handcrafted. Both purses use equipment for cutting and stitching. The equipment also has the capability of creating standard designs. The standard purses use only these standard designs. They are all of the same size to accommodate the design features of the equipment. The handcrafted purses can be cut to any size because the designs are created manually. Many of the manually produced designs are in response to specific requests of retailers. The equipment must be specially configured to accommodate the production of a batch of purses that will receive a handcrafted design McCourt Company assigns overhead using direct labor dollars. Muggs Clark, sales manager, is convinced that the purses are not being costed correctly. To illustrate his point, he decided to focus on the expected annual setup and machine-related cut to. costs, which are as follows: Setup equipment $ 45,000 Depreciation 50,000…
- Shady Fabrication Group (SFG) manufactures components for manufacturing equipment at several facilities. The company produces two, related, parts at its Park River Plant, the models SF-08 and SF-48. The differences in the models are the quality of the materials and the precision to which they are produced. The SF-48 model is used in applications where the precision is critical and thus requires greater oversight in the production process. Although sales remain reasonably strong, managers at SFG have noticed that the company is meeting more resistance to the pricing for SF-08, although there seems to be little need for negotiation on the price of the SF-48 model. As a result, the marketing manager at SFG has asked the financial staff to review the costs of the two products to understand better what might be happening in the market. Manufacturing overhead is currently assigned to products based on their direct labor costs. For the most recent month manufacturing overhead was $208,800.…The Chopin Company has decided to introduce a new product. The new product can be manufactured by either a computer-assisted manufacturing (CAM) or a labor-intensive production (LIP) system. The manufacturing method will not affect the quality of the product. The estimated manufacturing costs for each of the two methods are as follows. CAM System: Direct Material = $5.0 Direct Labor (DLH) = 0.5 DLH X $12 = $6 Variable Overhead = 0.5DLHx$6 = $3 Fixed Iverhead* = $ 2,440,000 LIP System: Direct Material = $5.6 Direct Labor (DLH) = 0.8 DLH X $9 = $7.2 Variable Overhead = 0.8 DLH X $6 = $4.8 Fixed Overhead* = $1,320,000 *These costs are directly traceable to the new product line. They would not be incurred if the new product were not produced. The company’s marketing research department has recommended an introductory unit sales price of $30. Selling expenses are estimated to be $500,000 annually plus $2 for each unit sold. (Ignore income taxes.) Required: Calculate the estimated…California Circuits Company (3C) manufactures a variety of components. Its Valley plant specializes in two electronic components used in circuit boards. These components serve the same function and perform equally well. The difference in the two products is the raw material. The XL-D chip is the older of the two components and is made with a metal that requires a wash prior to assembly. Originally, the plant released the wastewater directly into a local river. Several years ago, the company was ordered to treat the wastewater before its release, and it installed relatively expensive equipment. While the equipment is fully depreciated, annual operating expenses of $260,000 are still incurred for wastewater treatment. Two years ago, company scientists developed an alloy with all of the properties of the raw materials used in XL-D that generates no wastewater. Some prototype components using the new material were produced and tested and found to be indistinguishable from the old…
