Business, 12.03.2020 17:32, Kelbee781

Vermont Instruments manufactures two models of calculators. The finance model is the Fin-X and the scientific model is the Sci-X. Both models are assembled in the same plant and require the same assembling operations. The difference between the models is in the cost of the parts. The following data are available for June: Fin-X Sci-X TotalNumber of units 10,000 40,000 50,000Parts cost per unit $25 $30Other costs:

Direct labor . . . . . . . . . . . . . . . . $ 62,000
Indirect materials . . . . . . . . . . . . 17,500
Overhead. . . . . . . . . . . . . . . . . . 70,500
Total . . . . . . . . . . . . . . . . . . . . . . . $150,000

Vermont Instruments uses operations costing and assigns conversion costs based on the number of units assembled. Compute the cost per unit of the Fin-X and Sci-X models for June.

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answered: Allybubbs

The cost per unit of the Fin-X model is $28 and the cost per unit of the Sci-X model is $33.

Explanation:

Process costing refers to a cost accounting technique that traces and accumulates direct costs for each product type or model, and then assigns indirect or conversion costs incurred in the manufacturing process to each product based on the method adopted by the firm.

The cost per unit of the Fin-X and Sci-X models for June can be computed by following the following steps:

Step 1: Calculation of total parts cost of Fin-X and Sci-X

Fin-X total parts cost = Units of Fin-X × Fin-X parts cost per unit

= 10,000 × $25

Fin-X total parts cost = $250,000

Sci-X total parts cost = Units of Sci-X × Sci-X parts cost per unit

= 40,000 × $30

Sci-X total parts cost = $1,200,000

Step 2: Assignment of total conversion cost of Fin-X and Scin-X

Fin-X portion of conversion cost = (Units of Fin-X ÷ Total units) × Total conversion cost

= (10,000 ÷ 50,000) × $150,000

Fin-X portion of conversion cost = $30,000

Sci-X portion of conversion cost = (Units of Sci-X ÷ Total units) × Total conversion cost

= (40,000 ÷ 50,000) × $150,000

Sci-X portion of conversion cost = $120,000

Step 3: Calculation of total cost of Fin-X and Scin-X

Fin-X total cost = Fin-X total parts cost + Fin-X portion of conversion cost

= $250,000 + $30,000

Fin-X total cost = $280,000

Sci-X total cost = Sci-X total parts cost + Sci-X portion of conversion cost

= $1,200,000 + $120,000

Sci-X total cost = $1,320,000

Step 4: Calculation of cost per unit for Fin-X and Scin-X

Fin-X cost per unit = Fin-X total cost ÷ Units of Fin-X

= $280,000 ÷ 10,000

Fin-X cost per unit = $28 per unit

Sci-X cost per unit = Sci-X total cost ÷ Units of Sci-X

= $1,320,000 ÷ 40,000

Sci-X cost per unit = $33 per unit

Conclusion

The cost per unit of the Fin-X model is $28 and the cost per unit of the Sci-X model is $33.

answered: Guest

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answered: Guest

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Vermont Instruments manufactures two models of calculators. The finance model is the Fin-X and the s...