Samantha is compiling the key processes of the factory where she works. Her focus on been on the key processes of the conversion work. All units require cutting and assembly, but not all units require quality control. Since the company is set up to create their products in batches while using the benefits of process costing, they have implemented an operation costing system. Samantha has collected the following budgeted costs and production volumes for the current year:
The company recently completed a batch of 1,280 units where the first half of the batch required cutting, assembly, and quality control, and the second half of batch only required cutting and assembly. The cost of Direct Materials (DM) associated with each type of these units is $4.89 per unit, and each unit has a selling price of $19.75 per unit. What is the total amount of Conversion Costs (CC) assigned to this batch? (Round answers to two decimal places.)

Question

Samantha is compiling the key processes of the factory where she works. Her focus on been on the key processes of the conversion work. All units require cutting and assembly, but not all units require quality control. Since the company is set up to create their products in batches while using the benefits of process costing, they have implemented an operation costing system. Samantha has collected the following budgeted costs and production volumes for the current year:
 The company recently completed a batch of 1,280 units where the first half of the batch required cutting, assembly, and quality control, and the second half of batch only required cutting and assembly. The cost of Direct Materials (DM) associated with each type of these units is $4.89 per unit, and each unit has a selling price of $19.75 per unit. What is the total amount of Conversion Costs (CC) assigned to this batch? (Round answers to two decimal places.)

Quizplus · Accepted Answer

This question requires familiarity with calculating Conversion Costs using an operation costing system. The first step entails calculating the per-unit budgeted cost for each key process. Cutting: $198,500/70,000 = $2.84 per unit, Assembly: $76,400/70,000 = $1.09 per unit, and Quality Control: $49,006/36,000 = $1.36 per unit. Since half of the units need all three processes and half need only cutting and assembly, the total amount of Conversion Costs will be (1,280 × $2.84) + (1,280 × $1.09) + (640 × $1.36) = $3,635.20 + $1,395.20 + $870.40 = $5,900.80.

Samantha Is Compiling the Key Processes of the Factory Where