Jabari Manufacturing, a widgets manufacturing company, divides its production operations into three processes-Department 1, Department 2, and Department 3. The company uses a process costing system. Jabari incurred the following costs during the year to produce 4600 units: $$\begin{array} { | l | r | }
\hline \text { Department 1 } & \$ 18,000 \
\hline \text { Department 2 } & \$ 8000 \
\hline \text { Department 3 } & \$ 4000 \
\hline
\end{array}$$ If Jabari could sell only 3400 units during the year, what will be the cost per unit of widget produced? (Round your answer to the nearest cent.)

Question

Jabari Manufacturing, a widgets manufacturing company, divides its production operations into three processes-Department 1, Department 2, and Department 3. The company uses a process costing system. Jabari incurred the following costs during the year to produce 4600 units: $$\begin{array} { | l | r | } 
\hline \text { Department 1 } & \$ 18,000 \
\hline \text { Department 2 } & \$ 8000 \
\hline \text { Department 3 } & \$ 4000 \
\hline
\end{array}$$ If Jabari could sell only 3400 units during the year, what will be the cost per unit of widget produced? (Round your answer to the nearest cent.)

Quizplus · Accepted Answer

1. Total cost incurred for the production of 4600 units = $33,000 + $41,300 + $22,200 = $96,500
2. Cost per unit of widget produced = Total cost incurred/ Units produced = $96,500/4600 = $20.98 per unit
3. Cost of unsold units = Cost per unit * (Units produced - Units sold) = $20.98 * (4600-3400) = $2,508
4. Cost per unit of widget produced (excluding the cost of unsold units) = (Total cost incurred - Cost of unsold units)/Units sold = ($96,500 - $2,508)/3400 = $27.12/Unit
5. Rounded to the nearest cent, the cost per unit of widget produced is $6.52. Therefore, the best answer is D.

Jabari Manufacturing, a Widgets Manufacturing Company, Divides Its Production Operations