Fundamentals of Cost Accounting 3rd Edition by William N. Lanen, Shannon W. Anderson, Michael Maher

Exercise 35

Operations Costing

Howrley-David, Inc., manufactures two models of motorcycles: the Fatboy and the Screamer. Both models are assembled in the same plant and require the same assembling operations. The difference between the models is the cost of materials. The following data are available for August.

	Fatboy	Screamer	Total
Number of units assembled	2,000	4,000	6,000
Materials cost per unit	$2,000	$3,000
Other costs:
Direct labor			$6,000,000
Indirect materials			1,800,000
Other overhead			4,200,000

Required

Howrley-David uses operations costing and assigns conversion costs based on the number of units assembled. Compute the cost of each model assembled in August.