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

Exercise 42

Operations Costing

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	Total
Number of units	10,000	40,000	50,000
Parts cost per unit	$20	$25
Other costs:
Direct labor			$ 62,000
Indirect materials			17,500
Overhead			70,500
Total			$150,000

Required

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.

Step 1 of 3

Under operations costing, operations cost are allocated to the products manufactured on the basis of number of units of each product manufactured. Once operation costs have been allocated, materials costs incurred for each product are added to get the total cost of the product. Then total cost is divided by the number of units produced to get cost per unit.