Calculating Cost Per Unit Transferred to Finished Goods Inventory
What is the cost per unit transferred to finished goods inventory for each of the three models in February?
Answer:
The cost per unit transferred to finished goods inventory for each model in February is $3.56 for the Commuter, $5.19 for the Sport, and $9.22 for the X-treme.
Explanation:
The cost per unit transferred to finished goods inventory for each of the three models in February can be calculated using the data provided in the table. The cost per unit is determined by allocating the conversion costs based on the number of units processed in each department. Since no work-in-process inventories are maintained, we can simply divide the total conversion costs for each model by the total number of units transferred to finished goods inventory.
Commuter:Total conversion costs for Assembly and Packaging = $17,800
Total units transferred to finished goods inventory = 5,000
Cost per unit transferred = Total conversion costs / Total units transferred = $17,800 / 5,000 = $3.56 per unit
Sport:Total conversion costs for Assembly, Detailing, and Packaging = $29,600
Total units transferred to finished goods inventory = 5,700
Cost per unit transferred = Total conversion costs / Total units transferred = $29,600 / 5,700 = $5.19 per unit
X-treme:Total conversion costs for Assembly, Customization, and Packaging = $35,900
Total units transferred to finished goods inventory = 3,900
Cost per unit transferred = Total conversion costs / Total units transferred = $35,900 / 3,900 = $9.22 per unit