S. Lee Enterprises produces two models of lawn tractor: SL1 and SL2. The models
ID: 2407030 • Letter: S
Question
S. Lee Enterprises produces two models of lawn tractor: SL1 and SL2. The models are both produced in the company’s Louisville factory and go through identical assembly operations. The difference is in the quality (hence, cost) of the parts used. The following data are available for November, the latest month for which information is available:
Required:
S. Lee Enterprises uses operations costing and assigns conversion costs based on the number of units assembled. Compute the cost of each model assembled in November.
SL1 SL2 Total Number assembled 1,950 2,450 4,400 Materials cost per tractor $ 1,550 $ 2,050 Other costs: Direct labor $ 1,850,000 Supplies 610,000 Other overhead 3,480,000Explanation / Answer
Cost of each model
Particular. SL1 SL2 Total
Material. 1550 2050
Direct labour 1850000
Supplies 610000
Other overhead. 3480000
Total conversion cost 5940000
Allocation 5940000*1950/4400
= 2632500 3307500
Per unit. 1350 1350
Total cost p.u
Conversion+material) 2900 3400
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