Question

Last month, Duncan Incorporated’s Assembly Division had total manufacturing costs of $457,250, total conversion costs of $279,000, and 38,750 equivalent units for both materials costs and conversion costs. During the same period, Davis Manufacturing’s Assembly Division had total manufacturing costs of $721,056, total conversion costs of $381,408, and 55,680 equivalent units for both materials costs and conversion costs. Based on these figures, Duncan’s materials cost per unit was ________ than Davis’

Answer 1

Answer:

The answer is: Duncan's materials costs per unit was $1.50 ($6.10 - $4.60) less than Davis's materials costs per unit.

Explanation:

We must first calculate the materials costs for both companies:

• Duncan's total costs was $457,250 minus conversion costs of $279,000 equals total materials costs of $178,250.
• Davis's total costs was $721,056 minus conversion costs of $381,408 equals total materials costs of $339,648 .

Now we calculate the materials costs per unit produced:

• Duncan's total materials costs $178,250 divided by 38,750 units equals $4.60 per unit.
• Davis's total materials costs $339,648  divided by 55,680 units equals $6.10 per unit.

So Duncan's materials costs per unit was $1.50 ($6.10 - $4.60) less than Davis's materials costs per unit.

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