Question

RadioWaves, Inc. is a manufacturer of weather radios. It has two departments: assembly and testing. In March 2018, the company incurred $800,000 on direct materials and $705,000 on conversion costs. Assume there was no beginning inventory of any kind on March 1, 2018. During March, 7,000 units were started into production and all 7,000 were completed by the end of the month. What is the approximate unit cost of an assembled radio at the end of March?

Answer 1

Answer:

Unit cost of an assembled radio = $215

Explanation:

Cost of direct material for the month = $800,000

Cost of conversion = $705,000

Total units produced = 7,000 units

Cost per unit of manufacturing will be total of both the costs divided by number of units produced.

Total costs = $800,000 + $705,000 = $1,505,000

Cost per unit = $\frac{1,505,000}{7,000} = 215$

As there was no opening or closing WIP inventory all the costs incurred during the month will be considered.

Unit cost of an assembled radio = $215