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Katena32 [7]
2 years ago
5

Whitney Company had no units in process at the beginning of the month. During the month 8,000 new units were started, 6,000 of t

hese were completed but 2,000 were still in process at the end of the month. The units still in process were 100% complete as to materials but only 30% complete as to conversion costs. The cost of materials used in production during the month was $20,800 and the costs of labor and overhead were $30,360. If Whitney Company uses process costing, the total cost of making a unit of product during this month rounded to the nearest cent is:
Business
1 answer:
shusha [124]2 years ago
4 0

Answer:

$7.20

Explanation:

                        Units  % Mat.  EUP- Mat.  % Conv.   EUP- Conv.

Units completed &               6000    100%     6000         100%        6000

transferred out

Units in ending inventory    2000    100%     2000         30%          600

Equivalent units of production                     8000                           6600

Cost per Equivalent Unit of Production      

                                                         Materials    Conversion      Total

Beginning costs             -                       -                 -

During the month costs                   <u>$20,800 </u>       <u>$30,360</u>

Total cost                                          $20,800        $30,360

÷ Equivalent units of production     <u>  8.000</u>          <u>   6,600</u>

Cost per equivalent unit                 $2.60             $4.60           $7.20

of production

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If labor costs are 60 percent of production costs, then a 15 percent increase in wage rates would increase production costs by <u>9 percent.</u>

<h3>What are labor costs?</h3>
  • The total of all employee wages, employee benefits, and payroll taxes paid by an employer constitutes the labor costs. Direct and indirect (overhead) labor costs are separated.
  • While indirect costs are related to labor costs, such as personnel who maintain industrial equipment, direct costs include wages for the employees who make a product, including those on an assembly line.
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Mr. Manning is looking to invest in a one-year stock option and has four possible options. The four options have various rates o
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a. YHA is the best expected value decision with an expected value of $59,766.

b. HTC is the worst expected value decision.

Explanation:

a) Data and Calculations:

Stock    Market Rising    Market Stable    Market Falling

SUA          $68,082              $47,373              $36,362

YSP           $64,850             $49,320              $44,865

HTC           $57,198             $52,949              $50,605

YHA          $59,766             $59,766              $59,766

Expected Value:

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Probability    60%                   30%                   10%

SUA          $68,082*60%   $47,373*30%    $36,362*10%     =  $58,697

YSP          $64,850*60%   $49,320*30%    $44,865*10%     =     58,163

HTC          $57,198*60%   $52,949*30%    $50,605*10%     =   55,264

YHA         $59,766*60%   $59,766*30%    $59,766*10%     =   59,766

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HTC = $34,318.80 + $15,884.70 + $5,060.50 = $55,264

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