Larned Recreational builds two models of dune buggies: Sport and Custom. Both models require the same assembly and finishing process and are assembled in the same factory. They differ in the quality and detail of the materials. The following data reflect expected operations for the upcoming year.   Sport Custom Total Number of units 3,200 1,800 5,000 Direct materials cost per unit $ 400 $ 1,100   Conversion costs:       Direct labor     $ 1,832,000 Overhead     2,608,000 Total     $ 4,440,000 Required:

FINANCIAL ACCOUNTING
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ISBN:9781259964947
Author:Libby
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Chapter1: Financial Statements And Business Decisions
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Larned Recreational builds two models of dune buggies: Sport and Custom. Both models require the same assembly and finishing process and are assembled in the same factory. They differ in the quality and detail of the materials. The following data reflect expected operations for the upcoming year.

  Sport Custom Total
Number of units 3,200 1,800 5,000
Direct materials cost per unit $ 400 $ 1,100  
Conversion costs:      
Direct labor     $ 1,832,000
Overhead     2,608,000
Total     $ 4,440,000

Required:

  1. Larned Recreation uses operations costing and assigns conversion costs based on the number of units assembled. Compute the cost per unit of the Sport and Custom models for the upcoming year.

  2. The financial team at Larned suggests that a two-stage system be used to compute the product cost of the two models. Their recommendation is to assign direct labor cost based on the number of units and overhead cost based on direct materials cost. Compute the cost per unit of the Sport and Custom models for the upcoming year using the team's recommendation.

     

Required A Required B
Larned Recreation uses operations costing and assigns conversion costs based on the number of units assembled. Compute
the cost per unit of the Sport and Custom models for the upcoming year.
Sport
Conversion cost
Material cost
Total cost
Unit cost
Custom
< Required A
Total
Required B
>
Transcribed Image Text:Required A Required B Larned Recreation uses operations costing and assigns conversion costs based on the number of units assembled. Compute the cost per unit of the Sport and Custom models for the upcoming year. Sport Conversion cost Material cost Total cost Unit cost Custom < Required A Total Required B >
Required A Required B
The financial team at Larned suggests that a two-stage system be used to compute the product cost of the two models. Their
recommendation is to assign direct labor cost based on the number of units and overhead cost based on direct materials cost.
Compute the cost per unit of the Sport and Custom models for the upcoming year using the team's recommendation.
Note: Do not round intermediate calculations. Round "Unit cost" to 2 decimal places.
Conversion cost
Direct labor
Overhead
Material cost
Total cost
Unit cost
Sport
Custom
< Required A
Total
Required B >
Show less ▲
Transcribed Image Text:Required A Required B The financial team at Larned suggests that a two-stage system be used to compute the product cost of the two models. Their recommendation is to assign direct labor cost based on the number of units and overhead cost based on direct materials cost. Compute the cost per unit of the Sport and Custom models for the upcoming year using the team's recommendation. Note: Do not round intermediate calculations. Round "Unit cost" to 2 decimal places. Conversion cost Direct labor Overhead Material cost Total cost Unit cost Sport Custom < Required A Total Required B > Show less ▲
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