Howrley-David, Inc., manufactures two models of motorcycles: the Fatboy and the Screamer. Both models are assembled in the same plant and require the same assembling operations. The difference between the models is the cost of materials. The following data are available for August: Fatboy Screamer Total Number of units assembled 990 1,980 2,970 Materials cost per unit $ 2,600 $ 3,600 Other costs: Direct labor $ 3,207,600 Indirect materials 534,600 Other overhead 1,603,800 Required: Howrley-David uses operations costing and assigns conversion costs based on the number of units assembled. Compute the cost of each model assembled in August.

Cost per Unit  Fatboy= $  27800

Screamer Cost per unit =  $3779.80  

Explanation:

Howrley-David, Inc.

                                        Fatboy             Screamer           Total

Units Assembled               990                 1,980                  2,970

Materials cost per unit      $ 2,600        $ 3,600

Material Costs                   2574000         7128000  

Other costs:

Direct labor                          $1069200       2138400      $ 3,207,600

Indirect materials                                                                 534, 600

Other overhead                                                                    1,603,800

FoH                                     712800           1425600           2138400

Total Costs                          2752,2000    7484000

No of units                             990                1980

Cost per Unit                       27800              3779.80  

The total costs have been added and then divided with the number of units to get the cost per unit.

Direct Labor Costs  =Total Direct Labor Costs/ Total number of units* required number of units

DLC for Fatboy= $ 3,207,600 /2970 *990= $1069200

DLC for Screamer= $ 3,207,600 /2970 *1980= 2138400

FActory Overheads = Total Factory Costs/ Total Units ( Required Units)

FOH for Fatboy=  534, 600 +1,603,800/2970 * 990= 712800

FOH for Screamer = 534, 600 +1,603,800/2970 * 1980=  1425600

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