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UMB Tech, Inc., is a manufacturer of smart phone. It has two departments: assembly and...

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Accounting

UMB Tech, Inc., is a manufacturer of smart phone. It has two departments: assembly and testing. In January 2020, the company incurred $750,000 on direct materials and $798,000 on conversion costs, for a total manufacturing cost of $1,548,000.

a. Assume there was no beginning inventory of any kind on January 1, 2020. During January, 10,000 smart phones were placed into production and all 10,000 were fully completed at the end of the month. What is the unit cost of an assembled smart phone in January?

b. Assume that, during February 2020, 10, 000 smart phones are placed into production. Further assume the same total assembly costs for January are also incurred in February, but only 9,000 smart phones are fully completed at the end of the month. All direct materials have been added to the remaining 1,000 smart phones. However, on average, these remaining 1,000 smart phones are only 25% complete as to conversion costs.

(a) What are the equivalent units for direct materials and conversion costs and their respective costs per equivalent unit for February 2020?

(b) What is the unit cost of an assembled smart phone in February 2020?

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