a. Suppose the marketing manager's suggestion is followed. What will be the unit cost of a bike produced in November? Coastal Cycles makes three models of electric bicycles: E20, E35, and E60. The models differ by the stze of the battery and the qualityof the components. The bicycles are produced in two departments. The Assembly Department purchases components from vendorsand assembles them Into blcycles. The models E20 and E35 are complete and ready for sale after completing the assembly process.The model E60 undergoes further process in Customization Department, which is actually just a small area in the same bullding as theAssembly Department.Conversion costs in both the Assembly Department and Customization Department are based on the number of units produced. Thereare never any work-in-process inventories. Data for production in November are shown in the following table.Total7,000220E35260Unite produced3,000$4,350,0002,500$2,375,0001,500Materials costConversion costsAssemblyCustomization$11,075,000$4,350,0009,967,5001,522,500Total conversion costs $11,490,000The marketing menager cannot beleve that the Controller wants to treat all bicycles the same. He says that in order to understandwhere to target marketing resources, he needs to understand the profitability (and therefore the costs) of the individual models. Hesuggests treating the individual models as "jobs" using job costing to calculate the costs of the individual models. He also suggested,based on what he remembered from his cost accounting course, that the conversion costs should be applied to the jobs based ondirect material costs.Required:a. Suppose the marketing manager's suggestion is followed. What will be the unit cost of a bike produced in November?Unit CostE20E35E60333

Given information: Model E20 and E35 are complete and ready for sale after the Assembly process.…

Coastal Cycles makes three models of electric bicycles: E20, E35, and E60. The models differ by the stze of the battery and the quality of the components. The bicycles are produced in two departments. The Assembly Department purchases components from vendors and assembles them into bicycles. The models E20 and E35 are complete and ready for sale after completing the assembly process The model E6O undergoes further process in Customization Department, which is actually just a small area in the same bullding as the Assembly Department. Conversion costs in both the Assembly Department and Customization Department are based on the number of units produced. There are never any work-in-process inventories. Data for production in November are shown in the following table. Total 120 3,000 $4.350.000 Unite produced 2,500 7,000 $11,075,000 1,500 $4.350,000 Materials cost Conversion costs Assenbly Custonization $2,375,000 9.967,500 1,522,500 Total conversion costs 11,490,000 The marketing manager cannot believe that the Controller wants to treat all bicycles the same. He says that in order to understand where to target marketing resources, he needs to understand the profitability (and therefore the costs) of the individual models. He suggests treating the individual models as "jobs" using job costing to calculate the costs of the individual models. He also suggested, based on what he remembered from his cost accounting course, that the conversion costs should be applied to the jobs based on direct material costs. Required: a. Suppose the marketing manager's suggestion is followed. What will be the unit cost of a bike produced in November?

15th Edition

ISBN:9781337912020

Author:Carl Warren, Ph.d. Cma William B. Tayler

Publisher:Carl Warren, Ph.d. Cma William B. Tayler

Chapter5: Support Department And Joint Cost Allocation

Section: Chapter Questions

Problem 4BE: Blakes Blacksmith Co. produces two types of shotguns, a 12-gauge and 20-gauge. The shotguns are made...