Final answer:
The unit cost for Oriole Furniture Company is calculated by dividing the total manufacturing costs by the number of units finished and transferred out, and equivalent units for those in progress. The total unit cost comes out to be $6.40 per unit.
Step-by-step explanation:
To calculate the unit costs for Oriole Furniture Company, we need to account for all the production units and the manufacturing costs. In January 2022, the assembly department finished and transferred out 19,400 units and started another 5,500 units, which are 100% complete for materials and 50% complete for conversion costs.
Firstly, we address the equivalent units for conversion costs for the 5,500 units in process. As they are only 50% complete, this gives us 2,750 equivalent units for conversion costs. When we add these to the 19,400 units finished, we get a total of 22,150 units for conversion costs. Following this, the total manufacturing costs for materials, labor, and overhead are added together: $64,740 + $40,650 + $43,520 = $148,910.
To find the unit cost for materials, since they are 100% complete even for the units in process, we divide the total materials cost by the total number of units (19,400 units finished + 5,500 units started = 24,900 units). For labor and overhead conversion costs, we divide by the equivalent units for conversion costs (22,150 units).
Unit cost for materials = $64,740 / 24,900 units = $2.60 per unit.
Unit cost for conversion costs (labor and overhead) = $84,170 (total of labor + overhead costs) / 22,150 units = $3.80 per unit.
The total unit cost, therefore, is the sum of the unit cost for materials and conversion costs: $2.60 + $3.80 = $6.40 per unit.