Refer to the data in Exercise 8-48. The plant controller believes that keeping track of the three

Question:

Refer to the data in Exercise 8-48. The plant controller believes that keeping track of the three models and separating costs in the Assembly and Customization Departments is not worth the time and effort. She suggests not distinguishing between the three bike models, treating Assembly and Customization as a single department, and using process costing to develop product costs for the three bikes.

Required
a. Suppose the controller’s suggestion is followed. What will be the unit cost of a bike produced in November?
b. Would you recommend adopting the controller’s suggestion? Explain.

Exercise 8-48

Total E20 E35 E60 Units produced 7,000 3,000 2,500 1,500 Materials cost $4,900,000 $1,500,000$1,900,000$1,500,000 Conversion costs Assembly 4,410,000 Customization 525,000 Total conversion $4,935,000 costs