Orville Knitters manufactures sweaters and uses an operation-costing system. All sweaters are
processed through Department no. 1, with subsequent processing taking place in Department no.
2 or Department no. 3 depending on the type of fabric used. Twenty thousand sweaters were
produced during the year; there was no beginning or ending work in process. Sixty percent of the
goods were sent to Department no. 2 for manufacturing.
Conversion cost incurred in the three departments totaled $504,000, subdivided as follows:
Department no. 1, $360,000; department no. 2, $60,000; and department no. 3, $84,000. Data pertaining to two representative orders, nos. 545 and 567, were: No.545 No. 567
Direct materials $112,000 $94,000
Number of sweaters 800 1,300
Subsequent processing department No. 3 No. 2 Required: A. Determine the cost of order nos. 545 and 567 | 