Asked by Jakayla Richburg on Apr 30, 2024
Verified
If the costs for direct labour, factory overhead and direct material were $873,600,
$109,200 and $53,200 respectively for 28,000 equivalent units of production, the conversion cost per equivalent unit was $35.10.
Conversion Cost
The combined cost of direct labour and manufacturing overhead required to convert raw materials into finished goods.
Direct Labour
Employees who play a fundamental role in the assembly or creation of a company's products, contributing directly to the output.
Factory Overhead
Costs related to operating a manufacturing facility not directly tied to a specific product, including maintenance, utilities, and equipment depreciation.
- Comprehend the theory and computation of conversion expenses per equivalent unit.
Verified Answer
Conversion cost per equivalent unit = ($873,600 + $109,200) / 28,000
Conversion cost per equivalent unit = $982,800 / 28,000
Conversion cost per equivalent unit = $35.10
Learning Objectives
- Comprehend the theory and computation of conversion expenses per equivalent unit.
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