Asked by Christyon Pulley on May 04, 2024
Verified
If the costs for direct materials, direct labor, and factory overhead were $522,200, $82,700, and $45,300, respectively, for 16,000 equivalent units of production, the conversion cost per equivalent unit was $8.00.
Conversion Cost
The combined costs of direct labor and overhead expenses incurred to convert raw materials into finished products.
Equivalent Unit
A measure used in cost accounting to express the amount of work done on partially completed goods in terms of fully completed units.
Factory Overhead
Indirect manufacturing costs that are not tied directly to specific units of product, such as maintenance, utilities, and rent of a factory.
- Develop skills in determining conversion costs and acknowledge their impact on the costing of products.
Verified Answer
Conversion cost per equivalent unit = ($82,700 + $45,300) / 16,000
Conversion cost per equivalent unit = $128,000 / 16,000
Conversion cost per equivalent unit = $8.00
Learning Objectives
- Develop skills in determining conversion costs and acknowledge their impact on the costing of products.
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