Asked by Gabriel Platero on Jul 07, 2024
Verified
If the costs of direct materials, direct labor, and factory overhead were $60,000, $35,000, and $25,000, respectively, for 20,000 equivalent units of production, the conversion cost per equivalent unit was $6.
Conversion Cost
The combined cost of direct labor and manufacturing overheads incurred to convert raw materials into finished goods.
Equivalent Unit
A concept used in cost accounting to denote a partial completion of a product, quantitatively expressed in terms of the full units of output.
- Compute and interpret the conversion cost per equivalent unit.
Verified Answer
YD
Yuliani dwiutamiJul 09, 2024
Final Answer :
False
Explanation :
Conversion cost is calculated by adding direct labor and factory overhead costs. In this case, direct labor is $35,000 and factory overhead is $25,000, making the total conversion cost $60,000. To find the conversion cost per equivalent unit, divide $60,000 by 20,000 equivalent units, which equals $3 per equivalent unit, not $6.
Learning Objectives
- Compute and interpret the conversion cost per equivalent unit.
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