Asked by Kristine Mae Almodiel on Jun 11, 2024
Verified
Madison Industries has equivalent units of 8000 for materials and for conversion costs. Total manufacturing costs are $200000. Total materials costs are $150000. How much is the conversion cost per unit?
A) $2.50.
B) $6.25.
C) $25.00.
D) $5.00.
Conversion Cost
The sum of labor costs and overhead expenses involved in converting raw materials into finished goods, essential for cost-accounting in manufacturing.
Total Manufacturing Costs
The sum of all costs directly or indirectly involved in producing goods, including raw materials, labor, and overhead expenses.
- Comprehend the methodology for computing total manufacturing expenses and the cost for each unit.
Verified Answer
DL
Dipak LairenmayumJun 13, 2024
Final Answer :
B
Explanation :
Conversion costs are calculated by subtracting the total materials costs from the total manufacturing costs ($200,000 - $150,000 = $50,000). Then, to find the conversion cost per unit, divide the total conversion costs by the equivalent units for conversion costs ($50,000 / 8,000 units = $6.25).
Learning Objectives
- Comprehend the methodology for computing total manufacturing expenses and the cost for each unit.
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