The estimated unit costs for a company to produce and sell a product at a level of 13,800 units per month are as follows: Cost Item Estimated Unit Cost Direct material $ 37 Direct labor 27 Variable manufacturing overhead 22 Fixed manufacturing overhead 9 Variable selling expenses 3 Fixed selling expenses 4 What are the estimated conversion costs per unit?

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Business

Ariella Compton

12 December, 17:57

The estimated unit costs for a company to produce and sell a product at a level of 13,800 units per month are as follows: Cost Item Estimated Unit Cost Direct material $ 37 Direct labor 27 Variable manufacturing overhead 22 Fixed manufacturing overhead 9 Variable selling expenses 3 Fixed selling expenses 4 What are the estimated conversion costs per unit?

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Corinne Villanueva · Answer 1

Conversion Cost = $58 per unit

Explanation:

Giving the following information:

Direct labor = 27

Variable manufacturing overhead = 22

Fixed manufacturing overhead = 9

The conversion costs are the sum of direct labor and factory overhead:

CC = direct labor + factory overhead

CC = 27 + (22 + 9) = $58 per unit