Last year, Buckner and Jones Company incurred the following costs: Direct material $42,000 Direct labor 63,000 Manufacturing overhead 94,500 Selling expenses 25,200 Administrative expenses 23,100 Buckner & Jones produced and sold 2,060 units at a sales price of $131.25 each. Assume that beginning and ending inventories of materials, work in process, and finished goods were zero. What was the conversion cost per unit? (Note: Round answer to two decimal places.) a. $50.55 b. $76.46 c. $95.00 d. $125.65

Question

Business

Savannah Villa

8 August, 17:04

Last year, Buckner and Jones Company incurred the following costs: Direct material $42,000 Direct labor 63,000 Manufacturing overhead 94,500 Selling expenses 25,200 Administrative expenses 23,100 Buckner & Jones produced and sold 2,060 units at a sales price of $131.25 each. Assume that beginning and ending inventories of materials, work in process, and finished goods were zero. What was the conversion cost per unit? (Note: Round answer to two decimal places.) a. $50.55 b. $76.46 c. $95.00 d. $125.65

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Darrell Hanna · Answer 1

The answer is: B) $76.46

Explanation:

Conversion costs are those incurred when turning raw materials into finished products. To get the conversion cost of a product you must add direct labor and manufacturing costs, we can use the following formula:

Conversion Costs = Direct Labor + Manufacturing Overheads

Conversion Costs = $63,000 + $94,500 = $157,500

Then we divide the total conversion costs by the total amount of units manufactures:

Conversion cost per unit = $157,000 / 2,060 units = $76.46 per unit