Question

Last year, Barnard Company incurred the following costs: Direct materials $ 50,000 Direct labor 20,000 Manufacturing overhead 130,000 Selling expense 40,000 Administrative expense 36,000 Barnard produced and sold 10,000 units at a price of $31 each. Refer to the information for Barnard Company above. Conversion cost per unit is a. $7.00. b. $20.00. c. $15.00. d. $5.00. e. $27.60.

Answer 1

Answer:

Conversion cost per unit is b. $20.00

Explanation:

Conversion cost It is the cost of producing each unit, it corresponds to the direct materials used and the direct labor is for this reason that we do not consider neither the selling expenses nor the administrative expenses.

In this case:

Direct materials                $50,000

Direct labor                       $20,000

Manufacturing overhead $130,000

Conversion cost per unit = ($50,000 + $20,000  + $130,000 )/ 10,000 units=

Conversion cost per unit = $200,000 /  10,000 units = $20.00

Answer 2

Conversion cost per unit is b. $20.00

Calculation of the conversion cost per unit:

Since

Direct materials                $50,000

Direct labor                      $20,000

Manufacturing overhead $130,000

So,

Conversion cost per unit = ($50,000 + $20,000  + $130,000 ) ÷ 10,000 units

= $200,000 ÷  10,000 units

= $20.00

Hence, the conversion cost per unit is $20.00

Therefore, the correct option is b.

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