Question

Physical units accounted for are 155000. Total conversion costs are $413370. There are 3800 units in ending inventory which are 50% complete as to conversion costs. How much is the conversion cost per unit

Answer 1

The conversion cost per unit of the inventory comes out to be $2.63.

What is a conversion cost?

A conversion cost is computed by adding the production overheads to the direct labor in the production process.

Given values:

Physical units: 155,000

Conversion cost: $413,370

Units in ending inventory: 1900 (3,800 X 50%)

Computation of conversion cost per unit:

$\rm\ Conversion \rm\ cost \rm\ per \rm\ unit=\frac{\rm\ Conversion \rm\ cost}{\rm\ Physical \rm\ units + \rm\ Units \rm\ in \rm\ ending \rm\ inventory} \\\rm\ Conversion \rm\ cost \rm\ per \rm\ unit=\frac{\ 413,370}{\ 155,000 + \ 1,900} \\\rm\ Conversion \rm\ cost \rm\ per \rm\ unit=\ 2.63$

Therefore, $2.63 is the conversion cost per unit on the inventory.

Learn more about the conversion cost in the related link:

https://brainly.com/question/17061981

#SPJ1