If the costs of direct materials, direct labor, and factory overhead were $60,000, $35,000, and $25,000, respectively, for 20,000 equivalent units of production, the conversion cost per equivalent unit was $6.

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Quizplus · Accepted Answer

Conversion cost is calculated by adding direct labor and factory overhead costs. In this case, direct labor is $35,000 and factory overhead is $25,000, making the total conversion cost $60,000. To find the conversion cost per equivalent unit, divide $60,000 by 20,000 equivalent units, which equals $3 per equivalent unit, not $6.

If the Costs of Direct Materials, Direct Labor, and Factory