Rancor Inc. had a per-unit conversion cost of $2.50 during April and incurred direct materials cost of $100,000, direct labor costs of $75,000, and overhead costs of $45,000 during the month. How many units did they manufacture during the month?
A) 70,000
B) 18,000
C) 48,000
D) 30,000

Question

Quizplus · Accepted Answer

To calculate the number of units manufactured during the month, we need to use the following formula:

Total manufacturing cost / Per-unit conversion cost

Total manufacturing cost = direct materials cost + direct labor cost + overhead cost 
Total manufacturing cost = $100,000 + $75,000 + $45,000 
Total manufacturing cost = $220,000

Per-unit conversion cost = $2.50

Number of units manufactured = $220,000 / $2.50 = 88,000 units

Therefore, the correct answer is C) 48,000.