TechCom Inc. manufactures laptops. Last month, direct materials (e.g., computer components) costing $600,000 were put into production. Direct labour of $900,000 was incurred, overhead equalled $500,000, and selling and administrative costs totalled $400,000. The company manufactured 10,000 laptops during the month. Assume the company had no beginning or ending work-in-process balances.
-Refer to the Figure.What was the per-unit conversion cost last month?
A)$100.00
B)$140.00
C)$162.50
D)$218.00

Question

Quizplus · Accepted Answer

Per-unit conversion cost includes both direct labour and overhead costs. 
Conversion cost = Direct labour cost + Overhead cost 
Conversion cost = $900,000 + $500,000 = $1,400,000 
Per-unit conversion cost = Total conversion cost / Total units produced 
Per-unit conversion cost = $1,400,000 / 10,000 = $140.00