At the beginning of 2018, Haroldson Company installed a JIT purchasing and manufacturing system. The following information has been gathered about one of the company's products. $$\begin{array} { l l }
\text { Theoretical annual capacity } & 9,000 \
\text { Actual production } & 3,600 \
\text { Production hours avail able } & 3,000 \
\text { Actual cost per unit } & \$ 33
\end{array}$$ What is the ideal conversion cost per unit?
A)$39.60 per unit.
B)$16.50 per unit.
C)$99 per unit
D)$11 per unit.

Question

At the beginning of 2018, Haroldson Company installed a JIT purchasing and manufacturing system. The following information has been gathered about one of the company's products. $$\begin{array} { l l } 
\text { Theoretical annual capacity } & 9,000 \
\text { Actual production } & 3,600 \
\text { Production hours avail able } & 3,000 \
\text { Actual cost per unit } & \$ 33
\end{array}$$ What is the ideal conversion cost per unit?
A)$39.60 per unit.
B)$16.50 per unit.
C)$99 per unit
D)$11 per unit.

Quizplus · Accepted Answer

The ideal conversion cost per unit is calculated based on the theoretical annual capacity. Given the theoretical annual capacity is 9,000 units and the production hours available are 3,000, the ideal conversion cost per unit would be the cost spread over the maximum number of units that could be produced in those hours. Since no specific costs are provided to calculate this from, and the actual cost per unit is given as $33 (which is not directly relevant to the ideal conversion cost calculation without further context), the question seems to lack sufficient data for a standard calculation. However, assuming the question intends for a calculation based on provided numbers without additional costs, none of the calculations directly lead to the answers provided without further context. The correct answer choice, D, suggests a misunderstanding or a typo in the question as it stands.

At the Beginning of 2018, Haroldson Company Installed a JIT