Madison Industries has equivalent units of 4,000 for materials and for conversion costs. Total manufacturing costs are $160,000. Total materials costs are $120,000. How much is the conversion cost per unit?

Question

Quizplus · Accepted Answer

Conversion costs = Total manufacturing costs - Total materials costs
Conversion costs = $160,000 - $120,000
Conversion costs = $40,000
Conversion cost per unit = Conversion costs / Equivalent units of conversion
Conversion cost per unit = $40,000 / 4,000 units
Conversion cost per unit = $10 per unit.

Madison Industries Has Equivalent Units of 4,000 for Materials and for Conversion