Figure 2-8.Last year Quest Company incurred the following costs:
Quest produced and sold 2,000 units at a sales price of $125 each. Assume that beginning and ending inventories of materials, work in process, and finished goods were zero.
-Refer to Figure 2-8. Conversion cost per unit was?
A) $50
B) $75
C) $95
D) $125

Question

Figure 2-8.Last year Quest Company incurred the following costs:
  Quest produced and sold 2,000 units at a sales price of $125 each. Assume that beginning and ending inventories of materials, work in process, and finished goods were zero.
-Refer to Figure 2-8. Conversion cost per unit was?
A) $50 
B) $75 
C) $95 
D) $125

Quizplus · Accepted Answer

Conversion cost per unit is the total manufacturing overhead cost divided by the number of units produced. 
Total manufacturing overhead cost = direct labor cost + manufacturing overhead cost 
= $100,000 + $50,000 
= $150,000 
Number of units produced = 2,000 
Conversion cost per unit = $150,000 ÷ 2,000 
= $75. Therefore, the answer is B.