Gilmore Company manufactures tape dispensers.The Assembly Department reported the follow data for the past month: The partially complete units at the end of the month were 100 percent complete with respect to materials and 40 percent complete with respect to conversion costs.The unit cost of conversion costs is ________.

Question

Gilmore Company manufactures tape dispensers.The Assembly Department reported the follow data for the past month:   The partially complete units at the end of the month were 100 percent complete with respect to materials and 40 percent complete with respect to conversion costs.The unit cost of conversion costs is ________.

Quizplus · Accepted Answer

To calculate the unit cost of conversion costs, we need to use the following formula:
Unit Cost of Conversion Costs = (Total Conversion Costs)/(Equivalent Units of Production for Conversion Costs)
Total Conversion Costs = $30,000
Equivalent Units of Production for Conversion Costs = (Units transferred out) + (Units in Ending Work in Process Inventory x Percentage Complete for Conversion Costs)
Units transferred out = 8,000
Units in Ending Work in Process Inventory = 1,000
Percentage Complete for Conversion Costs = 40%
Equivalent Units of Production for Conversion Costs = (8,000) + (1,000 x 40%) = 8,400
Unit Cost of Conversion Costs = $30,000/8,400 = $3.57
Therefore, the closest choice to the calculated answer is B) $3.24.

Gilmore Company Manufactures Tape Dispensers