Conan Electronics Corporation manufactures and assembles electronic motor drives for video cameras. The company assembles the motor drives for several accounts. The process consists of a lean cell for each customer. The following information relates to only one customer's lean cell. For the year, planned labor and overhead was $80,000,000 and materials costs were $25 per unit. Planned production included 9,600 hours to produce 76,800 motor drives. Actual production for the month of August was 5,200 units, and motor drives shipped amounted to 5,040 units. From the foregoing information, determine the cell conversion cost rate for applying conversion costs.
A)$8,025 per hour
B)$800 per hour
C)$7,200 per hour
D)$8,333 per hour

Question

Quizplus · Accepted Answer

The cell conversion cost rate is calculated by dividing the planned labor and overhead costs by the planned production hours. Thus, $80,000,000 / 9,600 hours = $8,333.33 per hour, which rounds to $8,333 per hour.

Conan Electronics Corporation Manufactures and Assembles Electronic Motor Drives for Video