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 0.
$$\begin{array} { l r }
\text { Direct materials } & \$ 40,000 \
\text { Direct labour } & 60,000 \
\text { Overhead } & 90,000 \
\text { Selling expenses } & 24,000 \
\text { Administrative expenses } & 22,000
\end{array}$$
-Refer to the Figure.What was the conversion cost per unit?
A)$50
B)$75
C)$95
D)$125

Question

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 0.
 $$\begin{array} { l r } 
\text { Direct materials } & \$ 40,000 \
\text { Direct labour } & 60,000 \
\text { Overhead } & 90,000 \
\text { Selling expenses } & 24,000 \
\text { Administrative expenses } & 22,000
\end{array}$$
-Refer to the Figure.What was the conversion cost per unit?
A)$50
B)$75
C)$95
D)$125

Quizplus · Accepted Answer

Conversion costs are the sum of direct labor and manufacturing overhead costs. For Quest Company, these are $60,000 (direct labor) + $90,000 (overhead) = $150,000 total conversion costs. Divided by 2,000 units produced, the conversion cost per unit is $75.

Last Year Quest Company Incurred the Following Costs: Quest Produced

Last Year Quest Company Incurred the Following Costs:
Quest Produced