At the beginning of 2011, Peters Company installed a JIT purchasing and manufacturing system.The following information has been gathered about one of the company's products:
- What is the ideal conversion cost per unit?
A) $0.9 per unit.
B) $1.75 per unit.
C) $25.50 per unit.
D) $28 per unit.

Question

At the beginning of 2011, Peters Company installed a JIT purchasing and manufacturing system.The following information has been gathered about one of the company's products: 
- What is the ideal conversion cost per unit?
A) $0.9 per unit. 
B) $1.75 per unit. 
C) $25.50 per unit. 
D) $28 per unit.

Quizplus · Accepted Answer

To find the ideal conversion cost per unit, we need to add the direct labor cost and manufacturing overhead cost per unit. From the information given, we know that the direct labor cost per unit is $0.50 and the manufacturing overhead cost per unit is $1.25. Therefore, the ideal conversion cost per unit is $0.50 + $1.25 = $1.75. Therefore, the best choice is B.

At the Beginning of 2011, Peters Company Installed a JIT