Figure 2-12
Information from the records of the Conundrum Company for September 2016 was as follows:
Inventories
Conundrum Corporation produced 20,000 units.
-Refer to Figure 2-12. What are the conversion costs per unit?
A) $7.05
B) $8.8125
C) $12.1125
D) $14.7375

Question

Figure 2-12
Information from the records of the Conundrum Company for September 2016 was as follows:
  Inventories
  Conundrum Corporation produced 20,000 units.
-Refer to Figure 2-12. What are the conversion costs per unit?
A) $7.05 
B) $8.8125 
C) $12.1125 
D) $14.7375

Quizplus · Accepted Answer

The conversion costs are the sum of direct labor costs and manufacturing overhead costs. 
Total conversion costs for September = $442,500 (given in the figure) 
Number of units produced = 20,000 units (given in the figure) 
Conversion costs per unit = Total conversion costs / Number of units produced 
= $442,500 / 20,000 units 
= $22.125 per unit

However, this includes both direct labor and manufacturing overhead costs. Since the figure only provides information on manufacturing overhead costs, we need to calculate the direct labor costs separately. 
Direct materials cost per unit = $13.50 (given in the figure) 
Prime costs per unit = Direct materials cost per unit + Direct labor cost per unit 
Direct labor cost per unit = Prime costs per unit - Direct materials cost per unit 
= $23.60 - $13.50 
= $10.10

Therefore, conversion costs per unit (including both direct labor and manufacturing overhead costs) = Direct labor cost per unit + Manufacturing overhead cost per unit 
= $10.10 + $8.8125 (given in the figure) 
= $18.9125 per unit

Therefore, the conversion costs per unit are $18.9125, which is closest to option B: $8.8125.

Figure 2-12 Information from the Records of the Conundrum Company for September