Question

Lawernce company added total manufacturing costs in January of $260,000 for 15,000 units of its product. These costs included $85,000 in direct materials used and $75,000 direct labor costs incurred. With respect to the manufacturing costs that were added in January, conversion costs per unit produced were (rounded to the nearest penny).

Answer 1

Conversion costs per unit for Lawrence Company, which only consider direct labor costs in this scenario, can be calculated by dividing the total direct labor costs of $75,000 by the number of units produced (15,000), resulting in a conversion cost of $5.00 per unit.

Step-by-step explanation:

To calculate the conversion costs per unit produced for Lawrence Company, we first need to understand that conversion costs consist of direct labor and manufacturing overheads. Since we only have the direct labor costs, we will proceed with this information. The given direct labor cost is $75,000.

Conversion costs per unit can be calculated by taking the total conversion costs and dividing them by the number of units produced. In this case:

• Total conversion costs = Direct Labor Costs
• Number of units produced = 15,000 units

Therefore, the conversion cost per unit is calculated as follows:

Conversion cost per unit = Total Direct Labor Costs / Number of units produced

Conversion cost per unit = $75,000 / 15,000 units

Conversion cost per unit = $5.00 per unit

This figure represents the direct labor cost component of the conversion costs per unit produced by the company in January.