Question

Fortner Company has no beginning work in process: 9,000 units are transferred out and 3.000 units in ending work in process are two-thirds finished as to conversion costs and full complete as to materials cost. If total materials cost is $60,000, the unit conversion cost cost is:

Option 1: Cannot be determined
Option 2: $6.67
Option 3: $60.00
Option 4: $30.00

Answer 1

The unit conversion cost for Fortner Company cannot be determined from the information provided as the total conversion costs are not given, only the material costs are known.

Step-by-step explanation:

The question pertains to calculating unit conversion costs in a production process when given the total material costs and information on work in process. With a total materials cost of $60,000 for the units transferred out and information that the ending work in process units are two-thirds complete for conversion costs and fully complete for material costs, we need to determine the cost per unit for conversion costs.

Firstly, we calculate the total units accounted for, which includes both completed units (transferred out) and work in process units. This is 9,000 transferred out units plus 3,000 work in process units, totaling 12,000 units. Since the materials are fully complete for all units, the materials cost per unit is $60,000 divided by 12,000 units, which equals $5 per unit. The question, however, is focused on the conversion costs per unit.

Since we are not provided the total conversion costs and cannot determine the costs associated with labor and machines (or other conversion costs), we cannot calculate the exact unit conversion cost. Therefore, the correct answer to the student's question is Option 1: Cannot be determined.