PRC-1 · Chapter 7 · Question 9 of 100
A company has the following production data: Variable production overheads Rs. 350,000; Fixed production overheads Rs. 525,000; Normal production capacity 17,500 units; Actual production 12,500 units. What is the conversion cost per unit?
Test yourself: pick an answer
Reveal answer & explanation
Correct answer: C) Rs. 58
Explanation
Variable overheads are allocated based on actual production: 350,000 / 12,500 = Rs. 28/unit. Fixed overheads are allocated based on normal capacity: 525,000 / 17,500 = Rs. 30/unit. Total conversion cost per unit = 28 + 30 = Rs. 58.
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