Production costs chargeable to the Finishing Department in June in Hollins Company are materials $12,000, labor $29,500, and, and overhead $18,000. Equivalent units of production are materials 20,000 and conversion costs 19,000. Compute the unit costs for materials and conversion costs.

Unit cost of material = $0.6

Unit cost of Conversion  = $2.5

Explanation:

The question requires the computation of Cost of materials and Conversion Costs for the month of June in Hollins Company

Step 1: First important information,

Equivalent units for material is 20,000 and the conversion cost is 19,000

As such we answer as follows:

Material                                                   $12,000

Conversion:

Labour Cost                          $29,500

Overhead Cost                      $18,000    $47,500

Step 2: We determine the Equivalent cost per unit for both material and Conversion costs

Material:

Net cost                                               $12,000

Equivalent Units of Production        20,000

The Equivalent unit cost per unit = $12,000/ 20,000 = $0.6

Conversion:

Net cost                                               $47,500

Equivalent Units of Production        19,000

The Equivalent unit cost per unit = $47,500/ 19,000= $2.5