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Calculate the ideal conversion cost per unit

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Reference no: EM132052546

Question - Cycle Time and Velocity

Norton Company has the following data for one of its production departments:

Theoretical velocity: 590 units per hour

Productive minutes available per year: 51,000,000

Annual conversion costs: $306,000,000

Actual velocity: 236 units per hour

Required:

1. Calculate the actual conversion cost per unit using actual cycle time and the standard cost per minute

2. Calculate the ideal conversion cost per unit using theoretical cycle time and the standard cost per minute. If required, round your answers to two decimal places.

What incentive exists for managers when cycle time costing is used?

3. What if the actual velocity is 472 units per hour? What is the conversion cost per unit? If required, round your calculations and final answers to two decimal places.

Reference no: EM132052546

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