Bemidii Company has the following data for one of its production departments:
Theoretical velocity: 400 units per hour
Productive minutes available per year: 5,000,000
Annual conversion costs: $120,000,000
Actual velocity: 240 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. What incentive exists for managers when cycle time costing is used?
3. What if the actual velocity is 300 units per hour? What is the conversion cost per unit? What effect will this improvement have on delivery performance?