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

Theoretical velocity: 280 units per hour

Productive minutes available per year: 10,000,000

Annual conversion costs: $50,000,000

Actual velocity: 112 units per hour

Required:

1. Calculate the actual conversion cost per unit using the actual cycle time and the standard cost per minute. Round your actual cycle time answer to three decimal places and your cost per unit answer to the nearest cent.

Actual cycle time		minutes per unit
Standard cost per minute	$	per minute
Conversion cost per unit	$	per unit

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

Theoretical cycle time		minutes per unit
Conversion cost per unit	$	per unit

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

• To reduce cycle time
• To increase cycle time
• To keep cycle time constant

3. What if the actual velocity is 126 units per hour? What is the conversion cost per unit? If required, round your intermediate calculations and final answers to two decimal places.

Actual cycle time		minutes per unit
Conversion cost per unit	$	per unit

Answer rating: 100% (QA)

Answer 1 Actual conversion cost per unit Conversion cost per machine is found out by multiplying the ... View the full answer