For the month of September, Florida, Inc., incurs a direct materials cost of $12,000 for 7,500 gallons of strawberry lemonade produced in its Mixing Department. It also incurs conversion costs of $6,000 with 80% completed. If the conversion cost per equivalent unit was $1.15 per gallon in August, what is the difference in the conversion cost per equivalent unit between the two months

Florida, Inc.

The difference in the conversion cost per equivalent unit between the two months is:

= $0.15.

Explanation:

a) Data and Calculations:

Direct materials cost = $12,000

Production units (gallons of strawberry lemonade) = 7,500

Conversion costs = $6,000

Degree of completion of conversion = 80%

Equivalent units of conversion = 6,000 (7,500 * 80%)

Therefore, the conversion cost per equivalent unit = $1.00 ($6,000/6,000)

The difference in the conversion cost per equivalent unit between the two months is $0.15 ($1.15 - $1.00)