Norton Company has the following data for one of its production departments: Theoretical velocity: 420 units per hour Productive minutes available per year: 77,000,000 Annual conversion costs: $616,000,000 Actual velocity: 210 units per hour
Variance Analysis
In layman's terms, variance analysis is an analysis of a difference between planned and actual behavior. Variance analysis is mainly used by the companies to maintain a control over a business. After analyzing differences, companies find the reasons for the variance so that the necessary steps should be taken to correct that variance.
Standard Costing
The standard cost system is the expected cost per unit product manufactured and it helps in estimating the deviations and controlling them as well as fixing the selling price of the product. For example, it helps to plan the cost for the coming year on the various expenses.
Norton Company has the following data for one of its production departments:
| Theoretical velocity: 420 units per hour |
| Productive minutes available per year: 77,000,000 |
| Annual conversion costs: $616,000,000 |
| Actual velocity: 210 units per hour |
Required:
1. Calculate the actual conversion cost per unit using 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 | fill in the blank | minutes per unit |
| Standard cost per minute | $fill in the blank | per minute |
| Conversion cost per unit | $fill in the blank | per unit |
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