Outrageous Cups Corp Casts Are Produced in the Molding Department

Outrageous Cups Corp. manufactures cups. The company's manufacturing operations and costs applied to products for April were: $$\begin{array}{l}\begin{array} { l r r r } & \text { Molding } & \text { Heat-treat } & \text { Finishing } \\\text { Direct labor } & \$ 25,000 & \$ 12,500 & \$ 7,500 \\\text { Factory overhead } & 30,000 & 17,500 & 12,600 \\\text { Total } & \$ 55,000 & \$ 30,000 & \$ 20,100\end{array}\\\text { Three types of cups were produced in April. The quantities and direct materials costs were: }\\\begin{array} { l r r } \text { Type } & \text { Quantity } & \text { Direct Materials } \\\text { Casts } & 5,000 & \$ 15,000 \\\text { Cups } & 7,000 & 22,470 \\\text { Mugs } & 8,000 & 32,500\end{array}\end{array}$$ Casts are produced in the Molding Department. Cups pass through the Molding and Finishing Departments. Mugs pass through all three departments. An operations costing system is used.
What is Outrageous Cups' conversion cost per unit for the heat-treat operation, rounded to two decimal places?

A) $1.50
B) $2.00
C) $2.50
D) $3.75

Correct Answer:

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