If the costs for direct materials, direct labor, and factory overhead were $60,000, $35,000, and $25,000, respectively, for 20,000 equivalent units of production, the conversion cost per equivalent unit was $6.

Conversion Cost

The cost associated with converting raw materials into finished products, typically including labor and overhead expenses.

Equivalent Unit

A metric used in cost accounting to express the amount of work done on incomplete units as a proportion of work done on complete units.

Factory Overhead

Refers to the indirect costs associated with manufacturing, excluding direct materials and direct labor costs.