Question

The following costs were incurred in September:

Direct Materials $38,000
Direct Labor $29,000
MOH $21,000
Selling Expenses $17,000
Administrative Expenses $32,000

Conversion costs during the month totaled?

Answer 1

Answer:

$50,000

Explanation:

Conversion cost is the total cost incurred on converting raw material in to a finished product. Labor cost and overheads expenses are incurred during conversion process. Therefore conversion cost totals labor cost plus manufacturing overheads:

Conversion cost: Direct labor + Manufacturing overheads

Conversion cost: 29,000 + 21,000

Conversion cost: $50,000