Question

Robins Company reported the following costs for the current month. What are Robins' conversion cost?

A. Direct Materials
B. Direct Labor
C. Manufacturing Overhead
D. Total Production Costs

Answer 1

Conversion cost consists of direct labor and manufacturing overhead.

Step-by-step explanation:

The conversion cost consists of both direct labor and manufacturing overhead. Direct labor refers to the wages and benefits paid to employees who directly work on the production of goods. Manufacturing overhead includes costs such as factory rent, utilities, and equipment maintenance that are indirectly related to production.

1. First, identify the direct labor cost from the given information.
2. Next, identify the manufacturing overhead cost.
3. Add these two costs together to calculate the conversion cost.

Example: If the direct labor cost is $10,000 and the manufacturing overhead cost is $5,000, the conversion cost would be $15,000.