Question

In the manufacture of 9,200 units of a product, direct materials cost incurred was $171,600, direct labor cost incurred was $114,200, and applied factory overhead was $45,400. What is the total conversion cost? a.$171,600 b.$331,200 c.$159,600 d.$45,400

Answer 1

Answer: c. $159,600

Step-by-step explanation:

Conversion cost is the cost that the business incurs to transform raw materials into finished goods or at least the next stage of the good.

Direct labor is necessary to transform the good and they do so using factory overheads. Conversion cost is therefore calculated as follows:

= Direct Labor Cost + Factory overhead

= 114,200 + 45,400

= $159,600