Question

In the manufacture of 10,000 units of a product, direct materials cost incurred was $135,700, direct labor cost incurred was $82,000, and applied factory overhead was $37,500. What is the total conversion cost

Answer 1

The total conversion cost is $119,500.

Step-by-step explanation:

Conversion cost refers to all the costs of converting or turning raw materials into finished goods. Conversion cost can therefore be obtained by deducting the cost of raw materials from the cost of production. This implies that conversion cost is the the addition of direct labor costs and manufacturing costs.

Based on the above explanation, total conversion cost for this question can therefore be calculated as follows:

Total conversion cost = Direct labor cost + Applied factory overhead = $82,000 + $37,500 = $119,500

Therefore, the total conversion cost is $119,500.