Question

The following costs were incurred in August:Direct Labor $14,000Direct Materials $37,000Manufacturing Overhead $38,000Selling Expenses $10,000Administrative Expenses $28,000What were conversion costs for the month?

Answer 1

Conversion cost=$52,000

Step-by-step explanation:

Conversion cost is the sum of direct labour cost and the manufacturing overheads incurred to transform direct material into finished goods.

Direct labour cost is the amount paid to workers directly engaged for production purpose.

Manufacturing overhead is the sum of indirect material, indirect labour and indirect expenses incurred for production purpose

Conversion cost = Direct labour cost + Manufacturing overhead

= $14,000 + 38,000= 52,000

Conversion cost=$52,000