Question

Management of Solman Corporation has asked your help as an intern in preparing some key reports for June. The beginning balance in the raw materials inventory account was $20,000. During the month, the company made raw materials purchases amounting to $69,000. At the end of the month, the balance in the raw materials inventory account was $32,000. Direct labor cost was $24,000 and manufacturing overhead was $71,000. The beginning balance in the work in process account was $24,000 and the ending balance was $19,000. The beginning balance in the finished goods account was $53,000 and the ending balance was $58,000. Selling expense was $20,000 and administrative expense was $35,000. The conversion cost for June was:

Answer 1

The conversion cost is $95,000

Step-by-step explanation:

The computation of the conversion cost is shown below:

As we know that

Conversion cost

= Direct Labour + Overheads

where,

Direct labor is $24,000

And, the overhead is $71,000

Now placing these valeus to the above formula

So, the conversion cost is

= $24,000 + $71,000

= $95,000

Hence, the conversion cost is $95,000