Question

In the manufacture of 8,000 units of a product, direct materials cost incurred was $154,600, direct labor cost incurred was $84,000, and applied factory overhead was $45,500. what is the total conversion cost?

Answer 1

Conversion costs are the combination of direct labor costs plus factory overhead costs. Hence, conversion costs exclude the cost of direct materials.

So, here the conversion cost = Direct labor cost + Factory overhead cost

= $ 84,000 + $ 45,500

= $ 129,500