Question

Bubbles Inc. produces gummy bears. The company purchases raw materials, stores them in warehouse, and then runs them through two processes: production and packaging. During September, the production process incurred the following costs in processing 20,000 gummy bears Wages of workers operating production equipment$56,500 Manufacturing overhead allocated to the production department Direct materials 8,500 135,000.
Use the FIFO method to compute the September conversion costs in the Production Department.

A) $8,500

B) $200,000

C) $56,500

D) $65,000

Answer 1

Answer:

D. $65,000

Explanation:

Data provided

Direct labor = $56,500

Manufacturing overhead = $8,500

The computation of Conversion costs is shown below:-

Conversion costs = Direct labor + Manufacturing overhead

= $56,500 + $8,500

= $65,000

Therefore for computing the conversion cost we simply add the direct labor with manufacturing overhead.