Question

Management of Mcgibboney Corporation has asked your help as an intern in preparing some key reports for November. The beginning balance in the raw materials inventory account was $25,000. During the month, the company made raw materials purchases amounting to $54,000. At the end of the month, the balance in the raw materials inventory account was $37,000. Direct labor cost was $25,000 and manufacturing overhead cost was $62,000. The beginning balance in the work in process account was $22,000 and the ending balance was $23,000. The beginning balance in the finished goods account was $44,000 and the ending balance was $50,000. Selling expense was $21,000 and administrative expense was $38,000. The conversion cost for November was: Select one: a. $116,000 b. $79,000 c. $87,000 d. $129,000

Answer 1

Answer:

c. $87,000

Explanation:

Conversion Costs are obtained by adding the direct labor costs and Manufacturing Overhead Costs.

Mcgibboney Corporation

Raw materials inventory  $25,000

Raw materials purchases $54,000

Raw materials inventory Ending  $37,000

Direct Materials Used  42,000

Direct labor cost  $25,000

Manufacturing Overhead cost  $62,000

Conversion Costs $ 87,000=Direct labor cost  $25,000 +Manufacturing Overhead cost  $62,000

Total Manufacturing Costs = Direct Materials Used  42,000+Conversion Costs $ 87,000= $129,000

Work in process beginning $22,000

Work in process ending balance  $23,000

Finished goods beginning $44,000

Finished goods ending balance  $50,000

Selling expense  $21,000

Administrative expense was $38,000.