Question

Information from the records of the Abel Corporation for July 2018 was as follows: Sales $1,230,000 Selling and administrative expenses 210,000 Direct materials used 264,000 Direct labor 300,000 Factory overhead * 405,000 *variable overhead is $205,000, fixed overhead is $200,000 Inventories July 1, 2018 July 31, 2018 Direct materials $36,000 $42,000 Work in process 75,000 84,000 Finished goods 69,000 57,000
The conversion cost is:_______
a. $1,179,000
b. $705,000
c. $960,000
d. $564,000

Answer 1

Answer:

b. $705,000

Explanation:

The computation of the conversion cost is shown below:

as we know that

Conversion costs= Direct Labor + Manufacturing Overheads

= $300,000 + $205,000 + $200,000

= $705,000

Hence, the conversion cost is $705,000

Therefore the option b is correct