Compute conversion costs given the following data: direct materials, $393,800; direct labor, $198,500; factory overhead, $200,400 and selling expenses, $36,900. Oa. $594,200 Ob. $163,500 Oc. $398,900 Od. $792,700

FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
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**Problem Statement on Conversion Costs**

**Objective:** Compute conversion costs using the provided data.

**Given Data:**

- Direct Materials: $393,800
- Direct Labor: $198,500
- Factory Overhead: $200,400
- Selling Expenses: $36,900

**Options:**
- a. $594,200
- b. $163,500
- c. $398,900
- d. $792,700

**Solution Methodology:**

Conversion costs include direct labor and factory overhead. They do not include direct materials or selling expenses. 

**Calculation:**
- Direct Labor: $198,500
- Factory Overhead: $200,400

\[ \text{Conversion Costs} = \text{Direct Labor} + \text{Factory Overhead} \]
\[ \text{Conversion Costs} = 198,500 + 200,400 \]
\[ \text{Conversion Costs} = 398,900 \]

**Correct Answer:** c. $398,900
Transcribed Image Text:**Problem Statement on Conversion Costs** **Objective:** Compute conversion costs using the provided data. **Given Data:** - Direct Materials: $393,800 - Direct Labor: $198,500 - Factory Overhead: $200,400 - Selling Expenses: $36,900 **Options:** - a. $594,200 - b. $163,500 - c. $398,900 - d. $792,700 **Solution Methodology:** Conversion costs include direct labor and factory overhead. They do not include direct materials or selling expenses. **Calculation:** - Direct Labor: $198,500 - Factory Overhead: $200,400 \[ \text{Conversion Costs} = \text{Direct Labor} + \text{Factory Overhead} \] \[ \text{Conversion Costs} = 198,500 + 200,400 \] \[ \text{Conversion Costs} = 398,900 \] **Correct Answer:** c. $398,900
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