Question

XYZ Company recorded the following information related to their inventory
accounts for 2020:

                          January 1, 2020        December 31, 2020
Direct materials               50,000                   37,000
Work in process                38,000                   41,000
Finished goods                 32,000                   34,000

The following costs were taken from XYZ Company's accounting records for
2020:

Direct materials purchased ..............................   $129,000
Depreciation, factory equipment .........................     37,000
Sales revenue ...........................................    590,000
Utilities (60% for factory; 40% for office building) ....     30,000
Sales commissions .......................................       ?
Indirect materials ......................................     29,000
Depreciation, office equipment ..........................     33,000
Rent, factory building ..................................     60,000
Net income ..............................................     10,000
Direct labor ............................................     90,000
Advertising .............................................     57,000
Production supervisor's salary ..........................     82,000

Assume that the actual overhead cost for 2020 was equal to the overhead
applied to production. Thus there was no overhead variance for 2020.

Calculate XYZ Company's conversion costs for 2020.

Answer 1

Conversion Cost		Direct Labour cost + Manufactur Overhead
As per Question -
Direct labour cost $		90,000
Manufacture Overhead			Amnt($)
Depreciation Factory Equipment			37,000
Factory utilities			18,000
60% for Factory =60%*$30000
Indirect Material			29,000
Rent Factory Building			60,000
Production Supervisor Salary			82,000
Total Manufacture Overhead			2,26,000
Conversion Cost
Direct labour cost $		90,000
Total Manufacture Overhead$		2,26,000
Conversion Cost $		3,16,000