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Problem 1: Calculate the conversion costs and prime costs from the following information: Fixed manufacturing overhead $ 5,00
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Answer #1

Conversion Costs:- Expenses incurred when turning raw materials into a product.

[ Direct Labour + Fixed Manufacturing Overhead + Variable Manufacturing Overhead ]

[$1500 + $5000 +$1000= $7500 Conversion cost]

Prime Costs:- Expenditures directly related to creating finished products.

[ Direct Materials + Direct Labour ]

[$3500 + $1500 = $5000 Prime Costs]

(Note: Salary of CEO is Office or Administrative Overheads so it will not include)

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