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Inventories: March 1 March 31 Raw material $18,000 $15,000 Work in process 9,000 6,000 Finished goods 27,000 36,000 Additional information for March: Raw material purchased $42,000 Direct labor payroll $30,000 Direct labor rate per hour $7.50 Overhead rate per direct labor hour $10.00 Refer to Crawford Enterprises. For March, conversion cost incurred was

Sagot :

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Answer:

$118000

Explanation:

Calculation for conversion cost incurred

First step is to calculate the Prime Cost

Opening stock Of Raw Material $18000

Add: Material purchased $42000

Less: Closing stock of raw material ($15000)

Add: Direct Labour $30000

Prime Cost $75000

Now let calculate the conversion cost incurred

Prime cost $75000

Add: overhead expenses $40000

[($30000/ $7.50)**10]

( 4000 * $10=$40000)

Total $115000

($75000+$40000)

Add: opening work in progress $9000

Total $124000

($115000+$9000)

Less: Closing stock of work in progress ($6000)

Factory cost or conversion cost $118000

($124000-$6000)

Therefore For March, conversion cost incurred was $118,000

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