Figure 6-4
The following information is available from the records of Diamond Cut, Inc.:

-Refer to Figure 6-4. What are the conversion costs in the Finishing Department?
A) $35,000
B) $37,500
C) $40,000
D) $57,500

Question

Figure 6-4
The following information is available from the records of Diamond Cut, Inc.:
 
-Refer to Figure 6-4. What are the conversion costs in the Finishing Department?
A) $35,000 
B) $37,500 
C) $40,000 
D) $57,500

Quizplus · Accepted Answer

Conversion costs refer to the costs incurred in converting raw materials into finished products. In the Finishing Department, the conversion costs consist of direct labor and manufacturing overhead. From the data given in Figure 6-4, the direct labor cost in the Finishing Department is $25,000 and the manufacturing overhead cost is $15,000. Therefore, the total conversion costs in the Finishing Department are $25,000 + $15,000 = $40,000. Hence, the correct answer is C.

Figure 6-4 The Following Information Is Available from the Records of Diamond