The direct manufacturing labor costs is $40000 and manufacturing overhead cost is $7000, then conversion cost would be ____________?
Correct answer: A. $47,000
- A. $47,000
- B. $33,000
- C. $57,000
- D. $18,000
Explanation
Conversion cost is calculated as direct manufacturing labor plus manufacturing overhead: $40,000 + $7,000 = $47,000. The other figures do not follow this formula.
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About Cost Accounting
Cost accounting measures and analyses the cost of producing goods or providing services for planning, control and pricing decisions. It covers direct and indirect costs, fixed and variable costs, job and process costing, break-even analysis, marginal costing, overhead allocation, and the difference between product cost and period cost.
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