Conversion Costs vs Primary Costs

Conversion , Fixed and Variable Costs

Multiple Choice

Conversion costs are approved by GAAP to use toward the cost of inventoried goods.

• True

• False

Multiple Choice

Which of the following is NOT considered when calculating Prime Cost

• Direct Labor

• Cost of Materials

• Overhead

• The number of units produced

Multiple Choice

Which of the following is NOT considered when calculating Conversion Costs?

• Direct Labor

• Raw Materials

• Overhead Costs

• Number of units produced

Multiple Choice

Saye Metalwork has $50,000 of direct labor, $86,000 in manufacturing overhead, and produced 20,000 units in March

What is their conversion cost per unit?

• $7.55

• $10.00

• $4.00

• $6.80

Multiple Choice

BTK boots produce 5,200 boots per week. Their direct labor cost is $20.00 per hour for 4000 hours. The total cost of all raw materials is $100,000 and their overhead for the week is $42,000. What is their conversion cost per boot?

• $15.62

• $23.46

• $34.62

• $52.16