A company's beginning work-in-process inventory is $120,000, its ending work-in-process inventory is $160,000, its cost of goods manufactured is $400,000, and its direct materials used are $100,000. What are the conversion costs?
A) $140,000
B) $280,000
C) $300,000
D) $340,000

Question

Quizplus · Accepted Answer

Conversion costs are calculated by subtracting direct materials used from the total manufacturing costs. Total manufacturing costs can be derived from the cost of goods manufactured and the change in work-in-process inventory. Here, total manufacturing costs = $400,000 + ($160,000 - $120,000) = $440,000. Thus, conversion costs = $440,000 - $100,000 = $340,000.

A Company's Beginning Work-In-Process Inventory Is $120,000, Its Ending Work-In-Process