Beginning work-in-process inventory is $188,000, ending work-in-process inventory is $220,000, cost of goods manufactured is $850,000, and direct materials used are $162,000. What are the conversion costs?
A)$688,000
B)$980,000
C)$656,000
D)$720,000

Question

Quizplus · Accepted Answer

Using the formula for cost of goods manufactured:
Cost of Goods Manufactured = Beginning WIP Inventory + Direct Materials Used + Conversion Costs - Ending WIP Inventory

$850,000 = $188,000 + $162,000 + Conversion Costs - $220,000
$850,000 = $130,000 + Conversion Costs
Conversion Costs = $720,000

Beginning Work-In-Process Inventory Is $188,000, Ending Work-In-Process Inventory Is $220,000