Ellie's Candies,Inc.produces gummy bears.The company purchases raw materials,stores them in a warehouse,and then runs them through two processes: production and packaging.During September,the production process incurred the following costs in processing 20,000 gummy bears: $$\begin{array} { | l | r | }
\hline \text { Wages of workers operating production equipment } & \$ 50,500 \
\hline \text { Manufacturing overhead allocated to the production department } & 8,000 \
\hline \text { Direct materials } & 210,000 \
\hline
\end{array}$$ Use the FIFO method to compute the September conversion costs in the Production Department.

Question

Ellie's Candies,Inc.produces gummy bears.The company purchases raw materials,stores them in a warehouse,and then runs them through two processes: production and packaging.During September,the production process incurred the following costs in processing 20,000 gummy bears: $$\begin{array} { | l | r | } 
\hline \text { Wages of workers operating production equipment } & \$ 50,500 \
\hline \text { Manufacturing overhead allocated to the production department } & 8,000 \
\hline \text { Direct materials } & 210,000 \
\hline
\end{array}$$ Use the FIFO method to compute the September conversion costs in the Production Department.

Quizplus · Accepted Answer

Conversion costs are the costs incurred in converting raw materials into finished goods. In this case, the conversion costs are the wages of workers operating production equipment and the manufacturing overhead allocated to the production department. Using the FIFO method, the conversion costs for September are $58,500 ($50,500 + $8,000).

Ellie's Candies,Inc Use the FIFO Method to Compute the September Conversion Costs