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: $$\begin{array} { | l | r | }
\hline \text { Wages of workers operating production equipment } & \$ 52,500 \
\hline \text { Manufacturing overhead allocated to the production department } & 8,000 \
\hline \text { Direct materials } & 400,000 \
\hline
\end{array}$$ 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: $$\begin{array} { | l | r | } 
\hline \text { Wages of workers operating production equipment } & \$ 52,500 \
\hline \text { Manufacturing overhead allocated to the production department } & 8,000 \
\hline \text { Direct materials } & 400,000 \
\hline
\end{array}$$ Use the FIFO method to compute the September conversion costs in the Production Department.

Quizplus · Accepted Answer

Conversion costs are the costs required to convert raw materials into finished products, which include labor and manufacturing overhead. In this case, conversion costs are the sum of wages of workers operating production equipment ($52,500) and manufacturing overhead allocated to the production department ($8,000), totaling $60,500.

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