If beginning work-in-process inventory is $160,000, ending work-in-process inventory is $180,000, cost of goods manufactured is $500,000, and direct materials used are $130,000, what are the conversion costs?
A) $210,000
B) $320,000
C) $340,000
D) $390,000

Question

Quizplus · Accepted Answer

Conversion costs are calculated as the total manufacturing costs minus direct materials. Total manufacturing costs can be derived from the formula: Beginning WIP + Total Manufacturing Costs - Ending WIP = Cost of Goods Manufactured. Solving for Total Manufacturing Costs gives $520,000. Subtracting direct materials ($130,000) from this gives conversion costs of $390,000.

If Beginning Work-In-Process Inventory Is $160,000, Ending Work-In-Process Inventory Is