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A manufacturing concern has Raw material of worth Rs. 100,000, Direct Labor Rs. 75,000 and Factory Overhead Rs. 50,000. The amount of

<p>Conversion cost will be: </p> <p>A) Rs.150,000 </p> <p>B) Rs.175,000 </p> <p>C) Rs.125,000  </p> <p>D) Rs.225,000</p>

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Question added by Kamran Anjum , Head of Internal Audit , Rafhan Maize Products Company limited, Faisalabad, Pakistan, Ingredion Incorporated Gmbh
Date Posted: 2014/10/02
Khaled Abdelrehim ACCA DipIFR CMA
by Khaled Abdelrehim ACCA DipIFR CMA , Financial Analysis Assistant General Manager , Khalda Petroleum Company

RS125000

SREEDEVI SUNILKUMAR
by SREEDEVI SUNILKUMAR , Business finance officer , Emirates Airline

C) Rs.125,000  

Mohd Asif Ansari
by Mohd Asif Ansari , HR Administrator , Al Nasseej Al Arabi Factory Co. Ltd.

C)125000

Muhammad Hassaun
by Muhammad Hassaun , Shared Services Lead , M&P Express Logistics (Pvt.) Ltd.

Conversion Cost= Direct Labor + Factory Overhead

125,000

Khaled Mohee Eldeen Abbas Mahmoud
by Khaled Mohee Eldeen Abbas Mahmoud , Chartered Accountant # 10465 , Self-employed

Conversion costs are the combination of direct labor costs plus manufacturing overhead costs.You can think of conversion costs as the manufacturing or production costs necessary to convert raw materials into products. Expressed another way, conversion costs are a manufacturer's product or production costs other than the costs of raw materials.

Kamran Anjum
by Kamran Anjum , Head of Internal Audit , Rafhan Maize Products Company limited, Faisalabad, Pakistan, Ingredion Incorporated Gmbh

Right Answer is Option C) Rs.125,000

Muhammad Hafeez
by Muhammad Hafeez , Financial Analyst , Inter State Gas Systems (Pvt) Ltd.

Option is C 

Sara Naeem
by Sara Naeem , Trainee Finance officer , Wah Brass Mill

Conversion Cost = Direct labor (75,000 ) + FOH (50,000)

                            = Rs125,000

zohair Siddiqui
by zohair Siddiqui , Warehouse Associate , Numerous Warehouses

There are two components in the conversion cost: manufacturing overhead cost such as utilites, electricity, maintenance cost, and direct labour cost. The correct answer is50,000+75,000=1,25000

Divyesh Patel
by Divyesh Patel , Assistant Professional Officer- Treasury , City Of Cape Town

Answer is C

VENKITARAMAN KRISHNA MOORTHY VRINDAVAN
by VENKITARAMAN KRISHNA MOORTHY VRINDAVAN , Project Execution Manager & Accounts Manager , ALI INTERNATIONAL TRADING EST.

Rs.75000 + Rs.50000 =  Rs.125000/- is the conversion cost

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