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Chapter 18: Q.18-3SE (page 1007)

Question: Evergreen Orange manufactures orange juice. Last month’s total manufacturing costs for the Tampa operation included:

Direct materials

$450,000

Direct labor

32,000

Manufacturing overhead

125,000

What was the conversion cost for Evergreen Orange’s Tampa operation last month?

Short Answer

Expert verified

Answer:

The conversion cost for evergreen orange’s tampa operation is $157,000

Step by step solution

01

Conversion cost

Conversion cost means the cost incurred by the company for converting the raw materials into the finished goods. It is the sum total of the direct labor and the other manufacturing overhead.

02

Conversion cost

Conversioncost=Directlabour+ManufacturingOverhead=$32,000+$125,000=$157,000

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Most popular questions from this chapter

The comparative financial statements of Norfolk Cosmetic Supply for 2018, 2017, and

2016 include the data shown here:

2018 2017 2016

Balance sheet—partial

Current Assets:

Cash

Short-term investments

Accounts Receivable, Net

Merchandise Inventory

Prepaid Expenses

Total Current Assets

Total Current Liabilities

Income statement—partial

Net Sales (all on account)

\( 70,000

140,000

280,000

355,000

70,000

915,000

560,000

5,890,000

\) 60,000

170,000

240,000

330,000

35,000

835,000

630,000

5,130,000

$ 50,000

120,000

260,000

310,000

35,000

775,000

640,000

4,210,000

Requirements

1. Compute these ratios for 2018 and 2017:

a. Acid-test ratio (Round to two decimals.)

b. Accounts receivable turnover (Round to two decimals.)

c. Days’ sales in receivables (Round to the nearest whole day.)

2. Considering each ratio individually, which ratios improved from 2017 to 2018 and

which ratios deteriorated? Is the trend favorable or unfavorable for the company?

Dee Electronics makes game consoles in three processes: assembly, programming, and packaging. Direct materials are added at the beginning of the assembly process. Conversion costs are incurred evenly throughout the process. The Assembly Department had no Work-in-Process Inventory on October 31. In mid-November, Dee Electronics started production on 100,000 game consoles. Of this number, 90,000 game consoles were assembled during November and transferred out to the Programming Department. The November 30 Work-in-Process Inventory in the Assembly Department was 35% of the way through the assembly process. Direct materials costing \(399,000 were placed in production in Assembly during November, direct labor of \)139,000 was assigned, and manufacturing overhead of $130,280 was allocated to that department.

Requirements

1. Prepare a production cost report for the Assembly Department for November.

The company uses the weighted-average method.

2. Prepare a T-account for Work-in-Process Inventory—Assembly to show its activity during November, including the November 30 balance.

Work Problem P18-33A using the FIFO method. The Mixing Department beginning work in process of 300 units is 40% complete as to both direct materials and conversion costs. Round equivalent unit of production costs to four decimal places. Round all other costs to the nearest whole dollar.

Question: Spring Fresh produces premium bottled water. Spring Fresh purchases artesian water, stores the water in large tanks, and then runs the water through two processes: filtration and bottling.

During February, the filtration process incurred the following costs in processing

200,000 liters:

Wages of workers operating filtration equipment

$34,950

Manufacturing overhead allocated to filtration

19,050

Water

110,000

Spring Fresh had no beginning Work-in-Process Inventory in the Filtration Department in February.

Requirements

1. Use the FIFO method to compute the February conversion costs in the Filtration Department.

2. The Filtration Department completely processed 200,000 liters in February. Use

the FIFO method to determine the filtration cost per liter.

Question: Department 1 is transferring units that cost $40,000 to Department 2. Give the journal entry.
See all solutions

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