Chapter D, Problem 8QS

To determine

Concept Introduction:

Conversion costs-

Conversion cost is the sum of direct labor costs and manufacturing overhead costs. It is basically a manufacturing cost which is incurred to convert raw materials into final product.

Conversion costs rate is calculated as follows-

  $Conversioncostsrateperhour=Totalconversioncosts/Totalhours$

Requirement 1-:

To compute:

Conversion cost rate per hour

To determine

Concept Introduction:

Journal entries-

The business runs with the transactions it makes. Every transaction results in some outcome like the creation of asset, liability, income, loss, gain or expense. The debits and the credits are made on the basis of the rules of the accounting.

Requirement 2-:

To prepare:

To prepare journal entry to apply conversion cost to an order of 520 units.