Concept Introduction:
Conversion costs-
Conversion cost is the sum of direct labor costs and manufacturing
Conversion costs rate is calculated as follows-
Requirement 1-:
To compute:
Conversion cost rate per hour

Answer to Problem 8QS
Conversion cost rate is $625 per hour.
Explanation of Solution
Given,
- Total conversion cost = $1,000,000
- Total hours = 1,600 hours
Conclusion:
Thus, conversion cost rate per hour is $625.
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

Answer to Problem 8QS
S. No. | Accounts titles and Explanation | Debit ($) | Credit ($) |
A. | Conversion costs | 40,625 | |
Special order | 40,625 | ||
(To assign conversion costs to special order) |
Explanation of Solution
First we need to find total hours needed for production of 520 units-
Conversion cost assigned to 520 units is calculated as under-
Conclusion:
Thus, journal entry is prepared to assign conversion costs.
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Chapter D Solutions
FUNDAMENTAL ACCOUNTING PRINCIPLES
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