Belleview Orange manufactures orange juice. Last month's total manufacturing costs for the Duval operation included:
Direct materials $500,000
Direct labor 39,000
Manufacturing overhead 115,000
Required:
a. What was the conversion cost for Belleview Orange's Duval operation last month?

The conversion cost for Belleview Orange's Duval operation last month was $154,000

Explanation:

Conversion costs are those production costs required to convert raw material to finished goods. Conversion costs include direct labor and manufacturing overheads.

Conversion Costs = Direct Labor cost + Manufacturing Overheads cost = Total Manufacturing Cost – Direct Material cost.

Last month, in Belleview Orange's Duval, Direct labor cost was incurred of $39,000, Manufacturing overhead cost was incurred of $115,000

Conversion Cost = $39,000 + $115,000 = $154,000

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