In the Manufacture of 10,000 Units of a Product, Direct

question 88

Multiple Choice

In the manufacture of 10,000 units of a product, direct materials cost incurred was $145,800, direct labor cost incurred was $82,000, and applied factory overhead was $45,500. What is the total conversion cost?

• A) $127,500
• B) $145,800
• C) $272,200
• D) $273,300

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Definitions:

Efficiency

Conditions under which maximum output is produced with a given level of inputs.

ATC Curve

The curve that shows the average total cost of producing different quantities of a good or service.

MC Curve

Represents the Marginal Cost curve, showing how the cost of producing one more unit of a good changes as the production volume is increased.

Profitable Output

The level of production at which a company maximizes its profits under given market conditions.