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Assume R100 000 direct material was issued to the company. Direct labour paid amounted to R30 000, Factory supervisor salary R4 000, Electricity for the factory R3 000 and rent for the factory building was R20 000. Suppose the Work-in-progress in the beginning of the year was R9 000 and at the end of the year was R6 000. What is the value of the Finished goods that is transferred to the Sales department?
A. R154 000
B. R160 000
C. R103 000
D. R157 000



Answer :

To calculate the conversion cost, you need to add the direct labor and factory overheads.

So, Conversion Cost = Direct Labor + Factory Overheads Conversion Cost = R30,000 + R7,000 Conversion Cost = R37,000

Therefore, the correct answer is:

C. R37,000

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