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Conversion costs consist of direct labor and factory overhead. You can ignore the direct materials. It was just included to try to confuse you.
Overhead=.20(45,000+Overhead) Overhead=.20 Overhead + 9,000 .80 Overhead = 9,000 Overhead = 11,250 Conversion Costs = 11,250+45,000=56,250 Overhead = 56,250*.20=11,250 |
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