1)Let's pretend we are making glasses of water.Basically, our materials consist of water and the glasses.The conversion is pouring.Got it?Great.

Let's also assume that for the period, my materials cost $100 and the conversion costs were $300.

I start with no inventory.We manufacture - POUR - 100 glasses of water.

What's the cost of a glass of water?What is the Cost Goods Manufacturing (total) for the period?