Answered: What are conversion costs? A) A fixed…

What are conversion costs? A) A fixed cost. per unit. B) Raw Material and Direct Labor. C) Raw Material and Variable Cost. D) Direct Labor & Manufacturing overhead.

Principles of Accounting Volume 2

19th Edition

ISBN:9781947172609

Author:OpenStax

Publisher:OpenStax

Chapter5: Process Costing

Section: Chapter Questions

Problem 4MC: Which of the following is a conversion cost? A. raw materials B. direct labor C. sales commissions...

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Question

What are conversion costs?

A) A fixed cost. per unit.

B) Raw Material and Direct Labor.

C) Raw Material and Variable Cost.

D) Direct Labor & Manufacturing overhead.

Definition Definition Indirect costs incurred while producing goods or services. Overhead costs cannot be directly attributed to products or services. Overhead includes indirect material cost, indirect labor cost, rent, utilities expenses, and depreciation. Since these costs directly affect the profitability of a company, managing overhead becomes an important task for management.

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