Conversion cost consists of which of the following
A)Direct materials and direct labour costs.
B)Direct labour and manufacturing overhead costs.
C)Direct labour cost.
D)Manufacturing overhead cost.

Question

Quizplus · Accepted Answer

Conversion cost refers to the cost incurred in converting raw material into finished goods. It includes direct labor and manufacturing overhead costs such as utilities, rents, supervisory salaries, and maintenance. Direct materials are not included in conversion cost because they are considered a separate cost category. Therefore, the best choice is B because it includes both direct labor and manufacturing overhead costs.

Conversion Cost Consists of Which of the Following