Which of the following will be classified as a conversion cost?
A)cost of raw materials
B)depreciation on factory equipment
C)salary of sales personnel
D)depreciation on office furniture

Question

Quizplus · Accepted Answer

Conversion costs are the costs incurred in converting raw materials into finished goods that are ready for sale. These costs include direct labor and factory overheads such as depreciation on factory equipment, maintenance expenses, utility expenses, etc. Option A is the cost of raw materials which is not a conversion cost. Option C and D are not manufacturing overhead costs, hence, they are not conversion costs.

Which of the Following Will Be Classified as a Conversion