Conversion costs consist of
A) direct materials and direct labor.
B) direct labor and overhead.
C) direct materials and overhead.
D) direct labor and indirect labor.

Question

Quizplus · Accepted Answer

Conversion costs refer to the costs incurred to convert raw materials into finished products, and include direct labor and overhead. Direct materials are not included in conversion costs as these costs are incurred prior to the production process. Indirect labor is also not included in conversion costs as it is considered a component of overhead.

Conversion Costs Consist of