The sum of direct labor and factory overhead is referred to as
A)period costs.
B)conversion costs.
C)prime costs.
D)direct product costs.

Question

Quizplus · Accepted Answer

Conversion costs include all costs incurred to convert raw materials into finished products, including direct labor and factory overhead. Prime costs, on the other hand, only include the direct materials and direct labor used in the production process. Period costs are not related to the production process and directly expensed in the period incurred, while direct product costs are costs that can be directly traced to the production of a product, such as direct materials and direct labor.

The Sum of Direct Labor and Factory Overhead Is Referred