Which of the following statement(s)concerning conversion costs is correct?
A)Estimating the degree of completion of direct materials in a partially completed unit is usually easier to calculate than estimating the degree of completion for conversion costs.
B)The calculation of equivalent units is relatively easy for the textile industry.
C)Estimates are usually not considered acceptable.
D)Both B and C are correct.

Question

Quizplus · Accepted Answer

Conversion costs include direct labor and manufacturing overhead. Estimating the degree of completion of direct materials is usually easier because materials are usually added all at once, whereas conversion costs are incurred throughout the production process and can be more difficult to track. Option B is incorrect because the calculation of equivalent units can be complex for any industry depending on the nature of the production process. Option C is incorrect because estimates are necessary in accounting for conversion costs.

Which of the Following Statement(s)concerning Conversion Costs Is Correct