The reason for combining direct labor and overhead costs together and calling them "conversion costs" is that
A) they both are direct costs of production.
B) the equivalent unit amount for direct materials will be the same as that for direct labor and overhead costs.
C) both types of costs usually are incurred uniformly throughout the production process.
D) the costs for direct labor and overhead are not accounted for separately.

Question

Quizplus · Accepted Answer

Both direct labor and overhead costs are usually incurred uniformly throughout the production process, making them similar in nature. Combining them into conversion costs allows for easier calculation and analysis of total production costs.

The Reason for Combining Direct Labor and Overhead Costs Together