Asked by
Edmond Aynedjian
on Nov 13, 2024
Verified
Conversion costs are the combination of direct labor, direct material, and factory overhead costs.
Conversion Costs
The combined costs of direct labor and manufacturing overheads, representing the expenses to convert raw materials into finished goods.
Factory Overhead Costs
Expenses related to the operation of a factory that are not directly linked to a specific product, such as maintenance, utilities, and salaries of supervisory staff.
Direct Material
The raw materials that are used directly in manufacturing a product and can be easily traced to the final product.
- Identify the components of product costs and understand what constitutes prime costs and conversion costs.
Verified Answer
AP
Learning Objectives
- Identify the components of product costs and understand what constitutes prime costs and conversion costs.