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

Question

Quizplus · Accepted Answer

Conversion costs include all costs incurred in converting direct materials into finished products, which are direct labor and manufacturing overhead. Therefore, choice B, which includes both direct labor and manufacturing overhead, is the correct answer. Choices A and C do not include manufacturing overhead, which is a significant part of conversion costs, while choice D includes direct materials, which is not part of conversion costs.

Conversion Costs Consist of