Which of the following statements is true of conversion costs?
A) In process costing, they include all the factors of production.
B) They include all manufacturing costs including direct materials, direct labor, and other direct and indirect manufacturing costs.
C) In process costing, they are usually considered to be added evenly throughout the production process.
D) They include only direct materials and excludes all other manufacturing and non-manufacturing costs.

Question

Quizplus · Accepted Answer

Conversion costs include direct labor and manufacturing overhead costs, which are added evenly throughout the production process in process costing. They do not include direct materials cost. Option A and B are incorrect as they include all manufacturing costs including direct materials, which is not the case with conversion costs. Option D is incorrect as it only considers direct materials and excludes other important costs.

Which of the Following Statements Is True of Conversion Costs