How is conversion cost calculated?
A) product costs plus period costs
B) direct materials cost plus prime costs
C) indirect labour cost plus opportunity costs
D) direct labour cost plus manufacturing overhead cost

Question

Quizplus · Accepted Answer

Conversion cost is the sum of direct labour cost and manufacturing overhead cost. Direct labour cost is the cost of the wages and benefits of the employees directly involved in the manufacturing process, while manufacturing overhead cost includes all other costs associated with the production process, such as indirect labour, rent, utilities, and maintenance. Therefore, option D is the correct choice.

How Is Conversion Cost Calculated