Conversion costs consist of:
A) all costs of production.
B) raw materials and direct labor.
C) direct labor and manufacturing overhead.
D) raw materials and manufacturing overheaD.
Direct labor and manufacturing overhead costs can be lumped together in a single category called conversion cost.

Question

Quizplus · Accepted Answer

Conversion costs include direct labor and manufacturing overhead, but not raw materials. Therefore, option C, which includes only direct labor and manufacturing overhead, is the correct answer. Option A is too broad as it includes all costs of production, which would include raw materials as well. Option B includes raw materials, which are not part of conversion costs. Option D includes raw materials and manufacturing overhead, but leaves out direct labor, which is also part of conversion costs.

Conversion Costs Consist Of