Conversion cost includes both direct material and indirect material.

Name: Conversion cost includes both direct material and indirect material.
Brand: Quizplus
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Question

Quizplus · Accepted Answer

Conversion cost specifically refers to the costs incurred in the production process, which include direct labor and overhead costs. Direct material is not included in conversion cost, but rather in the manufacturing cost of the product. Indirect material, such as supplies used in the production process, is also not included in conversion cost.

Conversion Cost Includes Both Direct Material and Indirect Material