Which of the following assertions is TRUE concerning conversion costs?
A)Direct labour costs are always included in conversion costs.
B)The conversion period (for conversion costs calculation)can only include one operation.
C)When conversion costs are estimated to be over 80% complete, then the cost-benefit constraint requires us to use 100% as the estimate.
D)Conversion costs are impossible to estimate with any reliability.
E)The conversion period often includes several operations, and it may be impossible to estimate conversion costs with any reliability in some cases.

Question

Quizplus · Accepted Answer

Conversion costs often include multiple operations, and estimating these costs accurately can be challenging in some cases, leading to an unreliable estimate. Option A is incorrect, as while direct labor costs are often included in conversion costs, they are not always included. Option B is incorrect because the conversion period can include multiple operations. Option C is incorrect because the cost-benefit constraint does not require using 100% when the estimate is over 80% complete. Option D is incorrect because conversion costs can be estimated with a degree of reliability, even if this is sometimes challenging.

Which of the Following Assertions Is TRUE Concerning Conversion Costs