Which of the following costs incurred by a paper manufacturer would be included in the group of costs referred to as conversion costs?
A) Advertising costs
B) Raw lumber (direct materials)
C) Machine operator's wages (direct labor)
D) Sales salaries

Question

Quizplus · Accepted Answer

Conversion costs refer to the costs incurred to convert direct materials into finished goods. Machine operator's wages are an example of direct labor and are part of the conversion costs. Advertising costs and sales salaries are not related to production and are considered period costs. Raw lumber is a direct material and is not considered a conversion cost.

Which of the Following Costs Incurred by a Paper Manufacturer