BUSINESS ADMINISTRATION
ACCOUNTING FOR MANAGEMENT
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Question
[CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
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Direct Material Cost+Direct Labour Cost
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Direct Labour Cost+Manufacturing Overhead Cost
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Direct Material Cost+Direct Labour Cost+Manufacturing Overhead Costs
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Direct Material Cost+Direct labour Cost+Manufacturing Overhead Cost+Non Manufacturing Overhead Cost
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Detailed explanation-1: -The total conversion cost formula is: Conversion Costs = Direct Labor Costs + Manufacturing Overheads.
Detailed explanation-2: -Explanation: Conversion costs consists of direct labor costs and manufacturing overhead costs. This is what it will cost a company to convert raw materials into products to sell to customers.
Detailed explanation-3: -Definition of Conversion Costs Conversion costs are the total of direct labor and factory overhead costs. They are combined because it is the labor and overhead together that convert the raw material into the finished product.
Detailed explanation-4: -Conversion costs include direct labor and overhead expenses incurred as a result of the transformation of raw materials into finished products.