COST ACCOUNTING
MANUFACTURING OVERHEAD
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Question
[CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
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direct material plus labour cost
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direct labour plus manufacturing overhead
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direct materials plus manufacturing overhead
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indirect material plus indirect labour
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Detailed explanation-1: -Conversion costs are expenses for overhead and direct labor related to the conversion of raw materials into products. Conversion costs are similar to prime costs, except that the latter consists of costs related to direct labor and direct materials, not direct labor and overhead.
Detailed explanation-2: -Conversion costs include the manufacturing costs that are needed to convert direct materials into final products: direct labor costs and manufacturing overhead costs.
Detailed explanation-3: -The total conversion cost formula is: Conversion Costs = Direct Labor Costs + Manufacturing Overheads.
Detailed explanation-4: -The conversion costs are defined as the combination of direct labor with the manufacturing overhead. These costs are basically the cost that converts the direct material into the finished products.
Detailed explanation-5: -Conversion costs = Direct labor + Manufacturing overhead.