CAF-5 · Chapter 2 · Question 1 of 10
In cost accounting, which of the following equations correctly defines 'Conversion Costs'?
Test yourself: pick an answer
Reveal answer & explanation
Correct answer: B) Direct Labour + Manufacturing Overheads
Explanation
Manufacturing expenses generally comprise direct materials, direct labour, and production overheads. Material + Labour equals 'Prime Costs', while Labour + Overhead equals 'Conversion Costs' (the cost to convert raw materials into finished goods).
More Overheads MCQs
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