Answer (B) is correct . Conversion costs are necessary to convert raw materials into finished products. They include all manufacturing costs, for example, direct labor and factory overhead, other than direct materials.
Answer (A) is incorrect because Depreciation is a factory overhead cost and therefore is a conversion cost.
Answer (C) is incorrect because Indirect labor is a factory overhead cost and therefore is a conversion cost.
Answer (D) is incorrect because Indirect materials are factory overhead costs and therefore are conversion costs.
|
