_________is the cost of converting raw material into finished products?
Correct answer: D. Conversion cost
- A. Prime cost
- B. Explicit cost
- C. Job order cost
- D. Conversion cost
Explanation
Conversion cost is the cost of transforming raw materials into finished goods, normally consisting of direct labour and manufacturing overhead. Prime cost instead combines direct material, direct labour and direct expenses.
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About Cost Accounting
Cost accounting measures and analyses the cost of producing goods or providing services for planning, control and pricing decisions. It covers direct and indirect costs, fixed and variable costs, job and process costing, break-even analysis, marginal costing, overhead allocation, and the difference between product cost and period cost.
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