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First-In, First-Out
An inventory valuation method where the goods first purchased or produced are the first ones sold, assuming that older inventory is used up first.
Equivalent Units
A concept in cost accounting used to allocate costs to mass-produced items that are not identical, allowing for the calculation of per-unit costs at various stages of production.
Conversion Cost
The total cost of converting raw materials into finished goods, comprising both direct labor costs and manufacturing overhead costs.
Total Conversion Cost
The sum of all labor costs and overhead expenses involved in converting raw materials into finished goods.
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