Which of the Following Statements Correctly Describes the Term "Conversion

question 87

Multiple Choice

Which of the following statements correctly describes the term "conversion costs"?

• A) the cost to convert finished goods to sales to customers
• B) the cost incurred for direct and indirect materials during production
• C) the cost of direct materials, direct labor, and manufacturing overhead costs incurred during production
• D) the cost of direct labor combined with manufacturing overhead

---

Definitions:

APC

The fraction of income that is spent on consuming goods and services is known as the Average Propensity to Consume.

APS

Stands for Aggregate Planning Strategies, techniques used in business to match supply and demand by adjusting production rates, labor levels, and inventory.

MPC

The marginal propensity to consume, which is the proportion of any additional income that is spent on consumption rather than being saved.

MPS

Marginal Propensity to Save, which measures the proportion of additional income that households save rather than spend on consumption.