What Term Refers to the Cost of Changing Direct Materials

question 204

Multiple Choice

What term refers to the cost of changing direct materials into a finished manufactured product?

• A) factory overhead cost
• B) period cost
• C) conversion cost
• D) direct labor cost

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Definitions:

Work in Process Inventory

Items currently undergoing manufacturing but not yet finished.

Finished Goods Inventory

Products that have completed the manufacturing process and are ready for sale.

Indirect Labor

Labor costs not directly associated with the production of goods or the performance of a specific task, such as maintenance and administrative staff salaries.

Overhead Applied

The allocation of overhead costs to specific cost objects, such as products or projects, based on a predetermined rate or method.