Conversion Costs May Be Separated into Direct Labour and Overhead

question 59

True/False

Conversion costs may be separated into direct labour and overhead when it is relatively easy to track direct labour, and the use of labour occurs in a different pattern than the use of overhead resources.

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Definitions:

Mark-Up Percentage

The fraction that is added onto the cost price of items to include overhead costs and profit within the selling price.

Cost-Plus Pricing

A pricing method that involves adding a consistent percentage markup to the total production cost of a product or service to set its sale price.

Mark-Up Percentage

The percentage added to the cost price of goods to cover overhead and profit, determining the selling price.

Material Charge

A fee or cost applied for the materials used in the manufacturing or production of goods.