Which If the Following Are Not Conversion Costs

question 76

Multiple Choice

Which if the following are not conversion costs?

• A) the cost of direct laborers who assemble the parts of an automobile
• B) the cost of tires on an automobile
• C) the cost of depreciation on an automobile assembly plant
• D) the cost of electricity to run the tools in the automobile assembly plant

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Definitions:

Special One-time Order

An order that is not usual and is not expected to recur in the foreseeable future, often at a negotiated price different from regular orders.

Variable Selling

Costs related to selling that vary with the level of sales activity, such as commissions or shipping charges.

Production Capacity

The maximum output that a business can produce in a given period under normal working conditions.

Fixed Manufacturing Overhead

Costs associated with manufacturing that do not vary with the level of production, such as rent, salaries, and insurance.