Conversion Cost Consists of Which of the Following

question 57

Multiple Choice

Conversion cost consists of which of the following?

• A) Manufacturing overhead cost.
• B) Direct materials and direct labour costs.
• C) Direct labour cost.
• D) Direct labour and manufacturing overhead costs.

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Definitions:

Price-Taker Firm

A firm that has no control over the market price and must accept the prevailing market price for its product.

Marginal Cost

The expense associated with manufacturing an extra unit of a product or service.

Marginal Revenue

The increase in revenue that results from the sale of one additional unit of a product or service.

Positive Profit

Positive profit occurs when a business's total revenues exceed its total costs, indicating financial gain from its operations.