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The halo effect occurs when:
Factory Overhead
All indirect costs associated with manufacturing, such as utilities, depreciation, and maintenance, not directly tied to production.
Conversion Costs
The sum of labor costs and overhead expenses related to the transformation of materials into finished products.
Direct Materials
Raw materials that are directly traceable to the production of specific goods or services and are a significant component of manufacturing costs.
Equivalent Units
A concept used in cost accounting to represent the amount of work done on incomplete units, expressed as the equivalent of a number of fully completed units.
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