Describe How Process Costing for Services Differs from Process Costing

question 73

Essay

Describe how process costing for services differs from process costing for manufactured goods.

---

Definitions:

Opportunity Costs

The potential benefit missed out on when choosing one alternative over another.

Conversion Cost

Conversion cost is the sum of direct labor and manufacturing overhead costs incurred to convert raw materials into finished goods.

Product Cost

The expenses incurred to create a product, including direct materials, direct labor, and manufacturing overhead.

Direct Materials

Raw materials that can be directly traced to the manufacturing of a product.