What Does Conversion Cost Consist Of

question 68

Multiple Choice

What does conversion cost consist of?

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

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Definitions:

Investment

The expenditure of money with the expectation of achieving a profit or material result by putting it into financial schemes, shares, or property.

Present Value Factors

Multipliers used to determine the present value of future cash flows by accounting for the time value of money.

Future Value Factors

Numerical factors used to calculate the future value of an investment after accounting for interest rates and time periods.

Reciprocals

Mathematical expressions that represent the inverse of a given number or quantity, such that the product of a number and its reciprocal equals one.