The Difference Between the Asset Account and the Contra-Asset Account

question 41

Short Answer

The difference between the asset account and the contra-asset account is known as the ____________________.

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Definitions:

Direct Materials

Raw materials that are directly traceable to the production of a specific product and are a major component of its cost.

Direct Labor

Wages paid to workers directly involved in the production of goods or services, as opposed to administrative or managerial staff.

Manufacturing Overhead

All the indirect costs associated with producing a product, which may include the cost of utilities, depreciation of manufacturing equipment, and salaries of managerial staff.

Conversion Cost

The combined costs of direct labor and manufacturing overheads that are incurred in the process of converting raw materials into finished goods.