Which of the Following Assertions Is True Concerning Conversion Costs

question 6

Multiple Choice

Which of the following assertions is true concerning conversion costs?

• A) Direct labour costs are always included in conversion costs.
• B) The conversion period (for conversion costs calculation) can only include one operation.
• C) When conversion costs are estimated to be over 80% complete, then the cost-benefit constraint requires us to use 100% as the estimate.
• D) Conversion costs are impossible to estimate with any reliability.
• E) The conversion period often includes several operations, and it may be impossible to estimate conversion costs with any reliability in some cases.

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Definitions:

Performance Risk

Involves the perceived danger inherent in a poorly performing product or service.

Internal Locus of Control

The belief that one's own actions and behaviors are major determinants of life events and outcomes, rather than external forces or chance.

External Locus of Control

The belief that one's successes or failures result from external forces beyond personal control.

Performance Risk

The risk that a product or service will not perform to satisfactory standards, potentially leading to customer dissatisfaction or financial loss.