Which of the Following Is a Prime Cost and a Conversion

question 228

Multiple Choice

Which of the following is a prime cost and a conversion cost?

• A) manufacturing overhead
• B) direct materials
• C) direct labor
• D) selling expenses

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Definitions:

Cost of Goods Sold

The direct costs attributable to the production of goods sold by a company, including the cost of the materials and labor directly used to create the good.

Beginning Inventory

The value of goods available for sale at the start of an accounting period.

Inventory Turnover

A ratio indicating how many times a company has sold and replaced inventory during a certain period of time.

Cost of Goods Sold

This refers to the total cost of all the materials and labor directly involved in producing goods sold by a company during a specific period.