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What Are Conversion Costs? in Determining Equivalent Units of Production,why

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What are conversion costs? In determining equivalent units of production,why are conversion costs calculated separately from direct materials?


Definitions:

Overapplied

Overapplied refers to a situation where the overhead allocated to products or services exceeds the actual overhead costs incurred, usually in manufacturing settings.

Underapplied

A term often used in accounting to refer to a situation where the allocated costs are less than the actual costs incurred.

Job Order Cost System

An accounting system that accumulates manufacturing costs separately for each job or order, tracking direct labor, direct materials, and applied overhead.

Oil Refinery

An industrial plant specialized in the process of converting crude oil into various products and fuels such as gasoline, diesel, and jet fuel through various chemical processes.

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