What Is Included in Conversion Costs

question 22

Multiple Choice

What is included in conversion costs?

• A) direct labour and administrative costs
• B) direct materials and administrative costs
• C) direct labour and manufacturing overhead
• D) direct materials and manufacturing overhead

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Definitions:

Operating Income

Earnings from a firm's core business operations, excluding deductions of interest and tax.

Gross Profit

The financial metric calculated by subtracting the cost of goods sold from the total revenue, representing the profit made before deducting operating expenses.

Gross Profit

The difference between sales revenue and the cost of goods sold before accounting for operating expenses, interest, and taxes.

Merchandising Business

A type of business that purchases goods at wholesale prices and sells the same goods at retail prices to end-users or customers.