What Term Is Used to Refer to the Cost of Changing

question 44

Multiple Choice

What term is used to refer to the cost of changing direct materials into a finished manufactured product?

• A) Factory overhead cost
• B) Period cost
• C) Conversion cost
• D) Direct labor cost

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Definitions:

Total Cost

The sum of all costs incurred by a firm in producing a certain level of output, including both fixed and variable costs.

Variable Cost

Costs that are directly correlated with the quantity of production or output generated.

ATC Curve

The Average Total Cost curve, a graph that shows the cost per unit of output at different levels of production, typically U-shaped due to economies and diseconomies of scale.

Marginal Cost

The charge incurred for the manufacturing of one more unit of a particular good or service.