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Direct Materials
Raw materials that are directly traceable to the manufacturing of a specific product and included in its cost.
Conversion Costs
Expenditures associated with transforming raw materials into final products, often comprising direct labor costs and indirect manufacturing expenses.
Equivalent Units
A concept used in process costing that converts partially completed units into an equivalent number of fully completed units to accurately measure inventory and cost of goods sold.
Weighted-Average Method
A method of costing inventory that determines the cost of goods sold and the closing inventory by averaging the cost of all items available for sale throughout the period.
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