Which of the following statements is true of conversion costs? A. The conversion cost needed for a completed unit and the conversion cost in a partially completed unit can be measured accurately. B. If conversion costs are added evenly during the assembly we can conclude that there are more than one indirect-cost category. C. The calculation of equivalent units is relatively easy for the textile industry. D. Estimating the degree of completion is usually easier for direct material costs than for conversion costs.

Question

Business

Admiral

3 August, 05:58

Which of the following statements is true of conversion costs? A. The conversion cost needed for a completed unit and the conversion cost in a partially completed unit can be measured accurately. B. If conversion costs are added evenly during the assembly we can conclude that there are more than one indirect-cost category. C. The calculation of equivalent units is relatively easy for the textile industry. D. Estimating the degree of completion is usually easier for direct material costs than for conversion costs.

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Ralph Marsh · Answer 1

D. Estimating the degree of completion is usually easier for direct material costs than for conversion costs.

Explanation:

"Conversion cost" is a term that is used in accounting. This refers to the production cost of the manufacturer, other than the direct material's cost. This is calculated by adding the direct labor's costs and the manufacturing overhead costs. The answer will then be divided by the total number of products produced within the day.

On the contrary, the "direct material cost" refers to the cost of the raw materials that were used in order to produce the product. Since the raw materials can be easily identified, it then makes it easier to estimate the degree of completion compared to that of the conversion cost.

So, this explains the answer.