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Justin Sotelo
on Nov 13, 2024

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Conversion cost is the combination of direct materials cost and factory overhead cost.

Conversion Cost

The sum of labor and overhead expenses incurred to convert raw materials into finished products.

Direct Materials Cost

The cost of raw materials that are directly used in the production of a product.

Factory Overhead Cost

Indirect manufacturing expenses that are not directly tied to the production of goods, like utilities and salary of supervisors.

  • Analyze the variances between direct materials, direct labor, and factory overhead in terms of cost classification.
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BJ
Becca JensenNov 14, 2024
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