What are conversion costs? In determining equivalent units of production, why are conversion costs calculated separately from direct materials?
What will be an ideal response?
: Conversion costs are the cost to convert raw materials into finished goods. These conversion costs are direct labor and manufacturing overhead.
Conversion costs are shown separately from direct material costs because direct materials can be added at any time during the process while conversion costs are generally incurred evenly throughout production.
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Indicate whether the statement is true or false.
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