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Conversion costs do not include which of these: 1- Depreciation .2- Direct material .3- Indirect labor .4- Indirect material?

Planning IFRS CMA
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Question added by Ahmed Tharwat , general accountant , Ocean Kitchen Furniture Fix IND.LLC
Date Posted: 2013/08/18
Upvote (12) Views (40) Followers (2) Answers (18) Report Question
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Ahmed Tharwat
by Ahmed Tharwat , general accountant , Ocean Kitchen Furniture Fix IND.LLC

Conversion cost equals direct labour plus manufacturing overhead , also the costs of converting raw materials in to finished goods .
The answer is Direct material .

Deleted user
by Deleted user

Option2 - Direct Material is the right answer because conversion cost actually is cost to convert the direct material to the new product or refined one.

Jameel Yousaf
by Jameel Yousaf , Supervisor , Nasir Javaid MAqsood Imran Chartered Accountants

Conversion costs represent the costs of all such activities or resources that have been applied in converting raw materials to finished items.
  Thus Conversion Cost does not include Direct Material

Zeeshan Bhutto
by Zeeshan Bhutto , Business / Financial Analyst - Finance , United Bank Limited

DIrect material is not part of the conversion cost.

Khaled Abdelrehim ACCA DipIFR CMA
by Khaled Abdelrehim ACCA DipIFR CMA , Financial Analysis Assistant General Manager , Khalda Petroleum Company

Direcct Material

ahmed abo khalil
by ahmed abo khalil , accountant , Special project

2

Omar Gado
by Omar Gado , Senior Financial Accountant , Al-Faisal Holding

Direcct Material

ahmed khalil
by ahmed khalil , accountant , Supermarket

Conversion Cost does not include Direct Material

Omar Shahzad
by Omar Shahzad , Group Chief Accountant , dipndip

Conversion Cost = Direct Labor Cost + Manufacturing Overhead Cost

accountant mido
by accountant mido , senior accountant , arab trade foundation


2- Direct material

Muhammad Nouman Shafique Awan

the answer is2..
as we have to convert the material so conversion cost do not include the cost of material

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