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Ahmed Tharwat , Senior 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 .
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.
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