The cost of electricity for running production equipment is classified as: Conversion cost Period cost A) Yes No B) Yes Yes C) No Yes D) No No

Conversion costs are those costs that combine both labor costs and manufacturing overhead costs. These are those that affect the final cost of the manufactured product and the production costs.These costs are a mandatory in the conversion of the raw material to final product. In this case, electricity for running the production equipment effects final cost of the product produced.Period costs are not related to production of a product.For example marketing costs.They are recorded in the income statement as expenses on the income.

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bratislava bratislava · Answer 2 · 2022-01-18T13:36:10+01:00

The conversion costs are the costs that combine both the labor costs and the manufacturing overhead costs. These are those that affect all costs of the manufactured product and also affect the production costs.

For example the marketing costs. They are then recorded in the income statement as the expenses of the income.

Hence the option A is correct.

Learn more about the running production equipment.

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