Equivalent production units are generally determined for a. direct materials only b. direct materials and conversion costs c. direct materials and direct labor costs d. conversion costs only

B. Direct material and conversion cost.

Explanation:

Conversion costs : it is defined as those production costs required to convert raw materials into final goods. This idea is used in cost accounting so as to derive the value of ending inventory, which is then reported in the financial statements. It can also be used to determine the incremental cost of creating a product, which could be useful for price setting purposes.

Note that conversion activities involve labor and manufacturing overhead, the calculation of conversion costs is:

Conversion costs = Direct labor + Manufacturing overhead

Thus, conversion costs are all manufacturing costs except for the cost of raw materials. Examples of costs that may be considered conversion costs are:

Direct labor and related benefits and payroll taxes

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