Q - In Process costing, why are costs often divided into two main classifications?

Q - In Process costing, why are costs often divided into two main classifications? A - There are typically only two categories for cost in process costing and they are direct materials and conversion cost. These two categories are separated by the time of their entry into the process; direct materials are usually already on hand. For example, at General Motors the seat cushions, tires, steel and windows are already accounting for before the actual production of the vehicle begins. When production of the vehicle begins, that is when the conversion cost is added to the vehicle such as direct labor.Instructor’s Q - Specifically what makes up conversion costs and why is it called such?Criteria – NoneReference - Horngren, C. T., Datar, S.M., Foster, G., Rajan, M., & Ittner, C. (2009). Cost Accounting: A Managerial Emphasis (13th ed.). Upper Saddle River, NJ: Pearson Prentice Hall.

Conversion CostConversion Cost = Direct Labor Cost + Manufacturing overhead costDirect labor refers to the time spent by worker who works on manufacturing aproduct. Any factory or production...