Final answer:
The indirect costs of converting raw material into finished goods are called overhead costs. These include expenses that support production and are part of the conversion costs, different from explicit and implicit costs.
Step-by-step explanation:
The indirect costs of converting raw materials into finished goods are referred to as overhead costs. These costs are not directly tied to the production process but are necessary to support the production. They include expenses such as rent, utilities, and depreciation of equipment. Overhead costs, along with direct costs (the cost of raw materials and labor directly involved in the creation of a product), make up the conversion costs. It's important to distinguish these from explicit costs (out-of-pocket costs) and implicit costs (opportunity costs of using resources the firm owns).