Question

When conversion costs are uniform

materials, labor, and overhead are applied at different rates throughout the process.
materials, labor, and overhead are added throughout the process at the same rate.
labor and overhead are added at the same rate but materials are added at a different point.
materials and labor are added at the same rate but overhead is applied uniformly.

Answer 1

Conversion costs, which include labor and overhead, are uniform when they are added at the same rate while materials might be added at a different point due to their variable cost nature. Option C

Step-by-step explanation:

When conversion costs are uniform, labor and overhead are applied to the product at the same rate, and this is given by option C: 'labor and overhead are added at the same rate but materials are added at a different point'. Conversion costs typically refer to labor and manufacturing overhead costs, which are the expenses incurred when converting raw materials into finished products.

Materials may be added at a different point since they are variable costs directly based on the quantity produced. Variable costs increase or decrease with output and include labor, which typically requires more workers or more work hours to produce a greater quantity of a good or service, and raw materials. Fixed costs, such as overhead, do not change with the level of production. Option C