Conversion Cost Solution

STEP 0: Pre-Calculation Summary
Formula Used
Conversion Cost = Direct Labour Cost+Manufacturing Overhead Cost
CC = DLC+MOC
This formula uses 3 Variables
Variables Used
Conversion Cost - Conversion Cost is the total of direct labor and manufacturing overhead costs incurred to transform raw materials into finished goods.
Direct Labour Cost - Direct Labour Cost is the expense of wages for workers who are directly involved in the production of goods.
Manufacturing Overhead Cost - Manufacturing Overhead Cost is the aggregate expense of all indirect costs associated with the production process, excluding direct materials and direct labor.
STEP 1: Convert Input(s) to Base Unit
Direct Labour Cost: 600 --> No Conversion Required
Manufacturing Overhead Cost: 500 --> No Conversion Required
STEP 2: Evaluate Formula
Substituting Input Values in Formula
CC = DLC+MOC --> 600+500
Evaluating ... ...
CC = 1100
STEP 3: Convert Result to Output's Unit
1100 --> No Conversion Required
FINAL ANSWER
1100 <-- Conversion Cost
(Calculation completed in 00.004 seconds)
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Credits

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Created by Keerthika Bathula
Indian Institute of Technology, Indian School of mines, Dhanbad (IIT ISM Dhanbad), Dhanbad
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Verified by Aashna
IGNOU (IGNOU), India
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25 Cost Accounting Calculators

Material Cost Variance
​ Go Material Cost Variance = (Standard Quality for Actual Output*Standard Price)-(Actual Quantity*Actual Price)
Labour Cost Variance
​ Go Labour Cost Variance = (Standard Hours for Actual Output*Standard Rate)-(Actual Hours*Actual Rate)
Revised Standard Quantity
​ Go Revised Standard Quantity = (Standard Quantity of each Material/Total Standard Quantity)*Total Actual Quantity
Learning Curve
​ Go Learning Curve = (Time Taken to Produce Initial Quantity*Cumulative Number of Batches)^(-Learning Coefficient)
Labour Efficiency Variance
​ Go Labour Efficiency Variance = Standard Rate*(Standard Time-Actual Time)*Variance
Time to Receive
​ Go Time to Receive = Time for Stock Validation+Time to Add Stock to Records+Time to Prep Stock for Storage
Labour Rate Variance
​ Go Labour Rate Variance = Actual Time*(Standard Rate-Actual Rate)*Variance
Cycle Time
​ Go Cycle Time = Process Time+Inspection Time+Move Time+Queue Time
Revised Standard Hours of Labours
​ Go Revised Standard Hours of Labours = (Actual Mix/Standard Mix)*(Standard Hours of Labour)
Material Yield Variance
​ Go Material Yield Variance = (Actual Unit Usage-Standard Unit Usage)*Standard Cost per Unit
Overall Equipment Effectiveness
​ Go Overall Equipment Effectiveness = Good Count*Ideal Cycle Time/Planned Production Time
Avoided Cost
​ Go Avoided Costs = Assumed Repair Cost+Production Losses-Preventative Maintenance Cost
Material Usage Variance
​ Go Material Usage Variance = Standard Price*(Actual Quantity Units-Standard Quantity)
Labour Mix Variance
​ Go Labour Mix Variance = Standard Rate*(Reversed Standard Rate-Actual Time)
Material Price Variance
​ Go Material Price Variance = Actual Quantity*(Standard Price-Actual Price)
Material Quantity
​ Go Material Quantity = Standard Price*(Standard Quantity-Actual Quantity)
Customer Acquisition Cost
​ Go Customer Acquisition Cost = Cost of Sales and Marketing/Number of New Customers Acquired
Total Addressable Market
​ Go Total Addressable Market = Annual Contract Value per Client*Number of Potential Clients
First Pass Yield
​ Go First Pass Yield = Number of Good Products Finished/Number of Production Orders Started
Average Days Delinquent
​ Go Average Days Delinquent = Days Sales Outstanding-Best Possible Days Sales Outstanding
Backorder Rate
​ Go Backorder Rate = (Number of Undeliverable Orders/Total Number of Orders)
Monthly Recurring Revenue
​ Go Monthly Recurring Revenue = Number of Customers*Average Billed Amount
Sell -Through Rate
​ Go Sell Through Rate = Number of Units Sold/Number of Units Received
Takt Time
​ Go Takt Time = Production Available Time/Customer Demand
On-Time Delivery
​ Go On-Time Delivery = On Time Units/Total Units

16 Important Formulas of Cost Accounting Calculators

Labour Cost Variance
​ Go Labour Cost Variance = (Standard Hours for Actual Output*Standard Rate)-(Actual Hours*Actual Rate)
Learning Curve
​ Go Learning Curve = (Time Taken to Produce Initial Quantity*Cumulative Number of Batches)^(-Learning Coefficient)
Labour Efficiency Variance
​ Go Labour Efficiency Variance = Standard Rate*(Standard Time-Actual Time)*Variance
Overall Equipment Effectiveness
​ Go Overall Equipment Effectiveness = Good Count*Ideal Cycle Time/Planned Production Time
Cost of Goods Sold
​ Go Cost of Goods Sold = Beginning Inventory+Purchases During the Period-Ending Inventory
Material Usage Variance
​ Go Material Usage Variance = Standard Price*(Actual Quantity Units-Standard Quantity)
Noria Effect
​ Go Noria Effect = (New Hires Salary Cost-Leavers Salary Cost)/Previous Salary Cost
Customer Acquisition Cost
​ Go Customer Acquisition Cost = Cost of Sales and Marketing/Number of New Customers Acquired
Total Addressable Market
​ Go Total Addressable Market = Annual Contract Value per Client*Number of Potential Clients
Backorder Rate
​ Go Backorder Rate = (Number of Undeliverable Orders/Total Number of Orders)
Conversion Cost
​ Go Conversion Cost = Direct Labour Cost+Manufacturing Overhead Cost
Production Cost
​ Go Production Cost = Total Fixed Costs+Total Variable Costs
Prime Cost
​ Go Prime Cost = Direct Materials Cost+Direct Labour Cost
Takt Time
​ Go Takt Time = Production Available Time/Customer Demand
On-Time Delivery
​ Go On-Time Delivery = On Time Units/Total Units
Unit Cost
​ Go Unit Cost = Total Cost/Total Units Produced

Conversion Cost Formula

Conversion Cost = Direct Labour Cost+Manufacturing Overhead Cost
CC = DLC+MOC

What is Conversion Cost ?

Conversion cost encompasses all the expenses incurred during the manufacturing process to transform raw materials into finished goods. This includes direct labor costs, such as wages paid to workers directly involved in production, and manufacturing overhead costs, which comprise various indirect expenses like utilities, rent, depreciation of equipment, and maintenance. Essentially, conversion cost reflects the expenditure needed to convert raw materials into products ready for sale. It's a critical metric for businesses to assess production efficiency and cost management, aiding in strategic decision-making and pricing strategies to ensure profitability and competitiveness in the market.

How to Calculate Conversion Cost?

Conversion Cost calculator uses Conversion Cost = Direct Labour Cost+Manufacturing Overhead Cost to calculate the Conversion Cost, The Conversion Cost refers to the total of direct labor and manufacturing overhead expenses required to convert raw materials into finished goods. Conversion Cost is denoted by CC symbol.

How to calculate Conversion Cost using this online calculator? To use this online calculator for Conversion Cost, enter Direct Labour Cost (DLC) & Manufacturing Overhead Cost (MOC) and hit the calculate button. Here is how the Conversion Cost calculation can be explained with given input values -> 1100 = 600+500.

FAQ

What is Conversion Cost?
The Conversion Cost refers to the total of direct labor and manufacturing overhead expenses required to convert raw materials into finished goods and is represented as CC = DLC+MOC or Conversion Cost = Direct Labour Cost+Manufacturing Overhead Cost. Direct Labour Cost is the expense of wages for workers who are directly involved in the production of goods & Manufacturing Overhead Cost is the aggregate expense of all indirect costs associated with the production process, excluding direct materials and direct labor.
How to calculate Conversion Cost?
The Conversion Cost refers to the total of direct labor and manufacturing overhead expenses required to convert raw materials into finished goods is calculated using Conversion Cost = Direct Labour Cost+Manufacturing Overhead Cost. To calculate Conversion Cost, you need Direct Labour Cost (DLC) & Manufacturing Overhead Cost (MOC). With our tool, you need to enter the respective value for Direct Labour Cost & Manufacturing Overhead Cost and hit the calculate button. You can also select the units (if any) for Input(s) and the Output as well.
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