Conversion Cost Calculator

Formula

The formula to calculate the Conversion Cost is:

\[ CC = DL + MO \]

Where:

$CC$ is the Conversion Cost ($)
$DL$ is the Direct Labor Cost ($)
$MO$ is the Manufacturing Overhead ($)

What is a Conversion Cost?

A conversion cost is a measure of the total amount of cost it takes to convert raw material into a manufactured good. It includes the direct labor cost and the manufacturing overhead. Conversion costs are used to assess the efficiency and cost-effectiveness of the production process.

Example Calculation

Let's assume the following values:

Direct Labor Cost (DL) = $10,000
Manufacturing Overhead (MO) = $5,000

Using the formula:

\[ CC = 10000 + 5000 = 15000 \]

The Conversion Cost (CC) is $15,000.