Conversion Cost Calculator

✖Direct Labour Cost is the expense of wages for workers who are directly involved in the production of goods.ⓘ Direct Labour Cost [DLC]			+10% -10%
✖Manufacturing Overhead Cost is the aggregate expense of all indirect costs associated with the production process, excluding direct materials and direct labor.ⓘ Manufacturing Overhead Cost [MOC]			+10% -10%

✖Conversion Cost is the total of direct labor and manufacturing overhead costs incurred to transform raw materials into finished goods.ⓘ Conversion Cost [CC]

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Formula

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Conversion Cost

Formula

`"CC" = "DLC"+"MOC"`

Example

`"1100"="600"+"500"`

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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 00.005 seconds)

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Credits

Created by Keerthika Bathula

Indian Institute of Technology, Indian School of mines, Dhanbad (IIT ISM Dhanbad), Dhanbad

Keerthika Bathula has created this Calculator and 50+ more calculators!

Verified by Aashna

IGNOU (IGNOU), India

Aashna has verified this Calculator and 25+ more calculators!

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Go Material Cost Variance = (Standard Quality for Actual Output*Standard Price)-(Actual Quantity*Actual Price)

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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

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Labour Rate Variance

Go Labour Rate Variance = Actual Time*(Standard Rate-Actual Rate)*Variance

Cycle Time

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Revised Standard Hours of Labours

Go Revised Standard Hours of Labours = (Actual Mix/Standard Mix)*(Standard Hours of Labour)

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Go Material Yield Variance = (Actual Unit Usage-Standard Unit Usage)*Standard Cost per Unit

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Go Material Price Variance = Actual Quantity*(Standard Price-Actual Price)

Material Quantity

Go Material Quantity = Standard Price*(Standard Quantity-Actual Quantity)

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Go Customer Acquisition Cost = Cost of Sales and Marketing/Number of New Customers Acquired

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Go Total Addressable Market = Annual Contract Value per Client*Number of Potential Clients

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Go First Pass Yield = Number of Good Products Finished/Number of Production Orders Started

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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

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Conversion Cost

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Prime Cost

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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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