Conversion Cost

Manufacturing cost of converting material into finished product, typically direct labor plus manufacturing overhead.

Examples

01The conversion cost of a plastic bottle is EUR 0.04, made up of machine time, operator time and plant overhead.
02In the monthly review, conversion cost per unit is compared between two plants making the same product.
03After the line speed is raised by 12 %, the conversion cost per unit falls, which is confirmed with the next month's actual figures.