Conversion Cost Definition:

Conversion cost is equal to direct labor cost plus manufacturing overhead cost.

In equation form:

Conversion Cost = Direct Labor Cost + Manufacturing Overhead Cost

Other Related Accounting Articles:

• Manufacturing Overhead Budget Definition
• Marginal Costing Definition
• Manufacturing Overhead Definition
• Direct Costing Definition
• Cost of Goods Manufactured COGM and Sold Statement Formulas
• Variable Costing Definition
• Full Costing Definition
• Inventory Conversion Period