Enter the total direct labor cost and the manufacturing overhead into the calculator to determine the conversion cost.

- Cost of Goods Manufactured Calculator (COGM)
- Manufacturing Overhead Calculator
- Average Variable Cost Formula

## Conversion Cost Formula

The following formula is used to calculate a conversion cost.

CC = DL + MO

- Where CC is the conversion cost ($)
- DL is the direct labor cost ($)
- MO is the manufacturing overhead

## Example

How to calculate conversion cost?

**First, determine the direct labor cost.**This will be the cost of any labor that was directly involved in the process of manufacturing the good.

**Next, determine the total manufacturing overhead.**The manufacturing overhead will be the total overhead cost required for the manufacturing process to occur and the good to be produced.

**Finally, calculate the conversion cost.**Calculate the conversion cost by adding the direct labor cost to the manufacturing overhead.

## FAQ

**What is a conversion cost?**

A conversion cost is the total amount of cost it takes to bring a manufactured product from a raw material into a completed good.

**How do you reduce conversion costs?**

The best methods for reducing conversion costs involve improving efficiency that reduce both direct labor and manufacturing overhead.

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