Conversion cost是什麼意思

"Conversion cost" is a term used in manufacturing and accounting that refers to the costs associated with converting raw materials into finished goods. These costs typically include direct labor, direct materials, and manufacturing overhead that are directly related to the transformation process.

In other words, conversion cost is the cost of changing a product from one form to another. For example, if a company makes furniture, the conversion cost would include the cost of the wood, the cost of the labor to cut and shape the wood, and the cost of any machinery or equipment used in the production process.

Conversion costs are often used in cost accounting to determine the cost of goods manufactured and the cost of inventory. They can also be used to calculate the cost of individual products, which is important for making pricing decisions and determining the profitability of a product line.