The is better known as transforming cost. Expenses on transforming direct materials into the finished goods, excluding direct material cost, is known as conversion cost. It is taken as the aggregate cost of direct labour, direct expenses and factory overheads.
Conversion costs consist of all manufacturing costs other than direct material costs.
About the Author
True Tamplin, BSc, CEPF®
True Tamplin is a published author, public speaker, CEO of UpDigital, and founder of Finance Strategists.
True contributes to his own finance dictionary, Finance Strategists, and has spoken to various financial communities such as the CFA Institute, as well as university students like his Alma mater, Biola University, where he received a bachelor of science in business and data analytics.