Conversion costs as a percentage of cost of goods sold
This measure calculates the percentage of cost of goods sold (COGS) that comes from conversion costs. Conversion costs equate to the sum of labor and overhead costs. Overhead costs refer to those that an organization cannot identify as direct costs of performing a process; these include occupancy, facilities, utilities, and maintenance, etc. COGS represents the cost of purchasing raw materials and manufacturing finished products. This measure is part of a set of Supplemental Information measures that help companies evaluate additional variables not covered elsewhere for the "produce/manufacture/deliver product" process.
Benchmark Data
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Learn about Membership| 25th | Median | 75th |
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Compute this Measure
Units for this measure are percent.
Labor cost as a percentage of cost of goods sold + Overhead cost as a percentage of cost of goods sold
Key Terms
Cost of goods sold (COGS) is the amount on an income statement that represents the cost of purchasing raw materials and manufacturing finished products. This represents specific or direct manufacturing cost of material and labor entering in the production of finished goods. For merchandise companies, cost of goods sold represents the purchase price of items sold, as well as indirect overhead such as freight, inspecting, and warehouse costs. For service organizations, cost of goods sold may be referred to as Cost of Services.
Supplemental information is data that APQC determines is relevant to decision support for a specific process, but does not fit into the other measure categories such as cost effectiveness, cycle time, or staff productivity.