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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Measure Category:
Supplemental Information
Measure ID:
Total Sample Size:
1,915 All Companies
25th Median 75th
- - -
Key Performance Indicator:

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Compute this Measure

Units for this measure are percent.

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Labor cost as a percentage of cost of goods sold + Overhead cost as a percentage of cost of goods sold

Key Terms

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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.

Measure Scope

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Cross Industry (7.3.1)

  • 4.3.1 - Schedule production (10303)
    • - Model and simulate plant (19563)
    • - Generate line level plan (10306)
    • - Generate detailed schedule (10307)
    • - Schedule production orders and create lots (10308)
    • - Schedule preventive (planned) maintenance (preventive maintenance orders) (10315)
    • - Schedule requested (unplanned) maintenance (work order cycle) (10316)
    • - Release production orders and create lots (10309)
  • 4.3.2 - Produce/Assemble product (10304)
    • - Manage raw material inventory (10310)
    • - Execute detailed line schedule (10311)
    • - Report maintenance issues (10319)
    • - Rerun defective items (10313)
    • - Monitor and optimize production process (19566)
      • - Automate and control plant (19567)
      • - Perform advanced process control (19568)
      • - Perform real-time optimization (19569)
      • - Manage plant alarms and alerts (19570)
    • - Assess production performance (10314)
  • 4.3.3 - Perform quality testing (10369)
    • - Calibrate test equipment (10318)
    • - Perform testing using the standard testing procedure (10374)
    • - Manage quality samples (20956)
    • - Record test results (10375)
    • - Track and analyze non-conformance trends (12045)
    • - Perform root cause analysis (12046)
  • 4.3.4 - Maintain production records and manage lot traceability (10370)
    • - Determine lot numbering system (10376)
    • - Determine lot use (10377)