Conversion Costs

Conversion costs are the costs needed to convert raw materials into a salable product.

Direct labor and Factory Overhead are part of conversion costs. Direct labor is the salary expense for people who actual make the product. Overhead is indirect labor, indirect materials, and other expenses such as taxes, utilities, insurance, depreciation, and repairs.

https://accounting.uworld.com/cpa-review/lc/accounting-dictionary/term/conversion-costs/