# How to Figure Out Total Manufacturing Cost (Calculator and Formula)

> Source: https://netray.co/tools/total-manufacturing-cost-calculator
> Publisher: Netray (netray.co), AI and integration engineering for ERP and manufacturing systems.
> Section: Free Tools

## Short answer

Add direct materials, direct labor and manufacturing overhead to get total manufacturing cost, cost of goods manufactured and cost per unit. Shows how unit cost falls with volume.

## Category

cost-finance

## Audience

- Estimator
- Cost accountant
- Owner
- Controller

## Tool

**Kind:** calculator

**Currency:** $

**Inputs:**

#### Units produced

**Key:** units

**Type:** number

**Default:** 5000

**Min:** 1

**Step:** 100

**Unit:** units

#### Direct material per unit

**Key:** dm_unit

**Type:** number

**Default:** 14.5

**Min:** 0

**Step:** 0.1

**Unit:** $

#### Direct labor hours per unit

**Key:** dl_hrs

**Type:** number

**Default:** 0.35

**Min:** 0

**Step:** 0.01

**Unit:** h

#### Direct labor rate (with fringe)

**Key:** wage

**Type:** number

**Default:** 32

**Min:** 0

**Step:** 0.5

**Unit:** $/h

#### Variable overhead per direct labor hour

**Key:** voh

**Type:** number

**Default:** 6

**Min:** 0

**Step:** 0.25

**Unit:** $/h

#### Fixed overhead for the period

**Key:** foh

**Type:** number

**Default:** 42000

**Min:** 0

**Step:** 500

**Unit:** $

#### Beginning work in process

**Key:** wip_b

**Type:** number

**Default:** 8000

**Min:** 0

**Step:** 500

**Unit:** $

#### Ending work in process

**Key:** wip_e

**Type:** number

**Default:** 11000

**Min:** 0

**Step:** 500

**Unit:** $

**Outputs:**

#### Direct materials used

**Key:** dm

**Expr:** units * dm_unit

**Format:** currency

#### Total direct labor hours

**Key:** dlh

**Expr:** units * dl_hrs

**Format:** number

#### Direct labor cost

**Key:** dl

**Expr:** dlh * wage

**Format:** currency

#### Manufacturing overhead

**Key:** oh

**Expr:** dlh * voh + foh

**Format:** currency

#### Total manufacturing cost

**Key:** tmc

**Expr:** dm + dl + oh

**Format:** currency

**Primary:** true

**Description:** Direct materials + direct labor + manufacturing overhead

#### Cost of goods manufactured

**Key:** cogm

**Expr:** tmc + wip_b - wip_e

**Format:** currency

**Description:** Total manufacturing cost plus beginning WIP minus ending WIP

#### Cost per unit

**Key:** unit

**Expr:** if(gt(units,0), cogm / units, 0)

**Format:** currency

**Primary:** true

#### Prime cost

**Key:** prime

**Expr:** dm + dl

**Format:** currency

**Description:** Direct materials + direct labor

**Chart:**

#### Cost per unit vs units produced

**Type:** line

**X:** units

**From:** 500

**To:** 10000

**Steps:** 20

**Series:**

- unit

**Disclaimer:** Planning calculation. Use your own costing policy for overhead and WIP. Financial reporting may require additional adjustments.

## Content

**Intro:** Total manufacturing cost is direct materials plus direct labor plus manufacturing overhead for the period. This calculator also gives cost of goods manufactured and cost per unit, and shows how unit cost falls as volume rises.

**Sections:**

#### The total manufacturing cost formula

**Body:** Total manufacturing cost = direct materials used + direct labor + manufacturing overhead. Prime cost is direct materials plus direct labor. Cost of goods manufactured = total manufacturing cost + beginning work in process - ending work in process. Cost per unit = cost of goods manufactured divided by units completed. Overhead here is split into a variable part per direct labor hour and a fixed part for the period.

**Bullets:**

- Direct materials: the material that becomes part of the product
- Direct labor: wages of people who work on the product
- Overhead: indirect factory costs, see the overhead rate calculator
- WIP adjusts total cost to cost of goods manufactured

#### Worked example

**Body:** For 5,000 units, material at 14.50 gives 72,500. Labor of 0.35 hours at 32 dollars is 11.20 per unit, or 56,000. Variable overhead of 6 dollars on 1,750 hours is 10,500, and fixed overhead is 42,000, so overhead is 52,500. Total manufacturing cost is 181,000. Adding 8,000 beginning WIP and subtracting 11,000 ending WIP gives cost of goods manufactured of 178,000, or 35.60 per unit.

#### Reading the chart

**Body:** The chart shows cost per unit across volumes. Material and labor stay per unit, but fixed overhead is spread over more units as volume grows, so the curve falls and flattens. Use it to see the cost impact of a small run versus a full batch, or to set a minimum order quantity. If unit cost barely changes with volume, your costs are mostly variable and your pricing risk lies in material.

#### How it maps to ERP cost rollups

**Body:** In an ERP, the standard cost roll-up multiplies bill of material quantities by material cost, and routing times by labor and overhead rates, to get a standard cost per item. Actual job cost then collects real material issues, labor and machine time and applies overhead. Comparing the two shows variances. This calculator is a quick, transparent check of those numbers and a way to explain them.

**Cta:** If your cost rollups and job actuals are in an ERP, Netray can add a private AI layer on your own servers that explains cost variances by job and work center in plain language.

**Faq:**

#### What is included in total manufacturing cost?

**Answer:** Direct materials, direct labor and manufacturing overhead. Selling, general and administrative expenses are not included. Freight inbound on materials is normally part of material cost.

#### What is the difference between total manufacturing cost and COGM?

**Answer:** Total manufacturing cost is what was spent during the period. Cost of goods manufactured adjusts for work in process, adding the beginning WIP and subtracting the ending WIP, so it reflects completed units.

#### How do I find cost per unit?

**Answer:** Divide cost of goods manufactured by the number of units completed in the period. For a single job, divide the job's total cost by the quantity produced.

#### How does scrap affect manufacturing cost?

**Answer:** Scrap raises cost per good unit because material, labor and overhead were spent on parts you cannot sell. Include scrap in your material and hours, or divide by good units rather than started units.

## Search terms

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