About the Manufacturing Cost Calculator
This manufacturing cost calculator adds up the three classic product costs — direct materials, direct labor and manufacturing overhead — to give total manufacturing cost for a period, then adjusts for work-in-process inventory to find the cost of goods manufactured (COGM) and the production cost per unit.
It is designed for small manufacturers, makers moving into batch production, accounting students and anyone pricing a product who needs to know what each unit really costs to make. Overhead can be entered as a dollar amount, or applied as a percentage of direct labor if that is how your shop allocates it.
Use figures for the same period (a month, quarter or production run). Direct materials should be the materials actually used in production, not purchases. Selling, shipping and administrative costs are period costs and are not part of manufacturing cost, so leave them out here.
With the default inputs, the manufacturing cost per unit is $25.50. Change any value above to recalculate instantly.
How to use the manufacturing cost calculator
- 1Enter direct materials used and direct labor for the period.
- 2Enter manufacturing overhead as a dollar amount or as a percentage of direct labor.
- 3Add beginning and ending work-in-process balances (leave 0 if none).
- 4Enter the number of units completed in the period.
- 5Read cost per unit, COGM and the per-unit breakdown table.
Formula and method
Total manufacturing cost (TMC) is the sum of direct materials used, direct labor and manufacturing overhead incurred during the period. Some of that cost is still sitting in partly finished goods, so cost of goods manufactured adds the opening work-in-process balance and subtracts the closing balance — leaving the cost of units actually completed. Dividing COGM by units completed gives the average manufacturing cost per unit.
Prime cost (materials + labor) and conversion cost (labor + overhead) are standard cost-accounting subtotals. When overhead is applied as a percentage of direct labor, overhead = direct labor × rate. This is an absorption (full) costing view; selling and administrative expenses are excluded.
- DM
- Direct materials used in production
- DL
- Direct labor cost
- MOH
- Manufacturing overhead (indirect factory costs)
- WIP
- Work-in-process inventory at the start and end of the period
Worked examples
Quarterly production of 10,000 units
Materials $120,000 + labor $80,000 + overhead $60,000 = $260,000 total manufacturing cost. Adding $15,000 beginning WIP and subtracting $20,000 ending WIP gives COGM of $255,000, so each of the 10,000 units cost $25.50.
Simple batch with no work in process
With no WIP at either end, COGM equals total manufacturing cost: $45,000 + $30,000 + $25,000 = $100,000. Spread over 4,000 units that is $25.00 per unit.
Overhead applied at 70% of direct labor
Overhead is 70% × $6,200 = $4,340, so total manufacturing cost is $8,500 + $6,200 + $4,340 = $19,040. WIP fell by $1,000, adding to COGM: $20,040 ÷ 500 units = $40.08 per unit.
Frequently asked questions
What is the formula for total manufacturing cost?+
Total manufacturing cost = direct materials used + direct labor + manufacturing overhead for the period. It includes every cost of making products in the factory, whether or not the goods were finished.
What is the difference between total manufacturing cost and COGM?+
Total manufacturing cost is everything spent on production in the period. COGM adjusts for work in process — adding beginning WIP and subtracting ending WIP — so it only counts goods that were completed during the period.
What counts as manufacturing overhead?+
Indirect factory costs: factory rent and utilities, supervisors and maintenance staff, equipment depreciation, indirect materials like lubricants and fasteners, and factory insurance. Office, sales and shipping costs are not manufacturing overhead.
How is COGM different from COGS?+
COGM is the cost of goods finished in the period. COGS is the cost of goods sold, calculated as beginning finished-goods inventory + COGM − ending finished-goods inventory. COGS is what appears on the income statement.
How do I calculate production cost per unit?+
Divide cost of goods manufactured by the number of units completed in the same period. For a single job or batch with no WIP, simply divide total materials, labor and overhead for that batch by the units produced.
Results are estimates for educational purposes and are not financial advice. Rates, fees and terms vary — confirm with your lender or a licensed advisor before making decisions.