Enter the cost of materials, labor, manufacturing overhead, beginning work in process inventory, and ending work in process inventory into the calculator to determine the cost of goods manufactured.
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Cost of Goods Manufactured
The following equation is used to calculate the COGM, or cost of goods manufactured.
COGM = MC + LC + MO + BWIP – EWIP
- Where COGM is the cost of goods manufactured
- MC is the material cost
- LC is the labor cost
- MO is the manufacturing overhead
- BWIP is the beginning work in progress inventory
- EWIP is the ending work in progress inventory
COGM stands for the cost of goods manufactured. It’s a measure of the true cost of a manufactured item, including labor and overhead. It also takes into account the work in progress inventory.
Cost of Goods Manufactured Example
How to calculate cost of goods manufactured?
- First, determine the costs.
Calculate the material and direct labor costs associated with production.
- Next, determine the overhead.
Calculate the total manufacturing overhead.
- Next, determine the beginning and ending inventories.
Calculate the value of the inventory at the start and finish.
- Finally, calculate the COGM.
Using the formula above, calculate the COGM.
COGM is the cost of goods manufactured and measures all associated costs including overhead, labor, and material costs.