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.

Cost of Goods Manufactured

The following equation is used to calculate the COGM, or cost of goods manufactured.

  • 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

To calculate the costs of goods manufactured, simply sum the material, labor, and overhead costs, add in the beginning work in progress inventory, then subtract the engine work in progress inventory.

COGM Definition

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?

  1. First, determine the costs.

    Calculate the material and direct labor costs associated with production.

  2. Next, determine the overhead.

    Calculate the total manufacturing overhead.

  3. Next, determine the beginning and ending inventories.

    Calculate the value of the inventory at the start and finish.

  4. Finally, calculate the COGM.

    Using the formula above, calculate the COGM.


What is COGM?

COGM is the cost of goods manufactured and measures all associated costs including overhead, labor, and material costs.