Cost of goods manufactured

Cost of goods manufactured is total manufacturing cost assigned to units completed in a period: direct materials used plus direct labour plus overhead, adjusted for the change in work-in-process.

Also known asCOGM

ByHoang TruongUpdated June 30, 2026

See it move

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A waterfall chart builds up the cost of goods manufactured starting from opening work-in-process of €8,000, adding direct materials used (€22,000), direct labour (€15,000), and manufacturing overhead (€11,000), then deducting closing work-in-process of €6,000. The resulting cost of goods manufactured is €50,000, representing the cost of units completed and transferred from the production process to finished goods inventory during the period.

Where it fits

SubjectCost AccountingCoreTopicProduct Costing & Cost of Goods ManufacturedCore

The formula

LaTeX

\text{COGM} = \text{Opening WIP} + \text{DM Used} + \text{DL} + \text{OH} - \text{Closing WIP}

Variables

$C O GM$: Cost of goods manufactured (€)
$W I P$: Work-in-process inventory (€)
$D M U se d$: Direct materials consumed in production (€)
$D L$: Direct labour cost (€)
$O H$: Manufacturing overhead applied (€)

Check yourself

PracticeCORE

A soft-drink bottler begins the month with €5,000 of work-in-process. During the month it uses €30,000 of direct materials, incurs €18,000 of direct labour, and applies €12,000 of manufacturing overhead. Closing work-in-process is €7,000. What is the cost of goods manufactured for the month?

Select an answer to check your understanding.