Total manufacturing cost
Total manufacturing cost is direct materials used plus direct labour plus manufacturing overhead — the cost added to production in a period, before adjusting for work-in-progress.
See it move
A factory's direct materials used of €42,000, direct labour of €35,000 and manufacturing overhead of €28,000 stack up to a total manufacturing cost of €42,000 plus €35,000 plus €28,000, or €105,000. Work-in-progress plays no part in this figure — it only enters the next step, when total manufacturing cost is adjusted for opening and closing work-in-progress to reach cost of goods manufactured.
The formula
Variables
- Total manufacturing cost (€)
- Direct materials used (€)
- Direct labour (€)
- Manufacturing overhead applied (€)
The total cost added to production during a period, before any adjustment for work-in-progress inventory.
Check yourself
In a month, direct materials used are €30,000, direct labour is €22,000, and manufacturing overhead applied is €18,000. Opening work-in-progress is €8,000 and closing work-in-progress is €6,000. What is the total manufacturing cost for the month?