Cost of Goods Manufactured Formula

Cost of Goods Manufactured Formula

Cost of Goods manufacture means that how money good are produced during the year (Finished Goods). This concept is quite different from the cost of goods sold. All goods manufacture is not supposed to be sold in the current year.

Cost of Good Manufactured = WIP Opening + Factory Cost this Year – WIP Closing

Example

WIP-Opening = 10,000

Direct Labour =   5,000

Direct Material = 6,000

Factory Overhead= 8000

Solution

WIP-Opening =                      10,000

Add: Direct Labour =               5,000

Add: Direct Material =             6,000

                                          21,000

Factory Overhead=                (8000)

Cost of Goods Manufactures   13,000