How Do You Calculate The Cost Of Goods Manufactured?
Calculating the cost of goods manufactured is an important process that aids in setting the best selling price for goods. The cost of goods manufactured is the result of an accounting process that determines every cost input in creating a product, including raw goods, labor and plant costs. Calculating the cost, typically done yearly, can cover any period during which the costs of all inputs are available. Add the cost of the raw materials purchased during the calculation period to the value of the beginning raw materials inventory to obtain the total value of your raw materials. Subtract from this the value of the raw materials at the end of the calculation period and you have the total value of the raw materials used during the calculation period covered. Determine the total manufacturing overhead for the calculation period. This overhead is the combination of the indirect materials (utility costs, maintenance costs), indirect labor (all factory personnel except direct labor working
