Total manufacturing cost is the total sum of a budget that is needed to complete production during one financial period.
Calculating the total manufacturing cost allows a firm to determine the amount its spending in the manufacture. A company can use this figure to monitor the percentage of its revenues that go towards manufacturing costs.
Formula to calculate total manufacturing cost.
![Calculate Total Manufacturing Cost.](https://www.learntocalculate.com/wp-content/uploads/2020/05/manufacturing-1024x110.png)
Direct material cost is the cost of the raw materials and components used to create a product.
Direct labor cost is wages that are incurred in order to produce goods or provide services to customers.
Manufacturing overhead is all indirect costs incurred during the production process.
Example:
Calculate the total manufacturing cost of Delamere Yoghurt Making Company if direct material cost is Sh. 5 million, direct labor cost is Sh. 800,000 and the manufacturing overhead amounts to Sh. 1.2 million.
![Calculate Total Manufacturing Cost](https://www.learntocalculate.com/wp-content/uploads/2020/05/manufacturing-2-1-1024x268.png)
Therefore, the total manufacturing cost is Sh. 7,000,000.