To calculate total direct manufacturing costs, you will need to consider all of the costs that are directly related to the production of goods.
What are considered like direct costs?
- Direct labor: This is the cost of the labor required to produce the goods, including wages, benefits, and any training costs.
- Direct materials: This is the cost of the raw materials and components that are used to produce the goods.
- Manufacturing overhead: This is the cost of indirect materials and indirect labor that are required to support the manufacturing process. Examples of manufacturing overhead costs include utilities, property taxes, and rent.
To calculate total direct manufacturing costs, you will need to add up all of these costs.
Total direct manufacturing costs = Direct labor + Direct materials + Manufacturing overhead
A note on indirect costs
It is important to note that this calculation only includes direct costs, and does not include indirect costs such as marketing, research and development, or general and administrative expenses. These indirect costs are typically included in the calculation of total manufacturing costs