Manufacturing Overhead Calculator

Formula

The formula to calculate Manufacturing Overhead (MO) is:

\[ MO = COGS - CORM - LC \]

Where:

$ MO $ is the Manufacturing Overhead
$ COGS $ is the Cost of Goods Sold ($)
$ CORM $ is the Cost of Raw Material ($)
$ LC $ is the Direct Labor Cost ($)

What is Manufacturing Overhead?

Manufacturing overhead refers to the costs associated with producing goods that are not directly tied to raw materials or direct labor. This includes costs such as factory rent, utilities, and other indirect expenses. Manufacturing overhead helps businesses understand the full cost of producing a product, beyond just the raw materials and labor involved.

Example Calculation

Let's consider an example:

Cost of Goods Sold (COGS): $50,000
Cost of Raw Material (CORM): $20,000
Direct Labor Cost (LC): $10,000

Using the formula to calculate Manufacturing Overhead:

\[ MO = 50000 - 20000 - 10000 = 20000 \, \text{\$} \]

This means that the manufacturing overhead is $20,000.