Cost accounting formulas

True Tamplin

Written by True Tamplin, BSc, CEPF®
Updated on June 22, 2021

The following formulas can be used to find out different costs.
Prime cost = Direct material consumed + Direct labour
Conversion Cost = Direct material + Factory overhead
Factory cost = Direct material + Direct labour + Factory overhead
Cost of Goods Manufactured = Direct material consumed + Direct labour + Factory overhead + Opening WIP – Closing WIP
Cost of Goods sold = Direct material consumed + Direct labour + Factory overhead + WIP opeing – WIP closing + Opening finished goods – Closing finished goods

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