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For this situation, the calculation of total manufacturing cost is as follows: 1  Direct materials. 2  Add the total cost of materials purchases in the period to the cost of beginning inventory, and subtract the cost of ending inventory.3  The result is the cost of direct materials incurred during the period. 4  Direct labor. Direct materials. 2  Add the total cost of materials purchases in the period to the cost of beginning inventory, and subtract the cost of ending inventory. 3  The result is the cost of direct materials incurred during the period. 4  Direct labor.
It has just completed production for August. At the beginning of August, its Work in Process Inventory account showed direct materials costs of $31,700 and conversion costs of $29,400. The cost of direct materials used in August was $275,373; conversion costs were $175,068. During the month, the company started and completed 15,190 sets. For August, a total of 16,450 equivalent sets for direct materials and 16,210 equivalent sets for conversion costs have been computed.