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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.
Save. In financial accounting, inventory value is the sum of direct materials, direct labor and manufacturing overhead costs incurred to create the product. Total direct materials cost can be calculated at the end of the year to analyze inventory costs. It's also a component in work-in-progress inventory.or purposes of inventory calculation, the direct materials account includes the cost of materials used rather than materials purchased. To calculate direct materials, add beginning direct materials to direct materials purchases and subtract ending direct materials.