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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.
Planned annual production: 10,000 units. Total direct labor hours (number of hours multiplied by the number of units): 4,000. Divide fixed costs by total direct labor hours (12,000/4,000). The standard hour cost for this manufacturing company is $3.00 per item.or example, if your rent is $1,000 per month, the standard cost calculation is $12,000. Calculate the standard hours needed to produce your items using the information in the Things You'll Need list.