What is Manufacturing COGS Calculation?
Nexa Consultancy | Startup & Finance Glossary
The calculation of Cost of Goods Sold for a manufacturer. It includes direct material costs, direct labor costs, and all manufacturing overheads (e.g., factory rent, machinery depreciation).
Startup Example: A hardware startup manufactures a smart device. Its COGS is not just the cost of chips and plastic. It must also include the wages of assembly line workers and a portion of the factory's electricity bill and rent. Accurately calculating this is key to correct pricing.
Our services for manufacturing startups focus heavily on accurate COGS calculation.