The cost of goods manufactured (COGM), which is also referred to as the cost of goods completed, means the overall value of inventory produced during a specific accounting period which is now ready to be sold to the end consumer.
The formula for calculating the cost of goods manufactured is simply to add all the total manufacturing costs. All work in progress costs (direct materials + labor + factory overhead + beginning inventory) subtracted by (ending goods in process inventory).
This will look like:
COGM = Total Cost of Work in Progress – Ending Work in Process Inventory
The COGM is, hence, the total amount of money spent to turn unfinished inventory into sales-ready goods.