The manufacturing overhead formula is also called the total manufacturing cost.
This is the total net cost of a business to produce its good in an accounting period. There are two ways of reporting this cost.
The first method is to charge all expenses in the accounting period, which makes the total manufacturing cost the same as the cost of goods sold.
The second method is that a portion of the cost is charged to expenses, with some of it allocated to goods produced during the period which remain unsold.
Regardless of the method, the total manufacturing costs take into account things like direct materials, direct labor, and inventory.
The most popular method of calculating the manufacturing overhead formula is to charge all expenses in the accounting period. This is computed by: (direct materials + direct overhead + direct labor) = total manufacturing cost.
This will look like:
Total Manufacturing Cost = Direct Materials + Direct Overhead + Direct Labor