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Statement of Cost of Goods Manufactured and Sold

The statement of cost of goods manufactured outlines the relationship between total manufacturing cost, cost of goods manufactured, and cost of goods sold. Total manufacturing cost encompasses all production resources, while cost of goods manufactured accounts for completed goods during the period. The document also provides formulas for calculating direct materials used, total manufacturing cost, cost of goods manufactured, and cost of goods sold.

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26 views2 pages

Statement of Cost of Goods Manufactured and Sold

The statement of cost of goods manufactured outlines the relationship between total manufacturing cost, cost of goods manufactured, and cost of goods sold. Total manufacturing cost encompasses all production resources, while cost of goods manufactured accounts for completed goods during the period. The document also provides formulas for calculating direct materials used, total manufacturing cost, cost of goods manufactured, and cost of goods sold.

Uploaded by

ccallehay
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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Download as DOCX, PDF, TXT or read online on Scribd
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FINANCIAL ACCOUNTING AND REPORTING

Norma Dy Lopez-Mariano, FRIEDr, Ph. D.

Statement of Cost of Goods Manufactured

The statement of cost of goods manufactured supports the cost of goods sold figure on the income
statement. The two most important numbers on this statement are the total manufacturing cost and
the cost of goods manufactured. Be careful not to confuse the terms total manufacturing cost and cost
of goods manufactured with each other or with the cost of goods sold.

Total Manufacturing Cost includes the costs of all resources put into production during the period
(meaning, the direct materials, direct labor and overhead applied).

Cost of goods manufactured consists of the cost of all goods completed during the period. It includes
total manufacturing costs plus the beginning work in process inventory minus the ending work in
process inventory.

Cost of goods sold are the costs of all goods SOLD during the period and includes the cost of goods
manufactured plus the beginning finished goods inventory minus the ending finished goods inventory.
Cost of goods sold is reported in the income statement and deducted from sales to arrive at the gross
profit.

This chart will summarize the formulas you will need:

Direct Materials Used Beginning Raw Materials Inventory


+ Raw Materials Purchases
- Ending Materials Inventory

Total Manufacturing Cost Direct Materials


+ Direct Labor
+ Overhead Applied

Cost of Goods Manufactured Total Manufacturing Cost


+ Beginning Work In Process Inventory
- Ending Work in Process Inventory

Cost of Goods Sold Beginning Finished Goods Inventory


+ Cost of Goods Manufactured
- Ending Finished Goods Inventory
Statement of Cost of Goods Manufactured page -2-

Beginning finished goods inventory 2 000 000


Total goods available for sale 5 340 000
Ending finished goods inventory (3 000 000)
COST OF GOODS SOLD 2,340,000

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