The cost of Goods manufactured schedule
The cost of goods manufactured schedule is used to calcualte the cost of producing products for a period of time. The cost of goods manufactured amount is transferred to the finished goods inventory account during the period and is used in calculating cost of goods sold on the income statement. The cost of goods manufactured schedule reports the total manufacturing costs for the period that were added to work in process, and adjusts these costs for the change in the work in process inventory account to calculate the cost of goods manufactured.
Red car, Inc. cost of Goods Manufactured schedule For the year Ended december 31,20X0
Direct material used
Beginning raw material inventory 6,200
Add: cost of raw material purchased 49,400
Total raw material available 55,600
Less: Ending raw material inventory (5,800)
Total raw material used 49,800
Direct labor 125,600
Manufacturing overhead
Indirect materials 4,100
Indirect labor 43,700
Depreciation-factory building 9,500
Depreciation-factory equipment 5,400
Insurance- factory 12,000
Property taxes- factory 4,500
Total manufacturing overhead 79,200
Total manufacturing costs 254,600
Add: Beginning work in process inventory 10,20
264,800
Less: Ending work in progress inventory (9,800)
Cost of goods manufactured $ 255,000
The cost of goods manufactured for the period is added to the finished goods inventory. To calculate the cost of goods sold, the change in finished goods inventory is added to/subtracted from the cost of goods manufactured.
Red car, Inc. Income statement For the year Ended December 31,20X0
Sales 427,000
Cost of goods sold
Beginning finished goods inventory 14,500
Cost of goods manufactured 255,000
Total goods available for sale 269,500
Ending finished goods inventory (12,600)
Cost of goods sold 256,900
Gross profit 170,100
Operating expenses
Selling expenses
Sales salaries 65,300
Depreciation-sales equipment 21,000
Total selling expenses 86,300
Administrative expenses
Office salaries 35,000
Depreciation-office equipment 12,000
Insurance expense 9,000
Office supplies expense 2,400
Total administrative expenses 58,400
Total operating expenses 144,700
Income from operations 25,400
Interest revenue 5,100
Income before taxes 30,500
Income taxes 10,675
Net Income $19,825
Required: Need to prepare cycle of inventory by T-account for Direct Material, Work in progress, Finished Goods and then the income statement