Accounting Principles II: The Cost of Goods Manufactured Schedule

The Cost of Goods Manufactured Schedule

The cost of goods manufactured schedule is used to calculate 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 materials used
Beginning raw materials inventory	$ 6,200
Add: Cost of raw materials purchased	49,400
Total raw materials available	55,600
Less: Ending raw materials inventory	(5,800)
Total raw materials 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-process 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		255,00
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