Chapter 18, Problem 15E

To determine

Concept Introduction:

Schedule of cost of goods manufactured:

A schedule of cost of goods manufactured is a schedule explaining the flow of costs from raw material to the result as cost of goods manufactured for a period. The cost of goods manufactured amount if transferred to the finished goods inventory and is used to calculate cost of goods sold on income statement.

The schedule of cost of goods manufactured is as under −

Schedule of Cost of Goods manufactured
	Raw Material - Beginning
Add:	Purchases of Raw material
Less:	Raw Material - Ending
	Raw material consumed
Add:	Direct labor
	Manufacturing Overheads
Add:	Indirect labor
Add:	Factory computer supplies used
Add:	Repairs - Factory Equipment
	Rent Cost of factory building
	Total Manufacturing costs
Add:	Working in Process inventory - Beginning
Less:	Working in Process inventory - Ending
	Cost of Goods manufactured

To prepare:

Schedule of cost of goods manufactured

To determine

Concept Introduction:

Cost of goods sold:

The cost of goods sold can be defined as the cost incurred in order to convert a raw material into finished goods. The cost of goods sold includes direct expenses i.e. direct material, direct labor and overheads like - variable manufacturing overheads and fixed manufacturing overhead as well. It is subtracted from the sales to know the gross profit of the business.

Cost of goods sold is calculated as under −

  $\text{Cost of goods sold = Beginning Finished goods + Cost of goods manufactured – Ending Finished goods}$

To compute:

Cost of Goods sold for the year