Transcript Manufacturing Statement

Exercise 18-12
In order for the animations in the presentation to work
properly, be sure to view this presentation as a Slide Show.
A statement that summarizes
the types and amounts of costs
incurred in a company’s
manufacturing process.
Shanta Company
Manufacturing Statement
For Year Ended December 31, 2013
Label this statement with
the same three line
heading used for all other
formal accounting
statements:
•Name of the company
•Name of the statement
•Period covered
Randa Company
Shanta
Company
Manufacturing Statement
For Year Ended December 31, 2013
The best way to manage
the preparation of this
statement is to break it
into four sections:
•Direct Materials
•Direct Labor
•Factory Overhead
•Cost of Goods
Manufactured
Note that the first three
sections are the three
components of a
manufactured product.
Shanta
Company
The first section to
complete is Direct
Materials.
Manufacturing Statement
For Year Ended December 31, 2013
Direct Materials
Beginning raw materials inventory
$37,000
Raw materials purchases
175,600
Raw materials available for use
212,600
Less ending raw materials inventory
42,700
Direct materials used
Direct Materials Used
is calculated as follows:
$169,900
Beginning Direct Materials Inv
Plus: Raw Materials Purchased
Less: Ending Raw Materials Inv
You will always be given
beginning and ending
direct materials inventory
and raw materials
purchased.
Shanta
Company
Manufacturing Statement
For Year Ended December 31, 2013
Direct Materials
Beginning raw materials inventory
$37,000
Raw materials purchases
175,600
Raw materials available for use
212,600
Less ending raw materials inventory
42,700
Direct materials used
Direct Labor
$169,900
225,000
The next section to
complete is Direct Labor.
Direct Labor will be
entered as a single line
item.
Randa
Company
Manufacturing Statement
For Year Ended December 31, 2011
Direct Materials
Beginning raw materials inventory
$37,000
Raw materials purchases
175,600
Raw materials available for use
212,600
Less ending raw materials inventory
42,700
Direct materials used
$169,900
225,000
Direct Labor
Factory Overhead
Factory Computer Supplies Used
17,840
Indirect Labor
47,000
Repairs – Factory equipment
Rent Cost of Factory Building
Total factory overhead costs
The third section is
Factory Overhead.
5,250
57,000
127,090
For Factory Overhead,
simply list each factory
overhead component and
total them.
Shanta
Company
Manufacturing Statement
For Year Ended December 31, 2013
Direct Materials
Beginning raw materials inventory
$37,000
Raw materials purchases
175,600
Raw materials available for use
212,600
Less ending raw materials inventory
42,700
Direct materials used
$169,900
225,000
Direct Labor
Factory Overhead
Factory Computer Supplies Used
17,840
Indirect Labor
47,000
Repairs – Factory equipment
Rent Cost of Factory Building
Total factory overhead costs
The third section is
Factory Overhead.
5,250
57,000
127,090
For Factory Overhead,
simply list each factory
overhead component and
total them.
Shanta
Company
Manufacturing Statement
For Year Ended December 31, 2013
Direct Materials
Beginning raw materials inventory
$37,000
Raw materials purchases
175,600
Raw materials available for use
212,600
Less ending raw materials inventory
42,700
Direct materials used
$169,900
225,000
Direct Labor
Factory Overhead
Factory Computer Supplies Used
17,840
Indirect Labor
47,000
Repairs – Factory equipment
Rent Cost of Factory Building
Total factory overhead costs
Total manufacturing costs
Once you have the three
basic components listed,
5,250
57,000
127,090
521,990
•Direct Materials
•Direct Labor
•Factory Overhead
total these to determine
Total Manufacturing Costs.
Shanta
Company
Manufacturing Statement
For Year Ended December 31, 2013
Direct Materials
Beginning raw materials inventory
$37,000
Raw materials purchases
175,600
Raw materials available for use
212,600
Less ending raw materials inventory
42,700
Direct materials used
$169,900
225,000
Direct Labor
Factory Overhead
Factory Computer Supplies Used
17,840
Indirect Labor
47,000
Repairs – Factory equipment
Rent Cost of Factory Building
Total factory overhead costs
Total manufacturing costs
Once you have the three
basic components listed,
5,250
57,000
127,090
521,990
•Direct Materials
•Direct Labor
•Factory Overhead
total these to determine
Total Manufacturing Costs.
Shanta
Company
Manufacturing Statement
For Year Ended December 31, 2013
Direct Materials
Beginning raw materials inventory
$37,000
Raw materials purchases
175,600
Raw materials available for use
212,600
Less ending raw materials inventory
42,700
$169,900
$171,900
Direct materials used
225,000
Direct Labor
Factory Overhead
Factory Computer Supplies Used
17,840
Indirect Labor
47,000
Repairs – Factory equipment
Rent Cost of Factory Building
Total factory overhead costs
Total manufacturing costs
Beginning goods in process inventory
Total cost of goods in process
Less ending goods in process inventory
Cost of goods manufactured
At this point, it feels like
you have completed the
statement but you have
not.
5,250
57,000
127,090
533,990
521,990
53,900
575,890
41,500
$534,390
You have currently
determined the total
manufacturing costs
incurred this period. To
determine the cost of
[finished] goods
manufactured, add
beginning goods in
process to goods
manufactured and then
deduct ending goods in
process.
Shanta
Company
Manufacturing Statement
For Year Ended December 31, 2013
Total manufacturing costs
Beginning goods in process inventory
521,090
53,900
Total cost of goods in process
575,890
Less ending goods in process inventory
Cost of goods manufactured
41,500
$534,390
COST OF GOODS SOLD
Beginning finished goods inventory
$62,750
Cost of goods manufactured
534,390
Cost of goods available for sale
597,140
Less ending finished goods inventory
Cost of goods sold
The Cost of
[Finished] Goods
Manufactured
feeds into the
Cost of Goods
Sold reported on
the income
statement.
67,300
$529,840
Note the similarity between the calculation of Cost of
Goods Sold on the income statement and the calculation
of Direct Materials Used on the manufacturing statement.
Except for the calculation of Cost of
Goods Sold as demonstrated on the
previous slide, the income statement for
a manufacturer is completed in the same
manner used for merchandising
companies.
See page 739 of your textbook for a complete example
of a manufacturing income statement.
Part 1 – Manufacturing Statement
Kabiro Company
Manufacturing Statement
For Year Ended December 31, 2010
Direct Materials
Beginning raw materials inventory
Raw materials purchases
Raw materials available for use
Less ending raw materials inventory
Direct materials used
Direct Labor
Factory Overhead
Rental cost on factory equipment
Factory utilities
Factory supplies used
Indirect labor
Repairs—Factory equipment
Total factory overhead
Total manufacturing costs
Beginning goods in process inventory
Total cost of goods in process
Less ending goods in process inventory
Cost of goods manufactured
$13,000
47,000
60,000
9,400
$50,600
44,000
27,000
17,000
10,000
9,660
3,500
67,160
161,760
21,500
183,260
21,000
$162,260
Part 2 – Cost of Goods Sold
Beginning finished goods inventory
$15,000
Cost of goods manufactured
162,260
Cost of goods available for sale
177,260
Less ending finished goods inventory
Cost of goods sold
12,000
$165,260