Manufacturing Statement Overview
This content provides a detailed insight into manufacturing statements, focusing on cost components incurred in a company's manufacturing process. It covers the preparation of a manufacturing statement for Shanta Company for the year ended December 31, 2013, including sections on Direct Materials, Direct Labor, Factory Overhead, and Cost of Goods Manufactured.
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Presentation Transcript
Exercise 18-12 In order for the animations in the presentation to work properly, be sure to view this presentation as a Slide Show 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
Shanta Company Manufacturing Statement Randa 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 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. Note that the first three sections are the three components of a manufactured product.
Shanta Company The first section to complete is Direct Materials. The first section to complete is Direct Materials. Manufacturing Statement For Year Ended December 31, 2013 Direct Materials Beginning raw materials inventory Raw materials purchases Raw materials available for use Less ending raw materials inventory Direct materials used $37,000 175,600 212,600 42,700 Direct Materials Used is calculated as follows: Direct Materials Used is calculated as follows: Beginning Direct Materials Inv Plus: Raw Materials Purchased Less: Ending Raw Materials Inv $169,900 You will always be given beginning and ending direct materials inventory and raw materials purchased. 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 Raw materials purchases Raw materials available for use Less ending raw materials inventory Direct materials used Direct Labor $37,000 175,600 212,600 42,700 $169,900 225,000 The next section to complete is Direct Labor. The next section to complete is Direct Labor. Direct Labor entered as a single line item. Direct Labor will be entered as a single line item. will be
Randa Company Manufacturing Statement For Year Ended December 31, 2011 Direct Materials Beginning raw materials inventory Raw materials purchases Raw materials available for use Less ending raw materials inventory Direct materials used $37,000 175,600 212,600 42,700 $169,900 225,000 Direct Labor Factory Overhead Factory Computer Supplies Used Indirect Labor Repairs Factory equipment Rent Cost of Factory Building Total factory overhead costs The third Factory Overhead. The third s section is Factory Overhead. ection is 17,840 47,000 5,250 57,000 For simply list each factory overhead component and total them. For Factory Overhead, simply list each factory overhead component and total them. Factory Overhead, 127,090
Shanta Company Manufacturing Statement For Year Ended December 31, 2013 Direct Materials Beginning raw materials inventory Raw materials purchases Raw materials available for use Less ending raw materials inventory Direct materials used $37,000 175,600 212,600 42,700 $169,900 225,000 Direct Labor Factory Overhead Factory Computer Supplies Used Indirect Labor Repairs Factory equipment Rent Cost of Factory Building Total factory overhead costs The third Factory Overhead. The third s section is Factory Overhead. ection is 17,840 47,000 5,250 57,000 For simply list each factory overhead component and total them. For Factory Overhead, simply list each factory overhead component and total them. Factory Overhead, 127,090
Shanta Company Manufacturing Statement For Year Ended December 31, 2013 Direct Materials Beginning raw materials inventory Raw materials purchases Raw materials available for use Less ending raw materials inventory Direct materials used $37,000 175,600 212,600 42,700 $169,900 225,000 Direct Labor Factory Overhead Factory Computer Supplies Used Indirect Labor Repairs Factory equipment Rent Cost of Factory Building Total factory overhead costs Once you have the three basic components listed, Once you have the three basic components listed, 17,840 47,000 5,250 57,000 Direct Materials Direct Labor Factory Overhead Direct Materials Direct Labor Factory Overhead 127,090 Total manufacturing costs 521,990 total these to determine Total Manufacturing Costs. . total these to determine Total Manufacturing Costs
Shanta Company Manufacturing Statement For Year Ended December 31, 2013 Direct Materials Beginning raw materials inventory Raw materials purchases Raw materials available for use Less ending raw materials inventory Direct materials used $37,000 175,600 212,600 42,700 $169,900 225,000 Direct Labor Factory Overhead Factory Computer Supplies Used Indirect Labor Repairs Factory equipment Rent Cost of Factory Building Total factory overhead costs Total manufacturing costs Once you have the three basic components listed, Once you have the three basic components listed, 17,840 47,000 5,250 57,000 Direct Materials Direct Labor Factory Overhead Direct Materials Direct Labor Factory Overhead 127,090 521,990 total these to determine Total Manufacturing Costs total these to determine Total Manufacturing Costs. .
Shanta Company Manufacturing Statement For Year Ended December 31, 2013 Direct Materials Beginning raw materials inventory Raw materials purchases Raw materials available for use Less ending raw materials inventory At this point, it feels like you have completed the statement but you have not. At this point, it feels like you have completed the statement but you have not. $37,000 175,600 212,600 42,700 $169,900 Direct materials used $171,900 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. 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. 225,000 Direct Labor Factory Overhead Factory Computer Supplies Used Indirect Labor Repairs Factory equipment Rent Cost of Factory Building Total factory overhead costs Total manufacturing costs 17,840 47,000 5,250 57,000 127,090 521,990 Total manufacturing costs Beginning goods in process inventory Total cost of goods in process Less ending goods in process inventory Cost of goods manufactured 533,990 53,900 575,890 41,500 $534,390
Shanta Company Manufacturing Statement For Year Ended December 31, 2013 The Cost of [Finished] Goods Manufactured feeds into the Cost of Goods Sold the income statement. The Cost of [Finished] Goods Manufactured feeds into the Cost of Goods Sold reported on the income statement. Total manufacturing costs Beginning goods in process inventory Total cost of goods in process Less ending goods in process inventory Cost of goods manufactured 521,090 53,900 575,890 41,500 $534,390 reported on COST OF GOODS SOLD Beginning finished goods inventory Cost of goods manufactured Cost of goods available for sale Less ending finished goods inventory $62,750 534,390 597,140 67,300 Cost of goods sold $529,840 Note the similarity between the calculation of Goods Sold of Note the similarity between the calculation of Cost of Goods Sold on the income statement and the calculation of Direct Materials Used Cost of on the income statement and the calculation Direct Materials Used on the manufacturing statement. 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 Kabiro Company 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 12,000 Cost of goods sold $165,260
