form showing the cost of producing goods during the accounting period. The cost of goods manufactured is an element in preparing the income statement. It consists of the cost of producing goods: direct material, direct labor, and factory overhead. Also considered is the change in the work-in-process inventory.
Assume work-in-process inventory was $30,000 on 1/1/2005 and $35,000 on 12/31/2005. During the year, manufacturing costs were direct material $20,000, direct labor $23,000, and factory overhead $40,000. The cost of goods manufactured schedule follows:
|Work-in-process – 1/1/2005||$30,000|
|Add: Manufacturing costs|
|Total manufacturing cost||83,000|
|Less: Work-in-process – 12/31/2005||35,000|
|Cost of goods manufactured||$78,000|