Cost of goods manufactured schedule
/What is a Cost of Goods Manufactured Schedule?
The cost of goods manufactured schedule is used to calculate the cost of all items produced during a reporting period. The total derived from this schedule is then used to calculate the cost of goods sold. It is primarily used in financial accounting, as part of the process of compiling the financial statements. The following line items are typically found in the schedule:
Beginning raw materials inventory
+ Cost of raw materials purchased
- Ending raw material inventory balance
= Raw materials used
+ Direct labor cost
+ Manufacturing overhead
= Total manufacturing cost
+/- Change in work-in-process inventory
= Cost of goods manufactured
A sample cost of goods manufactured schedule appears in the following exhibit.
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This information is then used to derive the cost of goods sold with the following additional calculation:
Beginning finished goods inventory
+ Cost of goods manufactured
- Ending finished goods inventory
= Cost of goods sold
The cost of goods sold then appears in the income statement of the reporting entity, where it is subtracted from sales to determine the gross margin. This calculation can be avoided when a business uses standard costing. If so, the standard cost of each unit sold and scrapped in the period is aggregated to arrive at the cost of goods sold.
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