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 for the reporting period. 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 

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 is aggregated to arrive at the cost of goods sold.

Related Courses

Accounting for Inventory 
Cost Accounting Fundamentals 
How to Audit Inventory