Cost Of Goods Manufactured Schedule
As a business owner, understanding the cost of goods manufactured schedule can make a significant difference in your company’s profitability. In this article, we will discuss what the cost of goods manufactured schedule is, its importance, and how to create one for your business.
What is the Cost of Goods Manufactured Schedule?
The cost of goods manufactured schedule is a report that shows the total cost of producing finished goods during a specific period. It includes direct materials, direct labor, and manufacturing overhead costs. The report helps businesses track their production costs and determine the cost of each unit produced.
Why is Cost of Goods Manufactured Schedule Important?
The cost of goods manufactured schedule is essential for businesses because it helps them determine the cost of each unit produced. This information is vital for pricing decisions and determining the profitability of each product. Additionally, the report provides insight into the business’s efficiency in producing goods and identifies areas where cost savings can be made.
How to Create a Cost of Goods Manufactured Schedule?
To create a cost of goods manufactured schedule, you need to follow these steps:
Step 1: Determine Direct Material Costs
Identify the direct material costs used to produce finished goods during the period. This includes the cost of all materials used in production, from the raw materials to the finished goods.
Step 2: Calculate Direct Labor Costs
Determine the direct labor costs involved in producing finished goods during the period. This includes all wages paid to workers directly involved in production.
Step 3: Compute Manufacturing Overhead Costs
Calculate the manufacturing overhead costs for the period. This includes all indirect costs associated with production, such as rent, utilities, and supplies.
Step 4: Add Direct Material, Direct Labor, and Manufacturing Overhead Costs
Add the direct material, direct labor, and manufacturing overhead costs to determine the total manufacturing costs for the period.
Step 5: Subtract Beginning Work-In-Progress Inventory
Subtract the value of the beginning work-in-progress inventory from the total manufacturing costs calculated in Step 4. This gives you the cost of goods started during the period.
Step 6: Add Ending Work-In-Progress Inventory
Add the value of the ending work-in-progress inventory to the cost of goods started during the period. This gives you the cost of goods manufactured during the period.
Cost of Goods Manufactured Schedule Table
Here is an example of a cost of goods manufactured schedule table:
| Cost of Goods Manufactured Schedule | |||
|---|---|---|---|
| Direct Materials | $15,000 | ||
| Direct Labor | $10,000 | ||
| Manufacturing Overhead | $5,000 | ||
| Total Manufacturing Costs | $30,000 | ||
| Beginning Work-In-Progress Inventory | $5,000 | ||
| Cost of Goods Started | $25,000 | ||
| Ending Work-In-Progress Inventory | $3,000 | ||
| Cost of Goods Manufactured | $22,000 | ||
Questions and Answers
Q: What is the difference between cost of goods manufactured and cost of goods sold?
A: Cost of goods manufactured is the total cost of producing finished goods during a specific period, while cost of goods sold is the total cost of goods sold during the same period. Cost of goods manufactured is used to calculate cost of goods sold.
Q: How often should a cost of goods manufactured schedule be prepared?
A: A cost of goods manufactured schedule should be prepared at the end of each accounting period, typically monthly or quarterly.
FAQs
Q: Can the cost of goods manufactured schedule be used for service-based businesses?
A: No, the cost of goods manufactured schedule is only applicable to businesses that produce goods.
Q: What is the formula for calculating cost of goods manufactured?
A: The formula for calculating cost of goods manufactured is: Beginning Work-In-Progress Inventory + Total Manufacturing Costs – Ending Work-In-Progress Inventory = Cost of Goods Manufactured.
Q: Can the cost of goods manufactured schedule help identify areas for cost savings?
A: Yes, the cost of goods manufactured schedule can help identify areas where cost savings can be made, such as reducing direct material or labor costs or improving manufacturing efficiency.
By following these steps, you can create a cost of goods manufactured schedule for your business and gain valuable insight into your production costs and profitability. Use this information to make informed pricing decisions and identify areas for cost savings.