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.

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.