Manufacturing Statement2

Manufacturing
Statement
Exercise 18-12
In order for the animations in the presentation to work

properly, be sure to view this presentation as a Slide Show.
Manufacturing Statement
A statement that summarizes
the types and amounts of
costs incurred in a companys
manufacturing process.
Using the Data for Exercise

18-12 on page 765 of your text,
well create a Manufacturing
Statement for Shanta Company.
Shanta
Company
For Year Ended December 31, 2013
Label this statement with

the same three line
heading used for all other
formal accounting
statements:
Name of the company
Name of the statement
Period covered
Shanta
Randa
Company
Company
The best way to

manage the
preparation of this
statement is to break
it into four sections:
Direct Materials
Direct Labor
Factory Overhead
Cost of Goods
Manufactured
Note that the first

three sections are the
three components of a
manufactured product.
Shanta
The first section to

complete is Direct
Materials.
Company
Direct Materials
Beginning raw materials inventory
Raw materials purchases
175,600
Raw materials available for use
212,600
Less ending raw materials inventory
42,700
Direct materials used
Direct Materials Used

is calculated as
follows:
$37,000
$169,900
Beginning Direct Materials Inv

Plus: Raw Materials Purchased
Less: Ending Raw Materials
Inv
You will always be

given beginning and
ending direct materials
inventory and raw
materials purchased.
Shanta
Company
Direct Materials
$37,000
175,600
212,600
42,700

Direct Labor
$169,900
225,000
The next section to

complete is Direct
Labor.
Direct Labor will be
entered as a single line
item.
Randa
Company
Direct Materials
$37,000
175,600
212,600
42,700
$169,900
225,000
Direct Labor
Factory Overhead
Factory Computer Supplies Used
17,840
Indirect Labor
47,000
Repairs Factory equipment
5,250
Rent Cost of Factory Building
57,000
Total factory overhead costs
The third section is

Factory Overhead.
127,090
For Factory Overhead,

simply list each factory
overhead component
and total them.
Shanta
Company
Direct Materials
$37,000
175,600
212,600
42,700

Direct Labor
Factory
Overhead
Indirect Labor
$169,900
225,000
17,840
47,000
5,250
57,000
127,090
The third section is

Factory Overhead.
For Factory Overhead,
simply list each factory
overhead component
and total them.
Shanta
Company
Direct Materials
$37,000
175,600
212,600
42,700
$169,900
225,000
Direct Labor
Factory Overhead
17,840
Indirect Labor
47,000
5,250
57,000
127,090
Total manufacturing costs
521,990
Once you have the

three basic
components listed,
Direct Materials
Direct Labor
Factory Overhead
total these to
determine Total
Manufacturing Costs.
Shanta
Company
Direct Materials
$37,000
175,600
212,600
42,700
$169,900
225,000
Direct Labor
Factory Overhead
17,840
Indirect Labor
47,000
5,250
57,000
Total
manufacturing costs
127,090
521,990
Once you have the

three basic
components listed,
Direct Materials
Direct Labor
Factory Overhead
total these to
determine Total
Manufacturing Costs.
Shanta
Company
Direct Materials
$37,000
175,600
212,600
42,700
$169,900
$171,900
225,000
Direct Labor
Factory Overhead
17,840
Indirect Labor
47,000
5,250
57,000

Beginning goods in process inventory
Total cost of goods in process
Less ending goods in process inventory
Cost of goods manufactured
127,090
533,990
521,990
53,900
575,890
41,500
$534,390
At this point, it feels

like you have
completed the
statement but you
have not.
You have currently
determined the total
manufacturing costs
incurred this period.
To determine the cost
of [finished] goods
manufactured, add
beginning goods in
process to goods
manufactured and then
deduct ending goods in
process.
Shanta
Company
Beginning goods in process inventory
521,090
53,900
Total cost of goods in process
575,890
Less ending goods in process inventory

41,500
$534,390
COST OF GOODS SOLD

Beginning finished goods inventory
$62,750

Cost of goods available for sale
Less ending finished goods inventory
534,390
597,140
67,300
Cost of goods sold
The Cost of
[Finished]
Goods
Manufactured
feeds into the
Cost of Goods
Sold reported
on the income
statement.
$529,840
Note the similarity between the calculation of

Cost of Goods Sold on the income statement and
the calculation of Direct Materials Used on the
manufacturing statement.
Income Statement
for a Manufacturer
Except for the calculation of Cost of Goods
Sold as demonstrated on the previous
slide, the income statement for a
manufacturer is completed in the same
manner used for merchandising
companies.
See page 739 of your textbook for a complete example

of a manufacturing income statement.
Now you try preparing a Manufacturing

Statement.
Use the Data for Kabiro Company from
Exercise 18-11 on page 755 of your
text.
Check your answer on the next two
screens.
Part 1 Manufacturing Statement

Kabiro Company
Direct Materials
$13,000
47,000
60,000
9,400
$50,600
Direct Labor
44,000
Factory Overhead
Rental cost on factory equipment
27,000
Factory utilities
17,000
Factory supplies used
10,000
Indirect labor
9,660
RepairsFactory equipment
3,500
Total factory overhead
67,160
Part 2 Cost of Goods Sold

Beginning finished goods inventory
$15,000
162,260
Cost of goods available for sale
177,260
Less ending finished goods inventory

Cost of goods sold
12,000
$165,260
After completing this example

you should feel more prepared to
work Problem 18-7A in Connect.
If you need more practice on this
task, complete Problem 18-7B
and check your answers against
the B Problem Solutions linked
on the Content menu.
End of Presentation

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Manufacturing

In order for the animations in the presentation to work

Using the Data for Exercise

Label this statement with

The best way to

Note that the first

The first section to

Raw materials available for use

Less ending raw materials inventory

Direct materials used

Direct Materials Used

Beginning Direct Materials Inv

You will always be

Raw materials available for use

Less ending raw materials inventory

Direct materials used

The next section to

Raw materials available for use

Less ending raw materials inventory

Direct materials used

Repairs Factory equipment

Rent Cost of Factory Building

Total factory overhead costs

The third section is

For Factory Overhead,

Raw materials purchases

Raw materials available for use

Less ending raw materials inventory

Direct materials used

Factory Computer Supplies Used

Repairs Factory equipment

Rent Cost of Factory Building

Total factory overhead costs

The third section is

Raw materials available for use

Less ending raw materials inventory

Direct materials used

Repairs Factory equipment

Rent Cost of Factory Building

Total factory overhead costs

Total manufacturing costs

Once you have the

Raw materials purchases

Raw materials available for use

Less ending raw materials inventory

Direct materials used

Repairs Factory equipment

Rent Cost of Factory Building

Total factory overhead costs

Once you have the

Raw materials available for use

Less ending raw materials inventory

Direct materials used

Repairs Factory equipment

Rent Cost of Factory Building

Total factory overhead costs

At this point, it feels

Total cost of goods in process

Less ending goods in process inventory

COST OF GOODS SOLD

Cost of goods manufactured

Cost of goods sold

Note the similarity between the calculation of

See page 739 of your textbook for a complete example