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ehat is purpose of the statement of cost of goods manufacured?


ehat is purpose of the statement of cost of goods manufacured?

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Answer #1

The purpose of statement of cost of goods manufactured is to calculate the cost of units completed and transferred to finished goods inventory during the period that is to calculate the unit cost of units produced during the period such that such unit cost is used to calculate cost of goods sold .

For example :

Number of units produced : 1500

Number of units sold :1000

Direct material used : 15000

Direct labor : 25000

Overhead : 50000

Total cost incurred to produce1500 units = 15000 +25000 +50000 = 90000

Unit cost per unit produced = 90000/1500 = 60

Now this $ 60 per unit is used to calculate the cost of goods sold that is to calculate the cost of 1000 units sold .

cost of goods sold = 1000*60 = 60000

Thus in order to calculate the unit product cost ,The statement of Cost of goods manfactured is prepared.

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