COST OF GOODS SOLD STATEMENT

1. COST OF GOODS SOLD STATEMENT

2. Financial Statements Balance Sheet Income Statement Cost of Goods Sold is one of the basic component of Income Statement (Profit & Loss Account)

3. Cost of Goods Sold (CGS) • Cost of Goods Sold represents the expense a business incurs to manufacture or by a product for sale. • In Income Statement (P&L Account), CGS is shown in one figure. • However, for internal uses, additional information is necessary for future planning and for evaluation of past.

4. Cost of Goods Sold (CGS) • The cost of goods sold section of any manufacturing business can be divided into 5 distinct parts: • Direct Materials Section • Direct Labor Section • Factory Overhead (FOH) • Work-in-process Inventories • Finished Goods Inventories

5. Cost of Goods Sold (CGS) • Direct Materials • Beginning/Opening Inventory • Purchases (Net) • Ending/Closing Inventory

6. Cost of Goods Sold (CGS) • Direct Labor • Cost of those employees whose work can be identified directly with the product manufactured • No inventories involved

7. Cost of Goods Sold (CGS) • Factory Overhead (FOH) • All those costs that assist in an indirect manner in the manufacturing of the product. • No inventories involved

8. Cost of Goods Sold (CGS) • Work in Process (WIP) Inventories • Cost in process at the beginning of accounting period and costs still in process at the end of the period. • Opening WIP Inventories • Closing WIP Inventories

9. Cost of Goods Sold (CGS) • Finished Goods Inventories • Opening Finished Goods Inventories • Closing Finished Goods Inventories

11. Thank You