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Manufacturing Statement

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 company’s manufacturing process.

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Manufacturing Statement

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  1. 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.

  2. Manufacturing Statement A statement that summarizes the types and amounts of costs incurred in a company’s manufacturing process.

  3. Using the Data for Exercise 18-12 on page 765 of your text, we’ll create a Manufacturing Statement for Shanta Company.

  4. 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 Company Manufacturing Statement For Year Ended December 31, 2013

  5. Randa Shanta Company Company Manufacturing Statement Manufacturing Statement For Year Ended December 31, 2013 • 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.

  6. The first section to complete is Direct Materials. Direct Materials Used is calculated as follows: 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 Manufacturing Statement For Year Ended December 31, 2013 Direct Materials Beginning raw materials inventory $37,000 Raw materials purchases 175,600 Raw materials available for use 212,600 Less ending raw materials inventory 42,700 Direct materials used $169,900

  7. Shanta Company Manufacturing Statement For Year Ended December 31, 2013 Direct Materials Beginning raw materials inventory $37,000 Raw materials purchases 175,600 Raw materials available for use 212,600 The next section to complete is Direct Labor. Direct Labor will be entered as a single line item. Less ending raw materials inventory 42,700 Direct materials used $169,900 225,000 Direct Labor

  8. Randa Company Manufacturing Statement For Year Ended December 31, 2011 Direct Materials Beginning raw materials inventory $37,000 Raw materials purchases 175,600 Raw materials available for use 212,600 Less ending raw materials inventory 42,700 Direct materials used $169,900 The third section is Factory Overhead. For Factory Overhead, simply list each factory overhead component and total them. 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 127,090

  9. Shanta Company Manufacturing Statement For Year Ended December 31, 2013 Direct Materials Beginning raw materials inventory $37,000 Raw materials purchases 175,600 Raw materials available for use 212,600 Less ending raw materials inventory 42,700 Factory Overhead Direct materials used $169,900 The third section is Factory Overhead. For Factory Overhead, simply list each factory overhead component and total them. Factory Computer Supplies Used 17,840 225,000 Direct Labor Indirect Labor 47,000 Repairs – Factory equipment 5,250 Rent Cost of Factory Building 57,000 Total factory overhead costs 127,090

  10. Shanta Company Manufacturing Statement For Year Ended December 31, 2013 Direct Materials Beginning raw materials inventory $37,000 Raw materials purchases 175,600 Raw materials available for use 212,600 Less ending raw materials inventory 42,700 Direct materials used $169,900 225,000 Direct Labor • Once you have the three basic components listed, • Direct Materials • Direct Labor • Factory Overhead • total these to determine Total Manufacturing Costs. 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 127,090 Total manufacturing costs 521,990

  11. Shanta Company Manufacturing Statement For Year Ended December 31, 2013 Direct Materials Beginning raw materials inventory $37,000 Raw materials purchases 175,600 Raw materials available for use 212,600 Less ending raw materials inventory 42,700 Direct materials used $169,900 225,000 Direct Labor • Once you have the three basic components listed, • Direct Materials • Direct Labor • Factory Overhead • total these to determine Total Manufacturing Costs. 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 manufacturing costs 521,990 Total factory overhead costs 127,090

  12. Shanta Company Manufacturing Statement 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. For Year Ended December 31, 2013 Direct Materials Beginning raw materials inventory $37,000 Raw materials purchases 175,600 Raw materials available for use 212,600 Less ending raw materials inventory 42,700 $169,900 Direct materials used $171,900 225,000 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 127,090 Total manufacturing costs Total manufacturing costs 533,990 521,990 Beginning goods in process inventory 53,900 Total cost of goods in process 575,890 Less ending goods in process inventory 41,500 Cost of goods manufactured $534,390

  13. Shanta Company The Cost of [Finished] Goods Manufactured feeds into the Cost of Goods Sold reported on the income statement. Manufacturing Statement For Year Ended December 31, 2013 521,090 Total manufacturing costs Beginning goods in process inventory 53,900 Total cost of goods in process 575,890 Less ending goods in process inventory 41,500 Cost of goods manufactured $534,390 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.

  14. Income Statementfor 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.

  15. 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.

  16. Part 1 – Manufacturing Statement

  17. Part 2 – Cost of Goods Sold

  18. 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.

  19. End of Presentation

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