Cost of Goods Sold and Cost of Goods Manufactured

Factory Overhead

consists of all manufacturing costs that are not direct materials or direct labor

Cost of goods sold

cost of goods available for sale - finished goods ending inventory

Conversion cost

direct labor + overhead

Prime cost

direct materials cost plus direct labor cost

Freight In

The transportation cost to ship goods into the purchaser's warehouse; therefore, it is freight on purchased goods.

Total Goods Placed In Process

Total Manufacturing Cost + Work in Process Beginning

Total manufacturing cost

the sum of materials used, labor, and overhead for the period

Raw materials

Components that will become part of the finished product but have not yet been used in production

Freight out

Cost of freight on shipments to customers, which is included in the income statement as a selling expense

Freight-out

Cost of freight on shipments to customers, which is included in the income statement as either a part of cost of goods sold or as a selling expense

Goods Available for Sale

Cost of goods manufactured + finished goods beginning

Cost of goods sold

Cost of the inventory that was sold during the period

Freight-in

Cost to transport inventory to the company, which is included as part of the inventory cost

Finished goods

Inventory items for which the manufacturing process is complete

Inventory

Items a company intends for sale to customers

work in process inventory

Products that have started the production process but are not yet complete at the end of the period

Net Purchases

Purchases less purchase returns and allowances less purchase discounts plus freight in.

Raw Materials Used

Raw Materials Available for use - Raw Materials Ending Inventory

Raw Materials Available for Use

Raw Materials Beginning + Raw Materials Purchased

Direct Labor

The common terms between prime cost and conversion cost

Period Costs

all costs in the income statement other than cost of goods sold

Direct Labor

labor costs that can be easily traced to individual units of product

Product cost

sum of the costs assigned to a product.

Cost of Goods Manufactured

the cost of manufacturing the goods that were finished during the period.