COGS, COGM, IS

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Balance sheet

A financial statement that reports assets, liabilities, and owner's equity on a specific date.

Depreciation expense goes on

the income statement and the statement of cost of good manufacutred

COGM

the manufacturing costs associated with the goods that were finished during the period

Direct labor goes on

the statement of COGM

Indirect Labor goes on

the statement of cost of goods manufactured

Factory utilities used goes on

the statement of cost of goods manufactured (because a direct cost associated to manufacturing goods but not part of income statement bc is consolidated to the cost of goods)

Use the following costs to compute the COGM January 1: RM 20,000 WIP 25,000 Finished Gods 15,000 December 31: RM 10,000 WIP 30,000 Finished Goods 5,000 Purchase of raw materials 50,000 DL 60,000 Salary Expense 95,000 Factory Dep 80,000 Factory Supp 4,000 Office Dep 40,000

COGM RM Inv Jan 1=$20,000 +RM Purchs=50,000 -RM Inv Dec 31=(10,000) RM Consumed=60,000 *Add mfg costs and beg WIP less ending WIP +DL 60,000 +Fact Dep 80,000 +Fact Sup 4,000 +Beg WIP 25,000 -Ending WIP 30,000 =COGM= 199,000

Use the following costs to compute the COGS: January 1: RM 20,000 WIP 25,000 Finished Gods 15,000 December 31: RM 10,000 WIP 30,000 Finished Goods 5,000 Purchase of raw materials 50,000 DL 60,000 Salary Expense 95,000 Factory Dep 80,000 Factory Supp 4,000 Office Dep 40,000

COGS 15,000 (Jan 1 finished goods) + 90,000(COGM) -5,000 (Dec 31 Finished goods) =$100,000

For a merchandising company, the COGS section of the income statement contains purchases. In a manufacturing company, purchases in the COGS section is replaced with

Cost of Goods Manufactured

Use the following to compute Gross Margin aka "Gross Profit" Sales 900,000 Factory Overhead 50,000 COGM 200,000 COGS 350,000 Selling Exps 100,000 Admin Exps 100,000

Sales 900,000 -COGS 350,000 =$550,000

Statement of cost of goods manufactured

summarizes the cost of goods manufactured during the period

Ending work in process goes on

the balance sheet AND the statement of COGM

Office utilities used goes on

the income statement (bc its an expense and not part of the cost of goods manufactured i.e. not a direct cost to manufacturing)


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