In the published financial statements, the cost of goods sold is generally shown as a single figure in the income statement and is elaborated a little bit in the notes to the financial statements. However, for internal uses, some additional information such as material cost, labor cost, overheads etc. is essential for planning the future activities and evaluating the past performance. The following format will be helpful for preparing the cost of goods sold statement:
XYZ Company
Cost of Goods Sold Statement
For the Period Ended ________
| —-Amount in $—- | ||
| Direct material cost | ||
| Opening inventory | 10,000 | |
| Purchase during the period | 80,000 | |
| Materials available for use | 90,000 | |
| Less: closing inventory | (5,000) | |
| Materials consumed | 85,000 | |
| a | ||
| Direct labor cost | 55,000 | |
| a | ||
| Factory overheads | ||
| Indirect labor | 12,000 | |
| Power | 6,000 | |
| Heat | 1,500 | |
| Light | 4,000 | |
| Factory supplies | 500 | |
| Depreciation – factory building | 1,200 | |
| Depreciation – machinery | 1,000 | |
| Total factory overheads | 26,200 | |
| Total manufacturing cost | 166,200 | |
| a | ||
| Add: Work in process opening inventory | 5,000 | |
| Less: Work in process closing inventory | (3,500) | |
| Cost of goods manufactured | 167,700 | |
| a | ||
| Add: Finished goods opening inventory | 8,000 | |
| Less: Finished goods closing inventory | (3,200) | |
| Cost of goods sold | 172,500 | |