4:12 PM

Direct DM, DL Based on TRACEABILITY Indirect MOH

Product Cost (inventory) based on PURPOSE Period Cost

Manufacturer Calculations
Direct Materials Used Beginning raw materials inventory + purchases of raw materials + freight in materials available for use - ending raw materials inventory direct materials used Total Manufacturing Costs Incurred direct materials used + direct manufacturing labor + manufacturing overhead costs total manufacturing costs Cost of Goods Manufactured beginning work in progress inventory + total manufacturing costs total manufacturing costs to account for - ending work in progress inventory cost of goods manufactured Cost of Goods Sold beginning finished goods inventory + cost of goods manufactured cost of goods available for sale - ending finished goods inventory cost of goods sold Income Statement Schedule of COG manufactured

Merchandiser Calculations
Schedule of Cost of Goods Purchased purchases + freight-in total purchases - purchase returns and allowances - purchase discounts cost of goods purchased Schedule of Cost of Goods Sold Beginning inventory (units x cost) + cost of goods purchased cost of goods available for sale - ending inventory cost of goods sold

Manufacturer & Merchandiser Calculations

Gross Margin revenues - COGS gross margin Operating Income/loss gross margin - operating (period) costs (see below) operating income/loss Operating (Period) Costs general & administrative expenses + marketing, distribution, & customer service costs + miscellaneous costs + utilities operating (period) costs

Income statement