Manufacturers perform many activities and incur many different costs during the manufacturing process. Each activity and cost must be recorded and compared to the manufacturing budget in order to chart the company's goals. Most manufacturers use a manufacturing statement to help keep track of the manufacturing activities and expenses.
A manufacturing statement, also called the schedule of cost of goods manufactured or the schedule of manufacturing activities, is a summary of all of the manufacturing activities and costs. The manufacturing statement is usually split up into four different parts: direct materials, direct labor, overhead, and total manufacturing costs or cost of goods manufactured. Here is an example of a manufacturing statement layout.
Download this accounting example in excel.
A manufacturing statement is not only used to calculate the overall cost of manufacturing, it is also used to track each activity and expense. Cost accountants can track raw material purchases and prices, direct labor rates and efficiency, as well as overall factory overhead usage.
Generally, management are the only people who see the manufacturing statement since it is an internal report used to help plan and control the manufacturing process and budget. Sometimes the manufacturing report is issued to outside investors or creditors for additional information. For instance, a bank might require a manufacturing statement before it makes a substantial loan to a company for additional plant equipment. Otherwise, the manufacturing statement is rarely issued and is not part of the standard general-purpose financial statements.
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