Manufacturing Background

Page 1

Income Statement

Manufacturing Income Statement

Manufacturing companies make their inventory

They take various inputs and convert them into what we call Finished Goods Inventory

They look at:

(What they had in the beginning) + (What they made) - (What's left)

Goods Available for Sale:

What we had at the beginning of the year (Finished Goods Beginning Inventory) + What We Manufactured During the Year

What we sold during the year (Cost of Goods Sold):

Goods Available for Sale - What we have left at the end of the year (Finished Goods Ending Inventory)

Page 2

Balance Sheet

Manufacturing Balance Sheet

Inventory is reported in multiple "stages" of manufactured

Raw Materials

Work in Process

Completed/Finished Goods

Example:

Direct Materials (Wood)

Work in Process (Partially Completed Units)

Finished Goods (Wood Carvings)