Product Costing - Cost Flow

The video tutorial explains how to calculate the cost of goods manufactured (COGM) and cost of goods sold (COGS) using given data. It covers the components of manufacturing overhead, including indirect labor, utilities, and depreciation, and how to exclude non-factory costs. The tutorial also demonstrates creating a simple income statement by calculating gross profit and net operating income, using sales revenue and selling and administrative expenses (SNA). The process involves using equations and a plug-and-play approach to fill in missing data.

What is the first component added to the schedule of cost of goods manufactured?

• Direct materials

• Direct labor

• Beginning work in process

• Ending work in process

Which of the following is NOT included in manufacturing overhead?

• Indirect labor cost

• Utilities for the factory

• Depreciation for corporate equipment

• Insurance for the factory

What is the equation used to calculate the cost of goods sold?

• Ending work in process - Direct materials

• Beginning work in process + Direct materials + Direct labor

• Sales revenue - Cost of goods sold

• Beginning finished goods + Cost of goods manufactured - Ending finished goods

What is the starting point for creating a simple income statement?

• Selling and administrative expenses

• Cost of goods sold

• Sales revenue

• Net operating income

Which of the following is a component of selling and administrative expenses?

• Supplies for the corporate office

• Direct labor

• Direct materials

• Utilities for the factory

How is the gross profit calculated in a simple income statement?

• Sales revenue minus cost of goods sold

• Cost of goods sold minus selling and administrative expenses

• Cost of goods sold minus sales revenue

• Sales revenue minus selling and administrative expenses

What is the final result of a simple income statement?

• Sales revenue

• Net operating income

• Gross profit

• Cost of goods sold