Schedule of Cost of Goods Manufactured Direct Materials Raw material inventory, beginning Add: Raw materials purchased Raw materials available for use Deduct: Raw material inventory, ending Total: Raw material used Direct Labor Manufacturing Overhead Indirect Material Add: Indirect labor Add: Rent on factory building Add: Depreciation on factory equipment Add: Utilities Add: Property taxes Add: Insurance Total Manufacturing Overhead Deduct: Underapplied overhead Total: Overhead applied to work in process Direct Materials Add: Direct Labor Add: Manufacturing Overhead Total: Manufacturing Costs Incurred Add: Work in Process, Beg. Period Manufacturing Costs to Account For Deduct: Work in Process, End Period Cost of Goods Manufactured Transferred to Schedule of Cost of Goods Sold

Job Order Costing A visual representation of the Schedule of Cost of Goods Manufactured Conversion Costs Direct Material Purchased Indirect materials (Lubricants, bolts, etc.) Direct Labor-Job 2 Manufacturing Overhead Applied to Job 2 Direct Material-Job 2 End MIP Beg MIP Job 2 End WIP Beg WIP Job 1 Job 3 Directly to Manufacturing Overhead Control FACTORY Direct Material Used STOREROOM

Schedule of Cost of Goods Sold Finished Goods Inventory, Beginning of Period Add: Cost of Goods Manufactured Cost of Goods Available for Sale Deduct: Finished Goods Inventory, End of Period Cost of Goods Sold Deduct: Over Applied or Under Applied Overhead Total: Cost of Goods Sold (Adjusted) Transferred to Income Statement

Income Statement Sales Revenue Deduct: Cost of Goods Sold (Adjusted) Gross Margin Deduct: Selling and Administrative Expenses Income before Taxes Deduct: Income Tax Expense Total: Net Income