What is Cost of material consumed, cost of goods sold, change in inventories of finished goods, Work in progress & Stock in trade .. And what are there formulas ?????
Dear student,
Cost of material consumed-
The cost of raw material required to produce finished goods is referred as cost of material consumed. It is the largest cost incurred by a manufacturing company.
It can be calculated as follows:
Cost of material consumed = Opening material (at the beginning of the year) + purchase of material - closing material (at the closing of the year).
Cost of goods sold-
The cost of goods sold refers to how much it costs to produce your products or services. it is also known as cost of sales.
It can be calculated as:
Cost of goods sold= Inventory at the beginning of the year + purchase during the period - inventory at the end of the year.
Change in inventory of finished goods:
It is the difference between total of opening and closing inventories of finished goods.
It can be calculated as:
Change in inventory of finished goods = Inventory at the closing of the year - inventory at the beginning of the year.
Work in progress :
Work in progress inventory is defined as the goods which are in the process of production. It includes material that has been transferred from the inventory of raw material for process but not yet completed.
It can be calculated as:
Work in progress = initial WIP + manufacturing cost - cost of goods manufactured.
Stock in trade:
Stock in trade refers to the goods held in the ordinary course of business for the purpose of its trade. It is shown at the assets side of the balance sheet.
It is the sum of all the materials, equipment held for sale in the ordinary course of the business.
Regards!
Cost of material consumed-
The cost of raw material required to produce finished goods is referred as cost of material consumed. It is the largest cost incurred by a manufacturing company.
It can be calculated as follows:
Cost of material consumed = Opening material (at the beginning of the year) + purchase of material - closing material (at the closing of the year).
Cost of goods sold-
The cost of goods sold refers to how much it costs to produce your products or services. it is also known as cost of sales.
It can be calculated as:
Cost of goods sold= Inventory at the beginning of the year + purchase during the period - inventory at the end of the year.
Change in inventory of finished goods:
It is the difference between total of opening and closing inventories of finished goods.
It can be calculated as:
Change in inventory of finished goods = Inventory at the closing of the year - inventory at the beginning of the year.
Work in progress :
Work in progress inventory is defined as the goods which are in the process of production. It includes material that has been transferred from the inventory of raw material for process but not yet completed.
It can be calculated as:
Work in progress = initial WIP + manufacturing cost - cost of goods manufactured.
Stock in trade:
Stock in trade refers to the goods held in the ordinary course of business for the purpose of its trade. It is shown at the assets side of the balance sheet.
It is the sum of all the materials, equipment held for sale in the ordinary course of the business.
Regards!