The second step in the preparation of the statement of cost of goods manufactured is to add in and subtract out the two raw material inventory balances.

Question

Quizplus · Accepted Answer

The second step in the preparation of the statement of cost of goods manufactured involves adding the total manufacturing costs (which includes direct materials used, direct labor, and manufacturing overhead) to the beginning work in process inventory and then subtracting the ending work in process inventory. The raw material inventory balances are considered earlier when calculating the direct materials used.

The Second Step in the Preparation of the Statement of Cost