A manufacturing company makes the products that it sells. Briefly identify and define the cost elements that are incurred in making a product. After product cost elements are identified, how is the cost of goods manufactured for a period determined?
Hi from Just Answer.The primary cost elements incurred in making a product are labor, materials and overhead.The cost of goods manufactured is the sum of the costs of labor, materials and overhead used to generate completed products for the period in question. Some examples may help.If product costs are incurred during a period and no completed goods are produced, those costs are accumulated in inventory, and no costs of goods manufactured are reportable.If you are making staplers, and start with no inventory and produce 100,000 in a given week, adding up the costs of labor, materials and overhead can tell you how much your cost of goods manufactured was for that period.If this answers your question, thanks from Just Answer.
Tax professional and business consultant for 30 years.