Product Costs And Cost Of Goods Manufactured Report

2535 WordsSep 20, 201411 Pages
MEMORANDUM TO: Chief Executives and Management FROM: Erik Rocha DATE: September 1, 2014 SUBJECT: Product Costs and Cost of Goods Manufactured Report for August 2014 Introduction to John Deere John Deere has compromised to produce the best agricultural products in the market since 1837. Some of the agricultural products manufactured at John Deere include harvesters, tractors, trucks, planters, sprayers, seeders, and utility task vehicles. Many of the machines operating at John Deere’s factories run for 24 hours during the whole month. To specifically determine the cost of goods manufactured, the initial work in process, raw materials, labor costs, manufacturing overhead, and ending work in process need to be accounted. Manufacturing…show more content…
Raw materials are the basic parts in the manufacturing process. All the accounting information was taken from the month of August 2014. Raw materials include items like paint, aluminum, plastic, rubber, plastic, etc. To find all the direct materials used, the initial materials inventory is added with the material purchases and then the ending material inventory is subtracted. John Deere acquired $3,000 in raw material purchases and initially had $1,000 in Raw Materials Inventory and ended up with $500 in Raw Material Inventory by the end of the month. As a result, the company reported a total amount of $3,500 in Direct Materials used. The company officially reported $5,000 in direct labor and $900 in manufacturing overhead for the month of August 2014. Manufacturing overhead includes all costs indirectly associated with the final product. As a result, the total manufacturing costs add up to $9,400 after adding the Direct Materials cost. Lastly, the addition of the beginning work in process of $6,000 and the subtraction of the ending work in process of $1,000 resulted in a total cost of goods manufactured of $14,400 for the month of August 2014. Cost of Goods Available for Sale and Net Income The John Deere Harvester ultimately sold for unmatchable price of $20,000. John Deere reported $1,000 in beginning finished inventory and $2,400 in finished goods inventory for the month ended. To

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