Manufacturing companies: Cost accounting Income
Statement
Sales
Materials è Materials è Materials
1 ì purchases Inventory Used è Less
Capitalized
Inventoriable Finished Cost of
costs Goods è Goods
2 Inventory Sold
Manufacturing î ì
related Indirect
= Inventoriable costs Cost
3 Pool
Non capitalized ì
Inventoriable Manufacturing ì
costs labor
Gross Margin
è Period
ì Expensing of
Capitalized Non 4 Noninventory Capitalized Non-
- inventoriable è Assets inventoriable
Non - costs costs
manufacturing
related Non- 5 Non - Costs expensed
= Non-nventoriable costs capitalized è manufacturing as incurred
costs costs è
Operating
Income
Examples Merchandising-Sector Companies
1 Raw Materials Costs Yes
2 Depreciation for machines used in production No
3 Supervision, power used for machines No
4 Corporate office, sales office and distribution center depreciation Yes
5 Marketing costs, distribution, service warranty costs; R & D, Design expenses Yes