Factory Mfg
When calculating Cost of Goods Mfg do you include Admin or Depreciation costs?
The problem has listed General & Admin Expenses & Depreciation - Factory Equipment but I'm not sure if I should include them and if Deprecation should be subtracted or added.
THIS IS WHAT I HAVE SO FAR:
+Beg Fin Goods Inv
+Direct Labor
+Beg Goods in Process
+Direct Materials
+Indirect Labor
+Indirect Materials
- End good in Process
- End finished goods inventory
thanks!
Normally businesses count depreciation as part of their Cost of Goods Sold. Depreciation is generally related to capital equipment, which is directly associated with the manufacture of products. In most cases, increasing production requires the additional purchase of equipment, which will increase as volume increases.
Administrative costs, depending on the business you are looking at, is considered to be below the line, and not related to COGS.
By the way, there are several items in your lists that are not costs. The inventory items are assets that are on the balance sheet, not costs that would be on the P&L.
Hope this helps.
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