Kurumsal Finans ve Strateji Rehberi | Finance & Strategy Insights

Management accounting is a critical financial discipline that helps businesses control costs, increase profits, and make strategic decisions. In this article, we will examine the cost accounting and income statement preparation process for BETA Manufacturing Inc., a furniture production company, for the year 2023. This example demonstrates how production costs are calculated, how an income statement is prepared, and how unit cost analysis is conducted, illustrating the fundamental principles of management accounting.

Data

The financial data for BETA Manufacturing Inc. for 2023 is as follows:

Accounts	Beginning Balance (TL)	Ending Balance (TL)
Direct Materials	22,000	16,500
Work-in-Progress Inventory	0	3,200
Finished Goods Inventory	0	8,500

Item	Amount (TL)
Direct Materials Purchased	48,000
Factory Cleaning	2,100
Sales Staff Salaries	7,500
Product Distribution & Shipping	3,000
Net Sales Revenue	150,000
Factory Electricity	2,400
Factory Rent	12,000
Customer Service	2,500
Direct Labor	20,500

a. Calculating the Cost of Finished Goods for 2023

The cost of finished goods is calculated using the following formula:

Cost of Finished Goods = Direct Materials Used + Direct Labor + Manufacturing Overhead – Ending Work-in-Progress Inventory

Step 1: Calculating Direct Materials Used

• Beginning Direct Materials: 22,000 TL
• Direct Materials Purchased: 48,000 TL
• Total Direct Materials Available: 22,000 + 48,000 = 70,000 TL
• Ending Direct Materials: 16,500 TL
• Direct Materials Used: 70,000 – 16,500 = 53,500 TL

Step 2: Calculating Manufacturing Overhead

• Factory Cleaning: 2,100 TL
• Factory Electricity: 2,400 TL
• Factory Rent: 12,000 TL
• Total Manufacturing Overhead: 2,100 + 2,400 + 12,000 = 16,500 TL

Step 3: Calculating Total Production Cost

• Direct Materials Used: 53,500 TL
• Direct Labor: 20,500 TL
• Manufacturing Overhead: 16,500 TL
• Total Production Cost: 53,500 + 20,500 + 16,500 = 90,500 TL

Step 4: Calculating the Cost of Finished Goods

• Total Production Cost: 90,500 TL
• Ending Work-in-Progress Inventory: 3,200 TL
• Cost of Finished Goods: 90,500 – 3,200 = 87,300 TL

b. Preparing the Income Statement for 2023

Item	Amount (TL)
Net Sales Revenue	150,000
Cost of Goods Sold (COGS)
– Beginning Finished Goods Inventory	0
– Cost of Finished Goods	87,300
– Goods Available for Sale	87,300
– Ending Finished Goods Inventory	(8,500)
Cost of Goods Sold	78,800
Gross Profit	71,200
Administrative Expenses
– Sales Staff Salaries	7,500
– Product Distribution & Shipping	3,000
– Customer Service	2,500
Total Administrative Expenses	13,000
Operating Income	58,200

c. Calculating Unit Cost

BETA Manufacturing Inc. produced 22,000 units of furniture in 2023. The unit cost is calculated as follows:

Unit Cost = Cost of Finished Goods / Production Quantity

• Unit Cost = 87,300 TL / 22,000 units = 3.97 TL/unit

Conclusion and Evaluation

BETA Manufacturing Inc.’s financial performance in 2023 highlights the company’s strong cost management in the furniture sector. A 47.5% gross profit margin and a 38.8% operating income margin indicate effective cost control in both production and marketing processes. The unit cost of 3.97 TL/unit allows the company to pursue competitive pricing strategies. The 8,500 TL in ending finished goods inventory is a positive indicator for future sales.

This cost analysis provides BETA Manufacturing Inc. with valuable insights to enhance production efficiency, optimize inventory management, and strengthen marketing strategies.