The manufacturing statement is a type of financial record that is kept by companies. This serves as an account of all the manufacturing expenses incurred by the business. This keeps in mind the fixed assets that have been used during the production of specific goods. There are essentially three portions of the manufacturing statement that keeps track of the raw materials used, the work-in-progress and the final finished products. Each part is taken into account while creating the manufacturing statement. Hence, it is important to carefully analyze all the steps carefully for the production process before formulating such a statement for a company. The manufacturing statement should be created by an accounting expert to avoid any major errors. The following should be considered:
- The purchase and cost of raw materials as well as the parts that will be used for the production of goods should be mentioned in the manufacturing statement.
- Each step like raw material, work-in-progress, and the finished product will require its own expert labors. There should be, thus, a record of the labor charges incurred during each of these production phases.
- The estimated budget at the beginning of the production and the actual budget of the production should both be stated so that the company can assess the possible profit or loss.
- The final cost of the product should be determined through the manufacturing statement and this will help the business in creating a sales price for it in the market.
- The amounts can be shown individually in the statement or it can be rounded up and stated towards the end.
- There should be no confusion during the compilation of this statement. It should be easily understood. This will serve as a mode of reference for the processes to be followed after manufacturing i.e. marketing, sales etc.