Question

Please discuss how the Cost of Goods Manufacturing Statement, Cost of Goods Sold Statement, and Income Statement can be used to manage an organization and increase profitability. Please type answer

Answer 1

Cost of goods manufactured means the cost incurred to manufacture goods including direct material, direct labor, manufacturing overhead cost and opening and closing inventory.
Controlling the manufacturing cost will increase the gross profit and ultimately the net profit

Cost of goods sold includes the selling and administration cost are indirect cost. Organisation can control marketing cost.
The profit statement includes revenue by reducing the cost of goods manufacturing and the cost of goods sold.

An organization by preparing statements will get a crystal clear picture of the various components that are contributing to earn profit
Since cost accounting minutely calculates the cost, selling price and profitability of the product, segregation of profitable or unprofitable items or activities becomes easy.
It will help to take major decisions like whether to outsource the product or to manufacture in the organization

Through these statements, the pricing decision can be made precisely which is the most sensitive issue nowadays.