Please enlighten me about the composition of the Cost of Goods Sold statement, namely about the Manufacturing Overhead contained in the statement. Does it have to be allocated overhead, or actual (real) overhead ? If the two possibilities exist, when must Manufacturing overhead be allocated and when should it be actual (real). If possible, please indicate a credible and authritive source.

Thank you

am from kenya I hope that C/A is not influenced by legislation,my reason validated by it being an internal a/c. your stament should consist of opening ,purchassed less closssing stock raw material(=raw material consumed) add any direct production cost it should be actual not unless it is job costing where you have to adjust the cost value as per
the quantity. This will give you preme cost then add other manufacturing indirect expenses e.g. depreciation of plant. However when a cost is incured for manufacturing and maybe selling and distribution you should apportion. Add opening w.i.p_clossing W.i.p and you will have your cost of manufacturted good transfer it to the p& l a/c and treat it as purchasses. My answer would have been more precise if you had included an actual question.

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