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    Value of Production Income Statements

    Uploaded by

    nootshei
    - The document discusses two formats for presenting company income statements: one based on cost of sales and one based on value of production. - The value of production format reports total production for the period rather than just sales, including inventory changes and production not intended for sale. It deducts all production costs like materials, labor, depreciation to determine operating income. - The document demonstrates that both formats yield the same operating income result, though value of production provides more details about total production for the period.

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    Value of Production Income Statements

    Uploaded by

    nootshei
    570 views12 pages
    - The document discusses two formats for presenting company income statements: one based on cost of sales and one based on value of production. - The value of production format reports total production for the period rather than just sales, including inventory changes and production not intended for sale. It deducts all production costs like materials, labor, depreciation to determine operating income. - The document demonstrates that both formats yield the same operating income result, though value of production provides more details about total production for the period.

    Original Description:

    financial income statements

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    - The document discusses two formats for presenting company income statements: one based on cost of sales and one based on value of production. - The value of production format reports total production for the period rather than just sales, including inventory changes and production not intended for sale. It deducts all production costs like materials, labor, depreciation to determine operating income. - The document demonstrates that both formats yield the same operating income result, though value of production provides more details about total production for the period.

    Copyright:

    © All Rights Reserved
    Download as PDF, TXT or read online from Scribd
    Download as pdf or txt
    570 views12 pages

    Value of Production Income Statements

    Uploaded by

    nootshei
    - The document discusses two formats for presenting company income statements: one based on cost of sales and one based on value of production. - The value of production format reports total production for the period rather than just sales, including inventory changes and production not intended for sale. It deducts all production costs like materials, labor, depreciation to determine operating income. - The document demonstrates that both formats yield the same operating income result, though value of production provides more details about total production for the period.

    Copyright:

    © All Rights Reserved
    Download as PDF, TXT or read online from Scribd
    Download as pdf or txt
    of 12

    The European format: value of production

    2
    Sales revenue 75,000 $
    Less: Sales returns and allowances (5,000) $
    Sales discounts (3,500) (8,500)
    Net sales revenue 66,500
    Cost of goods sold 32,000
    Gross profit 34,500
    Operating expenses
    Salary expense 12,000 $
    Supplies expense 1,500
    Depreciation expense 2,000
    Utilities expense 1,200 16,700
    Operating income 17,800
    Other revenue and (expense)
    Interest expense (8,500) $
    Net Income 9,300
    Any Company
    Income Statement
    Year Ended December 31, 2011
    Manufacturing expenses
    Selling expenses
    R&D expenses
    Administrative expenses
    Interest expenses
    Materials
    Services
    Labor
    Interest expense
    Depreciation and amortisation
    Provisions
    Taxes


    1. INCOME STATEMENT
    - cost of sales
    - selling, administrative and
    other operating expenses
    OPERATING INCOME
    - interest expenses
    extraordinary items
    - taxes
    NET PROFIT (LOSS)
    2. INCOME STATEMENT
    Value of production
    - costs of production:
    Materials,
    Services,
    Personnel,
    Depreciations
    Provisions...
    OPERATING INCOME
    - interest exp.
    extraordinary items
    - taxes
    NET PROFIT (LOSS)
    The value of production comprises sold and
    unsold production. It also includes production
    not meant to be sold, such as self-production.

    By comparing the value of production with the
    cost of production, the operating profit is
    determined.

    The operating profit determined in the two
    formats (cost of sales and value of production)
    is exactly the same.
    Revenue from sales
    Change in inventory of finished products and work in
    progress
    Work performed by the enterprise and capitalized

    Total value of production

    - Value of materials used
    -Personnel expenses
    -Depreciation & amortization
    -Other operating expenses

    Operating profit (loss)
    Sample value of production income statement

    1. INCOME STATEMENT
    Sales
    - cost of sales
    - selling, administrative and other
    operating expenses
    OPERATING INCOME
    - interest expenses
    extraordinary items
    - taxes
    NET PROFIT (LOSS)
    2. INCOME STATEMENT
    Value of production
    - costs of production:
    Materials,
    Services,
    Personnel,
    Depreciations
    Provisions...
    OPERATING INCOME
    - interest exp.
    extraordinary items
    - taxes
    NET PROFIT (LOSS)
    Classified by function
    Classified by nature

    COST OF PRODUCTION:
    MATERIALS USED
    COST OF SERVICES (manufacturing)
    STAFF COSTS (manufacturing)
    DEPRECIATION AND AMORTISATION (manufacturing)
    - COST OF UNSOLD PRODUCTION:
    CHANGES IN INVENTORY OF FIN. PRODUCTS AND W.I.P.
    WORK PERFORMED BY THE ENTERPRISE AND CAPITALISED
    = COST OF SALES
    Globo-Chem Co. starts production in year 1, without selling anything. In the
    second year, the company sells the entire production obtained in the
    previous financial period, without manufacturing anything.
    Data are reported below:

    Year 1 Year 2
    Units produced 1,000 0
    Unit cost of prod. 5
    Units sold 0 1,000
    Unit price 6.5
    General expenses 400 400

    Year 1 Year 2
    Sales 0 6,500
    - Cost of sales 0 (5,000)
    Gross profit 0 1,500
    - General expenses (400) (400)
    Net profit (loss) (400) 1,100

    Year 1 Year 2
    Sales 0 6,500
    + Change in Products 5,000 (5,000)
    Value of production 5,000 1,500
    - Manufacturing expenses (5,000) 0
    - General expenses (400) (400)
    Net profit (loss) (400) 1,100

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