Spain COGS / Cost of sales

[HELENDM]

Hi,

Wondering if someone could help me on this. This particular company refers has manufacturing and installation.

We have identified,
1. Material & supply cost
2. Labour cost
3. Per diem (for transport + accomodation)

Questions
1. When identifying cost of sales do we take into account all three (1+2+3) or just Material and supply + labour cost) (1+2) only
2. The labour identified about is already Accounted under General Overheads under staff . So how do we avoid double counting.

Any help would be valued. As its been ten years since I last did P&L.

Regards

 

[Drmdcpa]

For manufacturers all costs associated with production belong to cost of goods sold. This usually includes direct labor, direct materials and a portion of overhead.

For labor posted to an overhead account and all other overhead items, a journal entry needs to be made moving the correct amount to COGS thus reducing SGA expense.

It is not clear in your question what the per diem pertains to. If it is all attached to direct labor then it is 100% COGS. Otherwise it is part of SGA and a portion needs to be allocated to COGS.