Accounting Report: GM Inventory, Overhead, and COGS Analysis

This accounting report examines General Motors (GM), focusing on its financial performance, inventory management, and manufacturing overhead. The report begins with an overview of GM, including its founding, business activities, and financial data, such as net income and total assets. It then delves into the company's inventory, referencing the financial statements and categorizing inventory types, including productive materials, work in progress, and finished goods. The report also analyzes the cost of goods sold (COGS), explaining its calculation and significance. Furthermore, it explores the elements of manufacturing overhead, detailing expenses like depreciation, electricity, property taxes, rent, and salaries. The analysis is supported by references to GM's annual reports and relevant academic research.

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Accounting

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Table of Contents
Overview.....................................................................................................................................................3
Inventory.....................................................................................................................................................3
Elements of the manufacturing overhead...................................................................................................4
References...................................................................................................................................................5

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Overview
General Motors Company also commonly known as GM, is an American based
multinational corporation which is engaged in the business of manufacturing of the vehicles and
the vehicle parts and are also involved in selling of the financial services. The key founder of the
company was William S Durant who founded the company in the year 1908, on 16th of
September. The company also tends to be the largest American Automobile manufacturer. The
net income of the company is currently US$8.014 billion for the financial year 2018 and the total
assets being US$227.339 billion (General Motors, 2018).
Inventory
Every company has to disclose the financial report and in the financial report, there is a
particular section which deals with the notes to accounts of the financial statements the
information regarding the inventory is found in the Note 6, on page 64 of the annual report of the
General Motors.
The category of the inventory as shown in the footnote of the General Motor Company
based in the U is presented below.
The two major categories that can be seen in the note above is the total productive,
material and work in progress inventories as well as the finished costs.
Particulars 2018
Cost of goods sold
manufactured
Opening inventory 6460
Add: Purchases 120656

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Less: Closing inventory 5542
Cost of goods sold 121574
Cost of goods sold, regularly defined as COGS, is an administrative count that
estimates the immediate or the direct expenses brought about in production of the product that
were sold amid a period. As such, this is the measure of cash the organization spent on labor,
direct materials, and overhead to fabricate or buy items that were sold to clients during the year.
The calculation of the cost of goods sold is arrived by using the formula. The formula states that
the cost of goods sold is calculated as the opening inventory + purchases – closing inventory.
Elements of the manufacturing overhead
Production line overheads are the expenses that are incurred during the procedure,
which do not include the expenses of direct labor and direct materials. Manufacturing overhead
is regularly accumulated into cost pools and assigned to units delivered amid the period. It is
allocated over the cost when the manufactured units are sold as the ready products or discounted.
The distribution of manufacturing overhead to units is not considered in the process of the direct
costing but included in the process of the absorption costing which is also followed by the
General Motors.
The elements of the manufacturing overhead that are found in the annual report of
the General Motors are depreciation on the factory or the building in which the vehicles are
assimilated or manufactured and made ready to sale amounting to $7604. The electricity used to
manufacture the vehicle is also the part of the direct overheads. The other items that are also
included are the property taxes $474, rent on factory building, salaries of the manufacturing
managers and maintenance of the equipment personnel as well (Chuang & Zhao, 2019).

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References
Chuang, C. H., & Zhao, Y. (2019). Demand stimulation in finished-goods inventory
management: Empirical evidence from General Motors dealerships. International
Journal of Production Economics, 208, 208-220.
General Motors, (2018). Annual Report. Retrieved from
http://www.annualreports.com/HostedData/AnnualReports/PDF/NYSE_GM_2018.pdf