The main difference between income statements of manufacturers and merchandisers is the items making up cost of goods sold. A merchandiser adds beginning merchandise inventory to cost of goods purchased and then subtracts ending merchandise inventory to get cost of goods sold. A manufacturer adds beginning finished goods inventory to cost of goods manufactured and then subtracts ending finished goods inventory to get cost of goods sold.
Compute cost of goods sold for a manufacturer. A manufacturer adds beginning finished goods inventory to cost of goods manufactured and then subtracts ending finished goods inventory to get cost of goods sold.
Prepare a manufacturing statement and explain its purpose and links to financial statements. The manufacturing statement reports computation of cost of goods manufactured for the period. It begins by showing the period's costs for direct materials, direct labor, and overhead and then adjusts these numbers for the beginning and ending inventories of the goods in process to yield cost of goods manufactured.

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Budgeted Purchases = Budgeted Cost Of Sales + (Net Change In Inventory)
Budgeted Purchases = 280,000 + (50,000 - 40,000) = 280,000 + 10,000 = 290,00

A flexible budget is designed to reveal the effects of volume of activity on revenues and costs. To prepare a flexible budget, management relies on the distinctions between fixed and variable costs. Recall that the cost per unit of activity remains constant for variable costs so that the total amount of a variable cost changes in direct proportion to a change in activity level. The total amount of fixed cost remains unchanged regardless of changes in the level of activity within a relevant (normal) operating range. (Assume that costs can be reasonably classified as variable or fixed within a relevant range.)
. A flexible budgetBudget prepared (using actual volume)