 Hello, in this lecture we will define cost of goods completed. According to fundamental accounting principles, while the 22nd edition, the definition of cost of goods completed is, total manufacturing costs, direct materials, direct labor and factory overhead for period plus beginning working process, less ending working process, also called cost of goods manufactured. Support accounting instruction by clicking the link below, giving you a free month membership to all of the content on our website, broken out by category, further broken out by course, each course then organized in a logical, reasonable fashion, making it much more easy to find what you need than can be done on a YouTube page. We also include added resources such as Excel practice problems, PDF files and more, like QuickBooks backup files when applicable. So once again, click the link below for a free month membership to our website and all the content on it. When we're considering the cost of goods completed, we are considering a manufacturing company generally, meaning a company that manufactures inventory rather than purchasing and selling inventory. We are making the inventory and therefore, within our cost of goods sold calculation, we will need to replace the purchases with the cost of goods completed, cost of goods completed being the raw materials, the direct labor and the factory overhead involved in the production process. So don't get confused between the cost of goods completed calculation and the cost of goods sold calculation, cost of goods sold being a calculation that we would have even if we were a merchandising company where we have the beginning costs plus purchases. In this case, we're going to replace purchases with cost of goods completed because we're not buying the inventory, we're buying raw material, but then we're producing the inventory, including direct labor and overhead to the raw materials that will give us the amount available for sale and the cost of goods sold minus the Indian inventory gives us the cost of goods sold. We need this number in order to do the cost of goods sold calculation. We need this report then to get the cost of goods completed number, cost of goods completed. Any inventory will include and it's really important to remember this that inventors not just raw materials, even if we purchase the inventory and then resell it at some point along the way the cost, the value of that inventory includes raw materials, direct labor and overhead. Raw materials plus the things that we needed to convert that raw material into what we now are using. This will give us the costs. We're going to calculate the costs for the period, the month or the year of raw materials, labor and factory overhead. That will give us the total manufacturing costs for that month or year, the time period. And then if we have, we don't in this example, but if we had beginning inventory that was in there at the beginning, we would have to add that to the cost of this time period given us the total cost in work and process, the work that's not quite done yet. And then if we had stuff that was left over at the end, we would have to subtract that out to give us the cost of goods completed, that number then being useful and used in the cost of goods sold calculation.