 So merchandise withdrawal from sale. So if you withdraw merchandise for your personal or family use, so now you're going to take the, you're going to take, dip it into your own stash of the merchandise. So you must exclude this cost from the total amount of merchandise you bought for sale. Do this by crediting the purchases or sales account with the cost of merchandise you withdraw for personal use. You must also charge the amount to your drawing account. You're basically taking out a draw because you're, you're consuming the, the merchandise for personal use. So, so that would be like similar to, to pulling money out of the business after it generated money, but instead of pulling the money out, you're drawing out the merchandise. So a drawing account is a separate account. You should keep to record the business income you withdraw to pay for personal and family expenses. So in other words, when you take money out, you can't record it as a business expense, lowering that income, but instead as a draw, which is a balance sheet account, which isn't shown on the tax return because the tax return only has an income statement generally. So, so when you're doing your accounting, it would be a balance sheet account that would be, uh, not recording an expense on the income statement for a draw because you took it out for personal use. You didn't expend the money or the expense for the business. So as stated above, you also use it to record withdrawals of merchandise for personal or family use. This account is also known as a withdrawal account or personal account. Line 37 cost of labor, labor costs are usually an element of cost of goods sold only in a manufacturer or mining business. So if you're just buying and selling merchandise, then you're not going to have labor. It's going to be specific to an industry, small merchandisers, wholesalers, retailers, et cetera, usually do not have labor costs that can properly be charged to cost of goods sold. In other words, you might have employees and whatnot, but they're not actually making the inventory if you're in like a service business. So those would be just wages expense, not part of cost of goods sold. So in a manufacturing business, labor costs properly allocated to the cost of goods sold include both the direct and indirect labor used in fabricating the raw material into finished sellable products. So when you're in a manufacturing company, you've got workers that are working on the actual products, those that you can draw specifically to a specific product are more like the direct laborers, indirect laborers are doing something like in the warehouse where they're making the products, but it's still kind of going towards the construction of the product and therefore you wouldn't just expense it as a expense, but rather include it as part of the cost of goods sold, the inventory that you're going to sell in, expensing it in the form of cost of goods sold at the point in time, the inventory is sold. Direct labor, direct labor costs are the wages you pay to those employees who spend all their time working directly on the product being manufactured. They also include a part of the wages you pay to employees who work directly on the product part time if you can determine that part of their wages, indirect labor, indirect labor costs are the wages you pay to employees who perform a general factory function like they do something within the factory, the maintenance of the factory itself. So you can't you can't allocate it to a specific unit of inventory, but their cost is helping the manufacture of inventory in general. That means that you have to use some method to allocate their indirect to the to the units, which becomes an accounting issue. But anyways, immediate or direct connection with making the sellable product, but that is a necessary part of the manufacturing process. So other labor, other labor costs are the properly chargeable to the cost of goods sold can be deducted as a selling or administration expenses. So if they're not included in the cost of goods sold, they're just like a normal kind of expense, which would be selling an admin expense, not part of the cost of goods sold. Generally, the only kinds of labor costs properly chargeable to your cost of goods sold are the direct or indirect labor costs and certain other costs treated as overhead expenses properly charged to the manufacturing process, as discussed later, line 39 other costs. All right, so we'll get to there soon. Line 38 materials and supplies materials and supplies such as hardware and chemicals used in manufacturing goods are charged to the cost of goods sold. Those that are not used in the manufacturing process are treated as deferred charges. You deduct them as a business expense. When you use them, business expenses are discussed in chapter eight and you got line 39 other costs. Example of other costs include in a manufacturing or mining process that you charge to your cost of goods sold are as follows. You got the contractors. So contractors and we've got the containers. I'm sorry, containers, not contractors. Containers and packages that are an integral part of the product manufactured are a part of your cost of goods sold. So now you're manufacturing something and you've got to put them into the container so that container then is going to be part of basically your inventory across the goods sold. So if they are not an intangible part of the manufactured product, the costs are shipped or selling expenses. So freight in freight in express in and cartage in on raw materials, supplies you use in production and merchandise you purchase for sale are all part of the cost of goods sold. So note that's a little bit confusing because that doesn't include other kind of shipping costs that aren't related to the cost to get sold, which might be an expense, right? It's only they're going to be the stuff that shipping that's part of the manufacturing process. You needed that in order to help you to do the inventory overhead expenses overhead expenses included expenses such as rent, heat, light, power, insurance, depreciation, taxes, maintenance, labor and supervision. You can usually think if there's like a manufacturing process, anything that's in the warehouse. Imagining the warehouse being different than the administrative office and the stores or the sales areas. If it's part of the manufacturing process, all the labor in there, the lights, the power, the insurance, the depreciation on the equipment is all part of making the inventory. And therefore you would think it wouldn't be expensed just as a normal operating expense, but rather be in essence, capitalized or included as part of the cost of goods sold and expensed as cost to get sold part of the inventory when sold.