Final answer:
The cost of goods manufactured schedule begins with the direct materials cost. This reflects the initial expenses for raw materials used in production, followed by direct labor and manufacturing overhead costs.
Step-by-step explanation:
The cost of goods manufactured schedule begins with the direct materials cost. This is the cost of raw materials that are used to produce the goods. The origin of these cost figures lies in the production function and the factor payments. In the example provided, the production function demonstrates the relationship between workers and the number of widgets produced. The initial outlay in the manufacturing process is typically for materials, which is why the cost schedule starts with this item. After direct materials, the schedule then includes direct labor costs, which are the wages paid to workers to produce the goods (as seen in the provided production function where workers (L) produce widgets (Q)). Lastly, manufacturing overhead is added, which covers all other costs associated with the production process that are not directly tied to a specific unit of product (like utilities or rent for the manufacturing facilities).