Professional Documents
Culture Documents
Dr Cr
Opening inventory of raw materials xx
Add:purchases of raw materials xx
xx
Add:carriage on raw materials(inwards) xx
xx
Less:purchases returns xx
xx
Less: closing inventory of raw materials xx
Cost of raw materials consumed xx
Add:direct labour/manufacturing wages/wages of factory operatives Xx
:royalties/licence fees/trade marks/patent fees/copyrights fees xx
Prime cost xx
Add factory overheads/indirect costs
Indirect material xx
Indirect labour xx
insurance xx
rent xx
Heating and lighting xx
Depreciation:plant and machinery xx
Factory supervisors xx
xx
xx
Add:opening inventory of work in progress xx
xx
Less:closing inventory of work in progress xx
Production cost of completed units xx
Dr Cr
Revenue(sales) xx
Less:cost of sales
Opening inventory of finished goods xx
Add:production cost of completed goods xx
xx
:purchases of finished goods xx
xx
Less:closing inventory of finished goods xx
Cost of sales xx
Gross profit xx
Manufacturing account for the year ended
Notes on manufacturing accounts Manufacturing
Accounts
Definition
Manufacturing businesses are those that take raw materials and, with the help of
labour and machinery, turn these raw materials into finished goods.
These businesses do not purchase finished goods and so do not have a Purchases
Account in the Trading and Profit and Loss. The Purchases Account is replaced by the
PRODUCTION COST OF GOODS COMPLETED ( how much did it cost to
manufacture the goods that the business has sold).
2. INDIRECT COSTS these are costs which cannot be traced to the product
being manufactured yet are still a cost of the factory. For example, wages of
cleaners and supervisors; rent of the factory; factory electricity; depreciation
of the
machinery. These are called Factory Overhead Expenses.
Apportionment of expenses
The common expenses between the Factory and other sections can be apportioned on
the basis of fractions of:
a) Floor area
b) Number of labourers
c) Percentages or fractions given
Manufacturing account for the year ended