A2 Accounting - Manufacturing Accounts

Purpose of Manufacturing Accounts - Calculate Cost of Production of goods where the business makes them rather than buying the items.

Manufacturing cost of production replaces the Purchases figure in the Cost of Goods Sold

The Manufacturing Account itself

• Direct costs and Indirect costs are separated
• Direct costs
  • Materials
  • Labour costs of employees working on product
  • Any expense relating just to that product
• Indirect Costs
  • Materials that the cost is too insignificant to justify tracking it by product
  • Labour costs of employees not working on the product
  • Expenses that are from a range…