Manufacturing Accounts

HideShow resource information
Direct Materials (Cost of Raw Materials Used)
The raw materials that are required in manufacturing the finished product.
1 of 22
Direct Labour
The cost of the workforce engaged in production e.g. machine operators wages (wages of factory supervisors are a production overhead)
2 of 22
Direct Expenses
Special costs identified with each unit produced e.g. hire of specialist machinery
3 of 22
Production Overheads
All other costs of manufacture e.g. wages of supervisors, factory rent, depreciation of factory machinery
4 of 22
Prime Cost = Direct Materials + Direct Labour + Direct Expenses
Basic cost of manufacturing a product before the addition of production overheads
5 of 22
Production Cost = Prime Cost + Production Overheads
The factory cost of making the product after the addition of production overheads
6 of 22
Manufacturing Account of a Manufacturer
Direct Materials + Direct Labour + Direct Expenses = Prime Cost + Production Overheads = Production Cost
7 of 22
Income Statement of a Manufacturer
Revenue - Production Cost (from manufacturing account) = Gross Profit - Non-production Overheads (selling and distribution, administrative, finance expenses) = Profit for the Year
8 of 22
Manufacturing Account: Step 1 (Raw Materials Used in the Factory)
Opening Inventory of Raw Materials + Purchases - Closing Inventory of Raw Materials = Cost of Raw Materials Used
9 of 22
Manufacturing Account: Step 2 (Calculating Prime Cost)
Direct Materials + Direct Labour + Direct Expenses = Prime Cost
10 of 22
Manufacturing Account: Step 3 (Adding Production Overheads)
Prime Cost + Production Overheads = Production Cost
11 of 22
Manufacturing Account: Step 4 (Adjusting for Work-in Progress)
Production Cost + Opening Inventory of Work-in Progress - Closing Inventory of Work-in Progress
12 of 22
Income Statement: Cost of Sales
Opening Inventory of Finished Goods + Production Cost of Goods Completed - Closing Inventory of Finished Goods
13 of 22
Income Statement: Expenses
It deals with the non-production expenses as the factory costs have been dealt with in the manufacturing account.
14 of 22
Income Statement
Revenue - Cost of Sales = Gross Profit - Non-production Expenses = Profit for the Year
15 of 22
Balance Sheet
Current Assets = Inventories (Raw Materials + Work-in Progress + Finished Goods)
16 of 22
Unit Cost of Goods Manufactured
Unit Cost = Production Cost of Goods Completed / Number of Units Completed
17 of 22
Transfer Prices (Manufacturing Account)
Production Cost + _% = Production Cost of Goods Completed (Transfer Price)
18 of 22
Transfer Prices (Income Statement)
Opening Inventory of Finished Goods + _%, Closing Inventory of Finished Goods + _%, Profit of the Year + Factory Profit (Production Cost + _%) - Increase (+Decrease) in Provision for Unrealized Profit
19 of 22
Increase/Decrease in Provision for Unrealised Profit
(Closing Inventory x 10%) - (Opening Inventory x 10%) = +(Increase) or -(Decrease)
20 of 22
Balance Sheet: Current Assets
Inventory of Finished Goods - Unrealised Profit at End of Year = Adjusted Inventory of Finished Goods
21 of 22
Calculating Unrealised Profit
(Opening Inventory + _%) x (_ %/ 100 + _%)
22 of 22

Other cards in this set

Card 2

Front

The cost of the workforce engaged in production e.g. machine operators wages (wages of factory supervisors are a production overhead)

Back

Direct Labour

Card 3

Front

Special costs identified with each unit produced e.g. hire of specialist machinery

Back

Preview of the back of card 3

Card 4

Front

All other costs of manufacture e.g. wages of supervisors, factory rent, depreciation of factory machinery

Back

Preview of the back of card 4

Card 5

Front

Basic cost of manufacturing a product before the addition of production overheads

Back

Preview of the back of card 5
View more cards

Comments

No comments have yet been made

Similar Accounting resources:

See all Accounting resources »See all Manufacturing Accounts resources »