13 Manufacturing Accounts Flashcards
What are integrated accounts?
These are a set of accounting records that integrates both financial and cost accounts using a common input data for all accounting purposes
What are the advantages of integrated accounts?
- Effort required to create a second set of accounts is avoided
- No need to reconcile the two sets of accounts
What are the disadvantages of integrated accounts?
- The need to prepare info to fulfil statutory financial accounts requirements may influence what info is available and the way the information is presented.
=> this may not be the best from the viewpoint of preparing cost and management accounts
What are the steps in the flow of information into a set of accounts?
Step 1 = Resources are obtained and paid for
Step 2 = Resources are used in the production process
Step 3 = Products are completed and go to the warehouse
Step 4 = Products are sold and their cost is compared to the revenue to establish the profit/loss made
On which side of the accounts do inputs and outputs appear?
On the left hand side inputs into an account appear, on the right hand side outputs into an account appear.
- Also an entry which will increase profits will be a credit in the relevant account in the income statement. - Reduced profits will be a debit in the relevant account.
What are the variances for the statement of profit or loss?
Favourable variances = result in a credit to the statement of profit or loss
Adverse variances = debit (reduced profit)
What are the different account variances?
Materials/stores account
- Material price variance ( Fav = debit, Adv = credit)
Wages control account
- Labour rate variance (Fav = debit, Adv = credit)
Overhead Control Account
- Total overhead variance
Over absorbed = Fav = Debit
Under absorbed = Adv = Credit
Work in progress Account
Material usage variance (Fav = Debit, Adv = credit)
