18. Manufacturing account Flashcards
bought in goods
bought in as finished goods to be sold to customers
finished goods
already manufactured and ready for sales
work in progress
partly completed goods
raw materials
purchased from suppliers and not yet used in production
SPL
will have more items in the trading account in COGS
3 stages to the manufacturing process
1 acquisition of raw materials
2 processing materials with labour and other direct costs
3 production of finished goods
COGS
manufacturing account
cost of raw materials used
opening inventory of raw materials
+ purchase of raw materials
- closing raw materials
direct costs
any other cost directly attributable to the cost of goods
i.e. labour used to produce goods, direct expenses factory running costs, equipment hire etc
Prime costs
total of all direct costs
Indirect costs
factory rent
heat
light
wages and salaries
Layout of manufacturing account
SALES less COGS opening inventory of finished goods \+ opening inventory of raw materials \+ purchases of raw materials TOTAL - closing inventory of raw materials \+ raw materials consumed \+ direct manufacturing wages \+ direct factory expenses TOTAL = PRIME COST PRODUCTION OVERHEADS Factory supervisor wages Heat and Light TOTAL = FACTORY COSTS INCURRED opening WIP - closing WIP TOTAL = FACTORY COST OF GOODS COMPLETED - closing inventory of finished goods COGS GROSS PROFIT
SFP inventories
to include bought in goods for resale finished goods work in progress raw materials
