6.1 Manufacturing

Question 1

What is a Production Cost of Finished Goods include ? ( 3 )

Answer 1

1. Prime Cost
2. Factory Overhead
3. Opening / Closing Work-In-Progress

Question 2

What is inside of a Prime Cost? ( 3 )

Answer 2

1. Cost of Materials Consumed
2. Direct Labour
3. Direct Expenses

Question 3

Work-In-Progress can be calculated at where ? ( 2 )

Answer 3

1. Prime Cost
2. Production Cost

Question 4

What is a Production Cost ?

Answer 4

1. It was Production Cost of Finished Goods before deducting Opening / Closing Work - In - Progress

Question 5

Where does the Production Cost of Finished Goods taken to ?

Answer 5

1. Trading Account

Question 6

Where does the Manufacturing Profit taken to ?

Answer 6

1. After deducted Cost of Sales

Question 7

What are the reasons to add a profit to the production cost of finished goods ? ( 2 )

Answer 7

1. To measure the efficiency and profitability of the factory operation and the trading activities
2. To decide whether to manufacture own goods or purchase ready-made goods for resale