Manufacturing Accounts - 30% Flashcards
What are the two main aspects to performance for manufacturing company
- production operation
- trading activities
How do you calculate the prime cost ?
Direct materials cost + direct labour costs
How do you calculate indirect costs?
Indirect material + indirect labour
How do you calculate manufacturing costs ?
Raw materials + labour costs + manufacturing overheads
What are factory production costs ?
The total expense of doing business
What costs are included in factory overhead costs?
- depreciation of equipment
- rent
- property tax
-insurance - utilities
- supervisor salaries
- matinance & quality control staff costs
( all indirect costs )
What is the calculation for factory costs of production
Prime costs ( all direct costs e.g labour & raw materials ) + indirect costs ( overhead costs such as rent, utilities & general administrative expenses )
Do you add or subtract opening WIP TO FACTORY COSTS ?
Opening WIP is added to factory costs of production
Do you add or subtract closing WIP to factory costs of production ?
The cost of closing WIP subtracted from the factory cost of production
Where are finished good produced transferred too ?
They are transferred to the trading account as part of the cost of sales
Manufacturing accounts Debit entries
Opening inventory
Purchases
Less purchase returns
Less closing inventory
Depreciation charges
Electricity
Indirect material
Salaries -()
Opening WIP
Closing WIP -()
Opening inventories of finished goods
Cost of finished goods produced
Less closing inventory of finished goods -()
Manufacturing account credit entries
Direct labour
Prime costs
Direct expenses
