Manufacturing Businesses

Question 1

Describe a manufacturing business

Answer 1

Makes goods by using machinery and labour, often on a large scale

Question 2

Describe a retail business

Answer 2

Sells small quantities to the public

Question 3

Describe a wholesale business

Answer 3

Sells bulk/large quantities to retailers

Question 4

How is cost of raw materials calculated?

Answer 4

Opening stock + Purchases + Carriage inwards - Closing stock

Question 5

How is carriage inwards on purchases of raw materials recorded?

Answer 5

Added to the cost of purchases

Question 6

How is prime cost calculated?

Answer 6

Cost (RM) + Direct material + Direct labour + Direct expenses

Question 7

Define factory overheads

Answer 7

All expenses of the factory which cannot be directly linked to the product being produced

Question 8

Define DIRECT cost

Answer 8

Consists of expenses which can be DIRECTLY linked to the product being produced

Question 9

Define INDIRECT cost

Answer 9

Arises from factory OPERATION, cannot be directly linked

Question 10

Define WORK-IN-PROGRESS

Answer 10

Items which are PARTLY made, but not completed at any moments in time at the end of the financial year

Question 11

Define unit cost

Answer 11

The cost of making the article (for one unit)