Prepare manufacturing

accounts

Section 10Objectives 2 & 3

Prepare manufacturing account

• Preparation of manufacturing accounts• Calculate unit cost of items produced

Prepare manufacturing account

• A manufacturing account is prepared to calculate the cost of producing completed goods.

• After the preparation of the manufacturing account, a calculation can be done to calculate the unit cost of items produced

Prepare manufacturing account

• Calculation of the key areas of the manufacturing process is done in an account

• Costs incurred are essential in a manufacturing company to determine profit

• Therefore rather than looking for the total cost of production alone, the cost of the keys areas are also important

$

Purchases of raw materials Xxx

Carriage inwards of raw materials Xxx

Less purchases returns of raw materials (Xxx)

Net purchases Xxx

Format used to calculate the key areas:Net purchases

Opening stock of raw materials $xxx

Net purchases xxx

Raw materials available for use xxx

Less closing stock of raw materials ( xxx)

Cost of raw materials used xxx

Format used to calculate the Key areas:Cost of raw material consumed

$

Cost of raw materials used Xxx

Direct wages Xxx

Direct expenses Xxx

Prime cost XXX

Format used to calculate the Key areas:Prime cost

Format used to calculate the Key areas:Cost of goods manufactured

Prime cost xxx

Factory overheads:

(list them down) Xxx

Total factory overhead Xxx

Add work in progress or process (opening)

xxx

Less work in progress or process (closing)

Cost of Goods manufactured (cost of production)

(Xxx)

Xxx

Prepare a complete manufacturing account

(a) Format of a complete manufacturing account showing clearly:• Raw materials• Prime cost• Factory overheads• Total manufacturing cost• Cost of production (also known

as cost of goods manufactured)

(b) Format to calculate the unit cost of production

Prepare manufacturing account

• Formula: calculation of cost per unit of items produced

Cost of goods manufactured ÷ number of units sold

Prepare manufacturing account

Show the name of the company, the period and the name of the company as part of your heading.

The total of all the manufacturing cost is labelled cost of production or cost of goods manufactured.

Insert the opening and closing work in progress (process) at the end before calculating cost of production.

Prepare manufacturing account

It is important to show the following sections in the manufacturing account:

– The cost of raw materials consumed– Prime cost– Factory overhead– Cost of production

Prepare manufacturing accountWatch the video on preparation of cost of goods manufactured statement

Cost of Goods Manufactured ScheduleCarolyn Christesen

https://www.youtube.com/watch?v=4Oit9o2q-WU