FA 2 Chapter 11 Manufacturing Accounts

7/25/2019 FA 2 Chapter 11 Manufacturing Accounts

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Financial Accounting 2

Manufacturing

Accounts


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BM020-3-1 FA2 Manufacturing Accounts

Learning Outcomes

To explain to calculate prime cost &

production cost of goods manufactured.

To dra up a manufacturing account andincome statement.

To ad!ust t"e manufacturing account in

respect of or#-in-progress.

$lide 1 of 20


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Manufacturing Accounts

%sed for usinesses "ic" are manufacturers.

A manufacturing account is prepared in

addition to t"e income statement.

't is product for internal use only.

T"e manufacturing accounts is used to calculate

& s"o t"e cost of manufacturing t"ose goods.

T"e figure it produces t"at is used in t"e Tradingaccount is #non as t"e production cost.

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(i)isions of costs


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(irect and indirect costs

T"e sum of all t"e direct costsis #non as t"e

prime cost.

A cost t"at cannot e easil* traced to t"e item eing

manufactured is #non as an indirect cost.


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'ndirect manufacturing costs

+xamples are,

ages of cleaners

ages of crane dri)ers

ent of a factor*

(eprecation of plant and mac"iner*

/osts of operating for#lift truc#s

Factor* poer

Factor* lig"ting.


7/20BM020-3-1 FA2 Manufacturing Accounts

Format of manufacturing account

T"is is deited it" t"e production cost of

goods completed during t"e accounting

period. 't contains costs of,

(irect materials

(irect laour

(irect expenses

'ndirect manufacturing costs.



Format of trading account

T"is account includes,

roduction cost roug"t don from t"emanufacturing account

pening and closing in)entor* of finis"ed goods

$ales.


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Manufacturing Accounts+xample 1.



Format of profit and loss account

T"is includes,

ross profit roug"t don from t"e tradingaccount

All administration expenses

All selling and distriution expenses

All financial c"arges.




+xample 2


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Q & A

Question and Answer Session


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M f t i A t

Ratio Analysis and Interpretation

What we will cover next

FA 2 Chapter 11 Manufacturing Accounts

Documents

Transcript of FA 2 Chapter 11 Manufacturing Accounts