Manufacturing Account

accountingexplained

So far, all previous posts deal with businesses that either sell goods (or products) to customers or services to customers. We have not been dealing with manufacturing company. A manufacturing company not only manufactures products but also sells them to other company. So, the existing preparation of accounts are not enough to record everything (the trading and profit and loss account and the balance sheet statement.) In this case, you will need to have another account drawn up; the manufacturing account.

In manufacturing account, you will need to be aware of new terms;

1) Direct costs – Costs that can be directly traced to making the products. Direct costs are categorised into direct materials, direct labour and direct expenses.

2) Indirect costs – Costs that cannot be directly traced to making the products.

3) Prime costs – All direct costs.

4) Factory overhead – Costs which occur in the factory…

View original post 304 more words

Advertisements

About generalfinance13

General Finance is a place for understanding the basics of financials and accounting, because in order to develop in your career you need to excel in what you do, and we will provide you with good techniques to improve your skills.

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s

%d bloggers like this: