Manufacturing Account in Final Accounts

Arjun EP

Published on: September 22, 2020

Manufacturing Account

Manufacturing account is prepared by manufacturing company.

Manufacturing company purchases raw materials and converts raw materials into finished goods.

To convert raw materials into finished goods, different expenses and overheads are needed.

The main features of manufacturing account are given below:

It helps to determine cost of production and cost of sales.

It provides information about direct expenses (manufacturing or factory expenses).

It helps to control direct expenses.

Manufacturing Account

ABC Manufacturing Company

As on 31^st December 20X1

Particulars		Amount	Particulars		Amount
To Opening stock:			By Closing stock:
Raw materials	xxxx		Raw materials	xxxx
Work in progress	+xxx		Work in progress	+xxx
To Raw materials purchase	xxxx		By Scrap sold		xxxx
Less: Return	(xxx)	xxxx	By Cost of production (b/f)		xxxx
To Carriage inward (on purchase)		xxxx
To Import duty		xxxx
To Excise duty		xxxx
To Clearing charge		xxxx
To Dock charge (dock dues)		xxxx
To Store consumed		xxxx
To Coal, gas, stem, water		xxxx
To Heat, light and power		xxxx
To Royalty (for manufacturing)		xxxx
To Wages (productive)		xxxx
To Coolie expenses		xxxx
To Motive power		xxxx
To Factory insurance		xxxx
To Repairs to factory building		xxxx
To Repair to plant and machinery		xxxx
To Depreciation on factory assets		xxxx
To Other factory expenses		xxxx
		xxxxx			xxxxx

Note: manufacturing = factory expenses = production = works

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PROBLEM: 1

ABC Manufacturing Company has following information for the year ended December, 2019:

Required: Manufacturing account

[Answer: Cost of production = 811,000]

SOLUTION:

Manufacturing Account

ABC Manufacturing Company

As on 31^st December 20X1

Particulars		Amount	Particulars		Amount
To Opening stock:		120,000	By Closing stock:
Raw materials	20,000		Raw materials	80,000
Work in progress	+100,000		Work in progress	+20,000	100,000
To Raw materials purchase	440,000		By Scrap sold		3,000
Less: Return	(60,000)	380,000	By Cost of production (b/f)		811,000
To Carriage inward		16,000
To Wages		90,000
To Gas and coal		72,000
To Import duty		10,000
To Repair to plant		52,000
To Repair to factory building		40,000
To Production royalty		24,000
To Depreciation on plant		20,000
To Depreciation on machinery		40,000
To Factory insurance		8,000
To Motive power		12,000
To Store consumed		5,000
To Other factory expenses		25,000
		914,000			914,000