 prepared by those organisations  that manufacture goods.  they prepare another account called  the manufacturing account  in addition to the trading,

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Presentation transcript:

 prepared by those organisations  that manufacture goods.  they prepare another account called  the manufacturing account  in addition to the trading, Profit and Loss Account.

 costs are usually divided into 3 types  Prime Cost  Production Cost  Total Cost

 Prime Cost  Direct Material  + Direct Labour  + Direct Expenses

 Production Cost =  Prime Cost + factory overheads

 Total Cost =  Production Cost  + Office  + selling and distribution overheads

 Direct costs  can be traced to a particular product that is being manufactured.  Examples are raw material costs, direct wages, etc.

 costs cannot be directly traced to an item being manufactured  Examples  foreman's wages, grease, etc.

 Examples  factory heating  lighting,  power, etc.

 Examples  managers' salary  accountancy fees  legal charges etc.

 Examples  Sales staff salaries  advertising freight  display salesmen commission  depreciation of delivery vans

 Q & A