Supplies of raw materials Manufacturing a/c  calculate the production cost A Manufacturing firm (make the product) Customers

Manufacturing a/c $ Stock of raw materials as at Add : Purchase Less: Stock of raw materials as at Cost of raw materials consumed 8000

Manufacturing a/c for the year ended 31 Dec 2002 $ Cost of raw materials consumed 8000 Direct wages 2000 Prime Cost Factory overhead expenses 6000 Total cost of production Add: Work-in-progress as at Less: Work-in-progress as at Production Cost of good completed c/d 15000

Production Cost of good completed Prime Cost (Direct Cost) Factory overhead expenses (Indirect cost) That can be traced back to the items being manufacturing Eg. Indirect Wages, Lighting, Rent, Depreciation Eg. Wage, Royalties

Work-in-progress Store Room Work-in-progress Production line Store Room Work-in-progress Have not include in prime cost and factory overhead expense Have included these goods at year start but not those at year end

Trading a/c Opening Stock of $ $ finished good 3890 Sales Add:Production Cost of goods completed b/d Less : Closing Stock of finished goods 4000 Cost of good sold Gross profit b/d

Profit &Loss a/c Administration Expenses $ $ Salaries 4400 Rent 200 Insurance 70 General expenses Selling & Distribution expenses Salesmen’s salaries 3000 Commission on sales 1150 Carriage outwards Net Profit $ Gross profit b/d

Balance Sheet (extract) Current Assets $ Stock : Raw material 6000 Finished good Work-in-progress 4000

Manufacturing a/c for the year ended xx/xx/xx $ Production cost of goods completed X Manufacturing profit X _____ X ==== $ Market value of goods completed c/d X Profit disposal of plant and machinery X ____ X ====

Trading a/c for the year ended xx/xx/xx $ Opening stock of finished goods X Add: Market value of goods completed b/d X Purchases of finished goods X X Less: Closing stock of finished goods X Costs of goods sold X Gross Profit c/d X X === Stock loss raw materials X $ Sale X ____ X ==== Gross Profit b/d X Manufacturing Profit X

Solution: CCC Ltd. Manufacturing a/c for the year ended 31 December 2003 $ Stock of raw material Add: Purchase 8800 Carriage inwards Less: Stock of raw materials Cost of raw materials used (i) 7890

Stock of case Add : Purchase Less : Stock of cases Cost of wooden cases uses (ii) 2580 Wages (2250*4/5) Prime cost (iii) 28470

Factory overhead expenses : (iv) Indirect Wages (2250*1/5) 4500 Manger ‘s salary 1650 Power 1820 Rates 910 Lighting (600*1/2) 300 Depreciation Add: Work-in-progress Less : Work in progress Production cost of goods completed c/d (v) 57000

Sales (80*1000) Less : Production cost of good sold b/d Gross Profit Less : Expenses: Administration expenses 2400 Salesmen’s salaries 5950 Lighting (600*1/2) 300 Carriage outwards Net Profit Trading &Profit and loss a/c for the year ended

Tang Sau Lin (10) Wong Wing Yin (14)