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

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

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

4.  Production Cost =  Prime Cost + factory overheads

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

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

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

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

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

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

11.  Q & A