FINAL ACCOUNT OF MANUFACTURING ENTITIES

FINAL ACCOUNT OF MANUFACTURING ENTITIES

MANUFACTURING ACCOUNT:

In a case where the cost of manufacturing goods is to be ascertained, the Manufacturing Account is prepared. The main feature of a Manufacturing Account are the following :—

¨      It is debited with all expenses that are incurred in manufacturing of goods. In this account, besides such
expenses as freight on purchases of raw materials, customs duty, wages, rent and lighting of factory  building, we must also debit the manufacturing account with repairs to plant and machinery. depreciation on machinery, loose tools, etc.

¨      In this account, we have to show the value of materials consumed instead of showing figures of opening stock, purchases and closing stock separately.

Ø  Raw Material consumed:

                  Opening Stock of Raw material                                  *****

                  Add: Purchases of Raw Material                                *****

                  Less: Closing Stock of Raw Material        *****

                                                                                                            *****

Note:- Opening and Closing Stocks of finished goods are not entered in Manufacturing Account,

¨      The opening stock of work-in- progress is debited and closing stock of work-in-progress is credited. The usual basis of valuation of work in progress is the actual materials used and labour spend on these unfinished goods plus a proper proportion of manufacturing expenses, generally on the basis of labour.

¨      In the course of manufacturing some waste material always emerges. when they are sold, the amount realized credited to “Scrap Account”. This Account is transferred to the credit side of the Manufacturing Account.

¨      The Balance in Manufacturing Account (i.e. the difference between the debit and credit sides) is the cost of the goods produced during the period. This is transferred to the debit side of the Trading Account.

                                                  Manufacturing Account of ----for the year ending----

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