Manufacturing Final Accounts, Slides of Computer science

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MANUFACTURING FINAL

ACCOUNTS

PRESENTED BY

- VIVEK CHOUDHARY

- ROLL NO. 6

INTRODUCTION

 This is an accounting statement that helps in the preparation of final accounts of manufacturing concern of a firm.  Certain manufacturing concerns do not prepare cost accounts since they do not have any cost office.  These manufacturing concerns ascertain the manufactured cost of goods and also the manufacturing profit or loss during the year.  Likewise, the cost of production of the manufactured goods and the profit or loss made by the manufacturing department is found out by the preparation of an account.  So, when the required data are presented in a convenient form, it is called manufacturing account.  Generally, the cost of production or the cost of goods manufactured is exhibited by the preparation of manufacturing account which helps in the calculation of manufacturing trading and profit and loss account.

EXPIRED AND UNEXPIRED COSTS

 Expired costs or expenses are the used up value of assets. Expired costs are always shown on the income statement as deductions from revenue.  Expired costs may be thought of as that portion of the asset value benefitting current operations.  It is helpful to think of expired costs as former assets values. To illustrate, supplies expense is an expired cost.  The cost allocated to supplies expense, of course, is the used portion of supplies, an asset.

Manufacturing Costs/Expenses

 The difference between a cost and an expense is frequently misunderstood. Because the terms variable costs and variable expenses will be used later in this chapter, and also throughout this book, the difference in meaning between a cost and a expense will now be clarified.  Technically, there is a difference between a manufacturing cost and a manufacturing expense.  The term manufacturing costs usually refers to material used, direct labor incurred, and overhead incurred in a manufacturing business.  Material used, direct labor, and manufacturing overhead at the time incurred are not expenses; rather they incurred costs.  In the manufacturing process, material, labor, and overhead do not expire; rather through manufacturing activity they become transformed from one type of utility to another

TYPES OF COSTS

FIXED COST

VARIABLE COST

TYPES OF COSTS

FIXED COST

 The most volatile variable in a business is considered to be volume.  A fundamental fact of all businesses is that some costs change (increase or decrease) with changes in volume (activity).  The costs or expenses that change with volume are called variable while those that do not change with changes in activity are called fixed. VARIABLE COST  Variable costs are expenses that vary in proportion to the volume of goods or services that a business produces.  In other words, they are costs that vary depending on the volume of activity. The costs increase as the volume of activities increases and decrease as the volume of activities decreases.