Format For Manufacturing Account

# #
Opening stock of Raw materials X Cost of production x
Add purchases of raw materials X
Add: Carriage inward on raw mat X
Cost of raw materials available X
Less: Closing stock of raw materials (X) Cost
of raw materials consumed X
Add: Direct wages X
Royalties X
Direct Expenses X
Prime Cost X
Factory Overhead :
Factory Power X
Factory rent & rates X
Indirect wages X
Factory insurance X
Fuel and Power X
Depreciation on plant
And machinery X
Lubricants X X
X
Add: Opening stock W.I.P X
X
Less: Closing W.I.P (X)
Cost of production X
Opening stock of finished goods X
Add: Cost of production X
X
Less: Closing stock of finished goods (X)
X
Gross profit X
X
X
Expenses:
Gross profit b/d X
Selling and distribution Expenses
Carriage Outward X
Commission on sale X
Salesmen Salaries X X
Administration Expenses
Admin. Salaries X
Office Rent X
 Office insurance X
Office Height X
Office Mach, Dep X X
Net profit X
X

Analysis : Manufacturing Account is mainly concerned with expenses, therefore all the
items appears on the debit side.
ILLUSTRATION
The following balances were extracted from the books of GSS jiwa (Nzewata )
Enterprises a manufacturer of leather material in Gwagwa at 3oth September 1998.
#
Raw materials purchased 38720
Manufacturing wages 18870
Factory sundry expenses 10120
Stock at 1/10/97 – Raw materials 8460
- Work in progress 3070
- Finished goods 12380
Sales 135000
Depreciation : Plants & machinery 7560
Delivery van 3040
Office Equipment 807
Repairing of plant & machinery 3020
Factory Power 3100
Advertising 3566
Foreman’s Salary 2530
Discount Allowed 1624
Office Expenses 2910
Rent & Rates 8400
Salesmen Salaries 6420
Carriage inwards on raw materials 2720
Other directs : Factory expenses 2100
Office Salaries 5170
Additional information
Rent and Rates should be apportioned as follows
Factory 50%
Administration 30%

Selling $ distribution 20%

Closing stock as at 30th September 1998 were:

Raw materials 10,985

Work in progress 2,460

Finished goods 14,570

Required: To computes:

( a) cost of raw materials available for use

(b) cost of raw materials consumed

(c) prime cost

(d) Manufacturing, trading, profit and loss account.

SOLUTION ( Compution )

1. Cost of raw materials available for use

Opening stock of raw materials 8460

Add: Carriage inwards on raw materials 2720

Cost of raw materials for used 49900

2. Cost of raw materials consumed :

Cost of raw materials available for use 49900

Less : Closing stock of raw materials 10985

Cost of raw materials consumed 38915

3. Prime Cost

Manufacturing wages 18870

Direct Expenses wages 2100

Prime cost 59885

G.S.S Jiwa Enterprises

Manufacturing, Trading, Profit and loss Account for the year ended 30/9/98

# # #
Cost of production 91025
Opening Stock of R/mat 8460
Add: Purchase of R/mat 38720
Add: Carriage inwards on R/mat 2720 41440
Cost of raw materials avai 49900
Less: Closing stock of R/mat 10985
Cost of raw materials consumed 38915
Add: Manufacturing wages 18870
Direct expenses 2100
59885
Factory Overhead:
Factory sundry expenses 10120
Dep plant & machinery 7560
Factory power 3100
Repairing plant & mach 3020
Factoryrent &rates(50%of6400) 4200
Foreman’s salary 2530 30530
80415
Add: 81025
Opening stock of work in pro 3070
83485
Less: Closing stock of work in pro 2460
Cost of production 81025
Opening stock of finished goods 12380
Add: Cost of production 81025
93405
Less: Closing stock of finished goods 14570
93405
Less: Closing stock of finished goods 14570
78835
Gross Profit 56165
135000