Cost of goods manufactured and the manufacturing account sheetEssay framePrepare the manufacturing account and the income statement of a manufacturer from the given data.
How to lay out the answer. Follow the frame, then write it in your own words.
- 1 · Raw materials consumed. Opening + purchases + carriage inwards − returns − closing.
- 2 · Prime cost. Add direct labour and direct expenses.
- 3 · Factory overheads. List and total indirect materials, indirect labour, factory rent, power and depreciation.
- 4 · Cost of goods manufactured. Total manufacturing cost + opening WIP − closing WIP; cost per unit if units are given.
- 5 · Cost of sales and gross profit. Opening finished goods + COGM − closing finished goods; sales − cost of sales.
- 6 · Period expenses and profit. Deduct administration, selling and finance costs.
- 7 · Check. Cost of sales + expenses + profit should add back to sales.
Scoring tip: Underline prime cost and COGM; examiners look for these two sub-totals first.
