Accounting For Manufacturing

BUS 351 – Cost Accounting
Unit 2 – Accounting for Manufacturing

Unit 2.1 Introduction to Manufacturing Concern (versus Trad/Serv)
Unit 2.2 Statement of Cost of Goods Manufactured
Unit 2.3 Unit Cost - Simple / Single Product Manufacturing
Unit 2.4 Valuing Finished Goods and Cost of Goods Sold
Unit 2.5 Concept of Missing Figures in CoGM
Unit 2.6 Flow of Cost under Manufacturing - T accounts flow
From the desk of Mr. Muhammad Mubeen – MS(Finance), Bilkent, Ankara, Turkey,
MS(Management Science), Karachi, FPFA-5516, CIPFA(UK)
Cost of Goods Sold

Trading Business Manufacturing Business
Unit 2 – Accounting for Manufacturing


Schedule of Cost of Goods Manufactured
PQ – 1
From the following data for the year ending June, 1997, determine.
A] The cost of goods manufactured for this year and also the cost of goods sold
Direct Material purchased Rs. 200,000
Direct Labour Costs 210,000
Manufacturing Overhead Cost. 175,000
Inventories were counted and priced as below:
June 30, 1997 June 30, 1996
Inventory of direct Materials. Rs. 50,000 Rs. 40,000
Inventory of work in process 80,000 75,000
Inventory of finished goods 25,000 30,000
Solution of PQ-1
Solution of PQ-1
PQ – 2: The following data have been taken from the book of Manufacturing Company Ltd. For the year
1997-98.
Inventories July 1 June 30
Raw Materials Rs. 16,000 Rs. 18,000
Goods In Process 24,000 22,000
Finished Goods 12,000 26,000
Data for the Year
Sales Rs. 480,000
Purchases ( Raw Materials ) 110,000
Purchase discount 2,000
Direct Labour 90,000
Factory Over Head 98,000
Operating Expenses 70,000
REQUIRED:
a) Statement of Cost of Goods Manufactured b) Income Statement
Solution of PQ-2
Solution of PQ-2
Week 2 – Accounting for Manufacturing


PQS – 7
The accounting records of Alladen Manufacturing Co. include the following information relating to
the year ended December 31, 1996. December 31 January 1
Materials inventory Rs. 60,000 Rs. 47,500
Goods in Process Inventory 18,750 20,000
Finished Goods inventory ( January 1 5,000 units ) ? 95,000
Raw materials Purchases Rs. 142,500
Direct Labour cost 97,500
Factory overhead cost 221,250
22,500 units were manufactured and 20,000 units were sold.
REQUIRED:
a) Prepare a statement of cost of finished goods manufactured for 1996.
b) Compute the cost of producing a single unit during 1996.
c) Compute the cost of goods sold during 1996, assuming that the FIFO inventory costing
d) Compute Inventory of Finished Goods on December 31, 1996 assuming that FIFO Method [B,96]


PQS – 7
The accounting records of Alladen Manufacturing Co. include the following information relating to
the year ended December 31, 1996. December 31 January 1
Materials inventory Rs. 60,000 Rs. 47,500
Goods in Process Inventory 18,750 20,000
Finished Goods inventory ( January 1 5,000 units ) ? 95,000
Raw materials Purchases Rs. 142,500
Direct Labour cost 97,500
Factory overhead cost 221,250
22,500 units were manufactured and 20,000 units were sold.
REQUIRED:
a) Prepare a statement of cost of finished goods manufactured for 1996.
b) Compute the cost of producing a single unit during 1996.
c) Compute the cost of goods sold during 1996, assuming that the FIFO inventory costing
d) Compute Inventory of Finished Goods on December 31, 1996 assuming that FIFO Method [B,96]
Solution of PQ-7
Solution of PQ-7


PQS – 12.
Kaay Company’s Cost of Good Sold for the month ended June 30, 1995 was 645,000. Ending Material
Inventory was 10% higher than beginning Inventory and Work In Process ending Inventory was 80% of
beginning Inventory. Factory overhead applied was 50% of Direct Labour. Other Information pertaining to
inventories and production for the month of June, 1995 is as follows:
Beginning Inventories: June 1, 1995
Direct Material Rs. 340,000
Work – In – Process 270,000
Finished Goods 212,000
Material Purchased during the month 328,000
Finished Goods Inventory June 30, 1995 215,000
REQUIRED:
A] Prepare a Schedule of Cost of Goods Manufactured for the month of June 1995. [C,95]
B] Prepare a Schedule to Compute the Prime cost Incurred during the month.
C] Prepare a Schedule to Compute the Conversion Cost charged to Work– in–Process during the
Solution of PQ-12
Solution of PQ-12
Solution of PQ-12
PQS – 15.
The following information was taken from the accounting records of MUSLIM CORPORATION:-
Inventories Jan.1, 1982 Dec. 31, 1982
Raw Materials 132,000 144,000
Goods in process 97,200 81,900
Finished Goods 144,600 292,500
Data for the year ended December 31,1982
Cost of goods manufactured Rs. 2,430,000
Factory Overhead, 80% of Direct Labour 535,200
The company also paid transportation cost of Rs. 90,000 on material purchased. Materials worth Rs. 48,900 was
also returned to suppliers.
Required:
Prepare a statement of cost of goods manufactured for the year ended December 31, 1982. Some information
needed for this statement is not listed above but can be derived from the data given. Show supporting computation for:
i) Total cost of goods in process during the year ii) Direct Labour
iii) Cost of raw material used iv) Cost of raw material available for use
v) Purchasing of raw materials (gross) [B, 82]
Solution of PQ-15
Solution of PQ-15
Solution of PQ-15



Accounting For Manufacturing

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Accounting For Manufacturing

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BUS 351 – Cost Accounting

Unit 2 – Accounting for Manufacturing

Cost of Goods Sold

Unit 2 – Accounting for Manufacturing

Unit 2.2 Statement of Cost of Goods Manufactured

Unit 2.3 Unit Cost - Simple / Single Product Manufacturing

Unit 2.4 Valuing Finished Goods and Cost of Goods Sold

Unit 2.5 Concept of Missing Figures in CoGM

Unit 2.6 Flow of Cost under Manufacturing - T accounts flow

Schedule of Cost of Goods Manufactured

Week 2 – Accounting for Manufacturing

Unit 2.2 Statement of Cost of Goods Manufactured

Unit 2.3 Unit Cost - Simple / Single Product Manufacturing

Unit 2.4 Valuing Finished Goods and Cost of Goods Sold

Unit 2.5 Concept of Missing Figures in CoGM

Unit 2.6 Flow of Cost under Manufacturing - T accounts flow

Week 2 – Accounting for Manufacturing

Unit 2.2 Statement of Cost of Goods Manufactured

Unit 2.3 Unit Cost - Simple / Single Product Manufacturing

Unit 2.4 Valuing Finished Goods and Cost of Goods Sold

Unit 2.5 Concept of Missing Figures in CoGM

Unit 2.6 Flow of Cost under Manufacturing - T accounts flow

Week 2 – Accounting for Manufacturing

Unit 2.2 Statement of Cost of Goods Manufactured

Unit 2.3 Unit Cost - Simple / Single Product Manufacturing

Unit 2.4 Valuing Finished Goods and Cost of Goods Sold

Unit 2.5 Concept of Missing Figures in CoGM

Unit 2.6 Flow of Cost under Manufacturing - T accounts flow

Week 2 – Accounting for Manufacturing

Unit 2.2 Statement of Cost of Goods Manufactured

Unit 2.3 Unit Cost - Simple / Single Product Manufacturing

Unit 2.4 Valuing Finished Goods and Cost of Goods Sold

Unit 2.5 Concept of Missing Figures in CoGM

Unit 2.6 Flow of Cost under Manufacturing - T accounts flow

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