09/03/2022
Manufacturing Accounts: Some company preferred to manufactured what they sell. The only reason why company will prefer to manufacture over purchases is because of the relative advantage of manufacturing purchases. This implies that if a girl considers that manufacturing will be cheaper than purchasing, then they will prefer to manufacture what they sell. This, the account called manufacturing relate to the total cost of production which is then transfer to the trading Accounts purchase for sales. Every accountant must understand the various components of cost that emanated from a manufacturing outfit. These are
1. material cost or material consumed. 2. Over head cost or fixed costs. 3. Labour cost or Direct labour 4. Other direct cost or other variable costs. 1. Material cost: do u agree with me that, there is no production without raw materials. And every production must incurred cost of materials. In the trading outfit,COGS=OS+P+Cl-RO- SW- CS why in a manufacturing concern cost of material consumed (COMC= OS+P+Cl -RO -SW -Cl). While the COGS relate to finished goods, COMC relate to raw materials. COMC is the total cost incurred in the materials used up for production. If it Sense please say hi to get more ok. Thanks friends
