These notes are a comprehensive, in-depth summary of Grade 11 Cost Accounting and all the relevant ledgers and calculations that go with the Manufacturing section of work. All of these are summarised into 8 concise pages to equip you for for the exam. Suitable for IEB and National Senior Certificat...
The following sequence is applicable for a manufacturing
business:
1. A business at the beginning of the financial year has stock of raw materials stock
(production inputs that have not been converted, or are not in the process of being
converted, to finished goods), work-in-progress stock, and finished goods stock that
is ready to be sold to retailers.
2. The business will usually purchase raw materials either on cash or credit from
suppliers. If a supplier lives a considerable distance from the business,
carriage/import duties/shipping fees may be applicable and must be added to the
purchases. If the business is unsatisfied with the raw materials, they will return it to
the supplier.
3. The business sends a portion of their raw materials stock to the factory.
4. The factory starts a process of converting the raw materials into production outputs.
5. The factory sends the goods that they have finished at the end of the year to a
‘showroom’ where retailers can purchase the goods that they have processed.
6. Retailers purchase goods from the showroom.
7. At the end of the financial year, there will be raw materials that have not been sent
to the factory on hand. There will still be products that are still in the manufacturing
process on hand, and lastly, there will still be goods in the showroom on hand.
The following ledger accounts represent the above steps.
Raw Materials Stock
1. Balance b/d xxx 4. Creditors Control CAJ xxx
2. Bank CPJ xxx
3. Creditors Control CJ xxx 5. Direct Materials Cost GJ xxx
6. Balance c/d
Balance b/d
, 1. The amount of production inputs on hand at the beginning of the
financial year.
2. Any raw materials stock bought from a supplier for cash.
3. Any raw materials stock bough from a supplier on credit.
4. Any raw materials stock returned to the supplier.
5. The raw materials that are issued to the factory for production.
6. The amount of production inputs on hand at the end of the financial
year.
Work in progress stock
1. Balance b/d 5. Finished Goods Stock GJ
2. Direct Materials Cost GJ 6. Balance c/d
3. Direct Labour Cost GJ
4. Factory Overhead Costs GJ
Balance b/d
1. The good that are currently being produced in the factory on hand at
the beginning of the year
2. The raw materials that have been sent to the factory for production.
The name changes from ‘Raw Materials Stock’ to ‘Direct Materials
Cost’.
3. This is the labour that was DIRECTLY used in the process of converting
the production inputs into goods. It does not include the factory
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