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,Manufacturing pg 428 (gr 12 textbook)
Direct labour note:
Gross salary + contributions
OR
Net salary + deductions + contributions
Net salary + deductions = gross salary
Different salaries (net vs basic vs gross):
Basic salary + bonus = gross salary
Gross salary – deductions = net salary
UIF is on gross salary
Production Cost Statement
Prime costs A+B
Direct material A
Direct labour (Gross salary + contributions OR Net salary + deductions + B
contributions) (sewer, machinist, carpenter, factory worker)
Factory overhead costs C
Total manufacturing costs A+B+C
Work in progress at beginning of year D
Work in progress at end of year ( E )
Cost of production of finished goods A+B+C+D-E
Direct material cost
Opening stock
+ purchases (cash and credit)
+ carriage
+ import duties
-Stolen
-Closing stock (amt given – CP of stock damaged)
= direct material cost
Finished goods note
Opening stock of finished goods
+ cost of production of finished goods Last line of PCS
-closing stock of finished goods ( )
= cost of finished goods sold / cost of sales **
** either use mark up or it is a balancing figure
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, Factory Overheads (only expenses for the factory!!)
Indirect labour (wages or salary of factory foreman, manager, supervisor, cleaner
etc. +contributions)
Consumable stores
Water and electricity
Insurance
Telephone
Sundry expense
Rent expense
Depreciation of factory equipment
Loss due to theft
Admin and selling & distribution note go into income statement
Selling & distribution:
- Bad debts
Admin note:
- Interest on loans
Income statement
Sales
Cost of sales
Gross profit
Other costs
Selling &distribution costs
Administration costs
Net profit
MANUFACTURING ANALYSIS (pg. 442)
Direct material cost per unit (DMC/u) 𝑑𝑖𝑟𝑒𝑐𝑡 𝑚𝑎𝑡𝑒𝑟𝑖𝑎𝑙 𝑐𝑜𝑠𝑡𝑠
𝑡𝑜𝑡𝑎𝑙 𝑢𝑛𝑖𝑡𝑠 𝑝𝑟𝑜𝑑𝑢𝑐𝑒𝑑
Direct labour cost per unit (DLC/u) 𝑑𝑖𝑟𝑒𝑐𝑡 𝑙𝑎𝑏𝑜𝑢𝑟 𝑐𝑜𝑠𝑡𝑠
𝑡𝑜𝑡𝑎𝑙 𝑢𝑛𝑖𝑡𝑠 𝑝𝑟𝑜𝑑𝑢𝑐𝑒𝑑
Total direct costs per unit 𝑡𝑜𝑡𝑎𝑙 𝑑𝑖𝑟𝑒𝑐𝑡 𝑐𝑜𝑠𝑡𝑠
𝑡𝑜𝑡𝑎𝑙 𝑢𝑛𝑖𝑡𝑠 𝑝𝑟𝑜𝑑𝑢𝑐𝑒𝑑
Factory overhead costs per unit (FOHC/u) 𝑓𝑎𝑐𝑡𝑜𝑟𝑦 𝑜𝑣𝑒𝑟ℎ𝑒𝑎𝑑 𝑐𝑜𝑠𝑡𝑠
𝑡𝑜𝑡𝑎𝑙 𝑢𝑛𝑖𝑡𝑠 𝑝𝑟𝑜𝑑𝑢𝑐𝑒𝑑
Cost of finished goods per unit 𝑐𝑜𝑠𝑡 𝑜𝑓 𝑝𝑟𝑜𝑑𝑢𝑐𝑡𝑖𝑜𝑛 𝑜𝑓 𝑓𝑖𝑛𝑖𝑠ℎ𝑒𝑑 𝑔𝑜𝑜𝑑𝑠
𝑡𝑜𝑡𝑎𝑙 𝑢𝑛𝑖𝑡𝑠 𝑝𝑟𝑜𝑑𝑢𝑐𝑒𝑑
The cost of finished goods per unit should be equal to the sum of Direct material cost per unit
plus direct labour cost per unit plus factory overhead cost per unit. However, if there are balances
in work-in-progress stock a/c at the beginning or end of the year, a difference will be caused
owing to these balances.
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