Manufacturing Accounts

Each of the following items should appear in either a manufacturing account or a profit and loss account. Categorise each item as either 'M' if it should appear in the manufacturing account or 'P&L' if it should appear in the profit and loss account and choose the option A, B, C or D which correctly categorises all three items.

• Item I - P&L

  Item 2 - M

  Item 3 - P&L

• Item I - M

  Item 2 - M

  Item 3 - P&L

• Item I - M

  Item 2 - P&L

  Item 3 - M

• Item I - M

  Item 2 - M

  Item 3 - M

Which of the following should be charged as an expense in the profit and loss account of a manufacturing firm ?

• Office rent.

• Work in progress.

• Direct material costs.

• Carriage charged on raw materials purchased.

Which of the following is calculated in a manufacturing account ?

• The total production costs paid during an accounting period.

• The total cost of goods produced during an accounting period.

• The production cost of goods completed during an accounting period.

• The gross profit on goods sold during an accounting period.

In the accounts of a manufacturing firm, 'production cost' equals . . .

• the cost of direct materials acquired.

• the sum of direct material costs and direct wages.

• the sum of direct expenses, direct material costs, direct wages and production overheads.

• the sum of direct expenses, direct material costs, direct wages, production overheads and administration expenses.

When preparing a manufacturing account, a distinction is made between direct costs and indirect costs. Categorise each of the following items as either direct or indirect costs and choose the option A, B, C or D which correctly categorises all four items.

• Item 1 - Direct

  Item 2 - Direct

  Item 3 - Direct

  Item 4 - Direct

• Item 1 - Indirect

  Item 2 - Direct

  Item 3 - Direct

  Item 4 - Direct

• Item 1 - Indirect

  Item 2 - Direct

  Item 3 - Direct

  Item 4 - Indirect

• Item 1 - Direct

  Item 2 - Direct

  Item 3 - Direct

  Item 4 - Indirect

Which of the following is a direct cost for a firm which manufactures and sells Grecian urns ?

• A royalty charge based on the number of urns produced.

• The cost of lubricating oils for machinery and vehicles.

• The factory supervisor's salary.

• None of the above.

Which of the following costs would not normally be included in the calculation of 'cost of sales' in the profit and loss account of a manufacturing firm ?

• Depreciation on the factory premises.

• Bad debts written off.

• Carriage charged on raw materials purchased.

• None of the above.

'Prime cost' does not include . . .

• direct labour costs.

• factory overhead expenses.

• the cost of raw materials consumed.

• direct expenses.

Which of the following costs should be included in the calculation of 'prime cost' in a manufacturing account ?

• The cost, incurred by the firm for which the manufacturing account is being prepared, of transporting raw materials from a supplier's premises.

• The wages of factory workers wholly engaged in machine maintenance.

• The depreciation of lorries used for deliveries to customers.

• The cost of indirect production materials.

In the accounts of a manufacturing firm, the cost of direct labour . . .

• should be included as part of the prime cost.

• should be included in factory overheads.

• should be included in the Profit and Loss Account.

• should be divided between the prime cost and the cost of factory overheads.