WorksheetsHigher Accounting - Manufacturing Accounts Theory
Total questions: 10
Worksheet time: 5mins
When is a manufacturing account created?
Before the income statement
After the income statement
As part of the income statement
Which is NOT an example of a manufacturing company?
Washing machines
Fridges
Cars
IT software
Which of the following elements of a manufacturing account matches the definition below:
The raw materials actually used to manufacture the product (e.g. cloth used to produce shirts, flour used to produce bread)
Direct materials
Direct wages
Indirect materials
Direct expenses
Which of the following elements of a manufacturing account matches the definition below:
The wages of those workers actually engaged in the manufacturing process (e.g. wages of a sewing machine operator)
Direct materials
Direct wages
Indirect wages
Profit on manufacture
Which of the following elements of a manufacturing account matches the definition below:
Expenses which can be traced directly to the units manufactured. This can include royalties and hire of specialist equipment.
Direct wages
Direct materials
Direct expenses
Indirect materials
Which of the following elements of a manufacturing account matches the definition below:
Fees that must be paid to other persons for the right to produce their products or to use their processes.
Direct expenses
Royalties
Hire of specialist equipment
Prime cost
How is Prime Cost calculated on a manufacturing account?
Prime Cost = Direct Materials + Direct Wages + Direct Expenses
Prime Cost = Direct Materials - Direct Wages - Direct Expenses
Prime Cost = Direct Materials x Direct Wages
Prime Cost = Direct Materials / Direct Expenses
Which of the following are examples of indirect costs? (There are THREE correct answers to select!)
Factory heat and light
Factory manager salary
Factory rent and rates
Machine operator wages
What is the general rule for dealing with Work-in-Progress on a manufacturing account?
Add opening WIP and closing WIP
Subtract opening WIP and add closing WIP
Add opening WIP and subtract closing WIP
Subtract opening WIP and closing WIP
Manufacturing firms like to compare their cost of manufacture with the wholesale cost of their output. Why do they do this?
To see whether it has been more or less profitable to manufacture the products rather than purchase them
To report to managers on the quality of their products
To apportion costs to different areas of the business
To investigate how many units are required to breakeven
