WorksheetsManufacturing Costs
Total questions: 39
Worksheet time: 20mins
Manufacturing Account is prepared to calculate
Cost of capital
Cost of sales
Cost of goods sold
Cost of production
Manufacturing Account does not include
Direct and Indirect cost
Prime and Factory Overhead cost
Administrative & Selling cost
Direct & Indirect cost
Cost of Raw Material does not include
Opening stock of raw material
Purchase of raw material
Carriage on raw material
Closing stock of raw material
Depreciation on machinery used for production is recorded in
Prime cost
Factory cost
Trading expense
Profit & Loss expense
Expense on acquiring patent is
part of factory cost
part of trading cost
part of prime cost
part of selling cost
Manufacturing business has
1 type of inventory
2 types of inventory
3 types of inventory
4 types of inventory
Work-in progress means goods which are
partially completed
completed
ready for sale
ready for packing
What is included in Trading A/C section of Manufacturing business but not in other type of business
Purchase of finished goods
Cost of production
Carriage on purchase of finished goods
Inventory of finished goods
Salary of factory manager is a
Direct ecpense
Indirect expense
Variable expense
Semi-variable expense
Rent of factory shed is a
Variable expense
Semi-variable expense
Indirect expense
Direct expense
Wages of machine operator is a
Direct expense
Indirect expense
Fixed expense
Semi-variable expense
Electricity consumption is a
Direcy expense
Indirect expense
Variable expense
Semi-variable expense
A manufacturing busuness prepares
Manufacturing A/C
Trading A/C
Profit & Loss A/C
All 3
A manufacturer will purchase some finished goods and not make them when
production does not meet demand
cheaper to buy than make
items cannot be made in the factory
All 3
Calculate the cost of production
PC = Prime Cost = 135000
FO = Factory Overhead = 85000
Op WIP = 19000
Cl WIP = 21000
2,22,000
2,18,000
2,20,000
2,39,000
Manufacturing Account is prepared by
Trader
Producer
Person in service
None
A __________ is part of the annual financial statements and is used to calculate the cost of goods produced.
Manufacturing account
Prime cost
Cost of production
Work in progress
_______ is the total of the direct materials, direct labour and direct expenses. The costs increase proportionately to the number of goods produced.
Manufacturing account
Prime cost
Cost of production
Work in progress
__________ is prime cost plus factory overheads, adjusted for any work in progress at the start and at the end of the year. It is the total cost of manufacturing the goods completed.
Manufacturing account
Prime cost
Cost of production
Work in progress
__________ is the goods which are partly completed at the end of the financial year.
Work in progress
Provision for unrealised profit
Finished goods
Raw Materials
How is prime cost calculated?
Direct materials + indirect materials costs
Direct materials + direct labour + other direct expenses
Direct materials + direct labour + work-in-progress
Direct materials + direct labour + overhead cost
What is direct factory wages?
Wages of the people employed in the factory making the goods.
Wages of people employed in the factory to do machine maintenance
Wages of people who deliver the goods to customers
Wages of people who deliver the goods from suppliers
What is indirect factory wages?
Wages of people employed in the factory but who are not involved in the actual production process.
Wages of the people employed in the factory making the goods.
Royalties and hire of a special machine, or any other suitable direct expense.
Total of the direct materials, direct labour and direct expenses.
State an alternative term for factory overheads.
Indirect factory expenses.
Prime cost
Direct labour
Direct expenses
What is the formula for cost of material consumed?
Opening inventory of raw materials + Purchases of finished goods − Closing inventory of raw materials
Opening inventory of raw materials + Purchases of raw materials + indirect materials
Opening inventory of raw materials + Purchases of raw materials − Closing inventory of raw materials
Purchases of raw materials + opening inventory of work-in-progress - closing inventory of raw materials
What is the formula for cost of sales for a manufacturer?
Opening inventory of raw materials + Cost of goods transferred – Closing inventory of raw materials
Opening inventory of finished goods + Cost of Production – Closing inventory of finished goods
Opening inventory of finished goods + Cost of goods transferred – Closing inventory of finished goods
Opening inventory of work-in-progress + Cost of completed goods – Closing inventory of work-in-progress
What is direct material cost?
The cost of the raw material used to make goods
A form of direct costs that can be directly traced to the manufacture of an item,
The cost of labour that can be directly traced to the manufacture of an item
The cost of disposable materials and perishable tools used in production
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
Prime cost include
Cost of Raw material consumed
Cost of sales
Cost of production
Work-in-progress
It is the cost of products being processed and not yet completed at end of period.
Finished goods
Work in process
Raw materials
Factory overhead
Supplies
It is the cost of products that have been completed and are waiting to be sold to customers.
Finished goods
Work in process
Cost of goods sold
Raw materials
Manufacturing cost
Which of these is not an example of a Factory Overhead?
Depreciation of factory Machinery
Factory Rates
Factory Insurance
Depreciation of office machinery
