Manufacturing Account SS3 Book Keeping Lesson Note

SPECIFIC OBJECTIVES: At the end of the lesson, pupils should be able to

1. Define manufacturing account
2. State the purpose of the manufacturing account
3. Explain some terminologies used
4. Calculate the cost of raw materials used

INSTRUCTIONAL TECHNIQUES: 

• Identification, 
• explanation, 
• questions and answers, 
• demonstration, 
• videos from source

INSTRUCTIONAL MATERIALS: 

• Videos, 
• Loudspeaker,
• textbook, 
• pictures

NOTE

MANUFACTURING ACCOUNT

Manufacturing accounts are prepared to ascertain the cost of goods manufactured during the financial year. Manufacturing of goods is the transformation of raw materials into finished goods. 

PURPOSE OF MANUFACTURING ACCOUNTS

1. To ascertain the cost of the goods manufactured.
2. To ascertain the amount of profit from the manufacturing process

TERMINOLOGIES USED

1. Direct Material Costs:These are costs which are directly used in the manufacturing of a product. For example, materials used in the preparation of plastic tables like glue plastic sheets, paints etc.
2. Direct labour costs: Costs which are paid directly to the worker involved in the manufacturing of a product. For example, in the preparation of Plastic tables wages are paid to the worker involved directly.
3. Direct Expenses: Expenses incurred in the manufacture of a product. For example, charges for special equipment used in the process of manufacture.
4. Factory Overheads: Expenses incurred indirectly in the manufacturing of a product. For example, factory rents, factory power and lighting etc.
5. Administrative Expenses: Administrative expenses are the expenses incurred in the process of planning, controlling and directing the business organisation. For example, office rents, office electricity etc.
6. Selling and Distribution Expenses:Expenses incurred in the process of selling, marketing and distributing the goods manufactured. For example cost of advertising, carriage outwards, salary to salesperson etc.
7. Finance Costs: Expenses such as bank charges, discounts allowed and other monetary expenses are included in Factory Expenses.

 Cost of raw materials consumed

This is the cost of raw materials which have been used up in the manufacturing process. This will be found by;

1. Taking opening stock of raw materials
2. Adding purchases of raw materials
3. Deducting closing stock of raw materials.

 EVALUATION:   

1. Define manufacturing account
2. State the purpose of the manufacturing account
3. Discuss some of the terminologies used
4. How do we calculate the cost of raw materials used?

CLASSWORK: As in evaluation

CONCLUSION: The teacher commends the students positively