Question

The manufacturing account is prepared __________________.

• A. To ascertain the profit or loss on the goods produced
• B. To ascertain the cost of the manufactured goods
• C. To show the sale proceeds from the goods produced during the year
• D. Both (B) and (C)

Answer 1

Answer: (B)

To ascertain the cost of the manufactured goods

Manufacturing account does not show the profit & loss. Manufacturing account accumulate the cost of manufacturing of material including raw material, labour and production overheads.

Below is the format of manufacturing account.

Manufacturing Account

Particulars	Amount	Particulars	Amount
To Op Stock of Raw Material		By Closing Stock of Raw Material
To Opening Stock of WIP		By Closing WIP
To Purchases of Raw Material		By Cost of goods transferred to Trading A/c
To Carriage Inwards
To Direct Labor
To Direct Expenses
To Factory Rent
To Fuel, Power
To Manufacturing overheads