Who Prepares Manufacturing Account

Who prepares the manufacturing account instead of the Trading and Profit and Loss accounts that are

the main question. Those concerns which convert raw materials into finished goods are required to find out the cost of goods manufactured besides gross and net profit of the concern. These are manufacturing cum trading concerns. In order to have full information about the cost of goods manufactured these concerns firstly prepare the Manufacturing account and then prepare the trading and Profit and Loss accounts. The Debit side of the manufacturing account starts with the cost of materials consumed, (i.e. Opening Stock of raw materials plus net purchases less the closing stock of raw materials) Procurement cost e.g. custom duty, landing Charges, and excise duty, etc should also be included with the cost of raw materials. Closing stock is taken and valued at a lower cost or net realizable value and then deducted from the sum of opening stock and purchases to eliminate the charge to manufacturing account for the stock of raw materials in hand on the closing date. Next to materials are listed productive wages and direct expenses

The main object of Manufacturing Account

1. Cost of finished goods produced
2. Constituent items thereof such as cost of material consumed, Productive wages, Direct and Indirect expenses

So it is clear from the above discussion that manufacturing accounts are prepared to know the cost of goods produced So we can say that this is the purpose and use of the manufacturing accounts 

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