In manufacturing accounting, specific terminologies are used to classify costs and measure production outcomes. Match each manufacturing account term on the left with its correct accounting definition or description on the right.
- Prime CostThe aggregate total of direct materials consumed, direct labour incurred, and direct expenses such as royalties paid per unit produced.
- Factory OverheadsThe sum of all indirect production expenses incurred in the factory, including factory supervisor salaries, power, and plant depreciation.
- Work-in-ProgressPartially completed goods remaining in the factory pipeline at the end of an accounting period, valued at manufacturing cost incurred to date.
- Cost of ProductionThe net total cost of completed goods manufactured during the financial period, transferred from the Manufacturing Account to the Trading Account.
Answer
Prime Cost matches with the aggregate total of direct materials, direct labour, and direct expenses. Factory Overheads matches with the sum of all indirect factory production expenses. Work-in-Progress matches with partially completed goods remaining in the factory at period end. Cost of Production matches with the net total cost of completed goods transferred to the Trading Account.
Each manufacturing term is accurately matched with its accounting definition: Prime Cost is the sum of all direct expenses; Factory Overheads represents all indirect production expenses; Work-in-Progress refers to uncompleted inventory at period end; and Cost of Production is the net cost of finished goods transferred to the Trading Account.
Step-by-Step Solution
Key Concept
Key terminologies and cost classifications in Manufacturing Accounts