Understanding Manufacturing Accounts

Front

Manufacturing Account Purpose

Back

Calculate cost of production

Front

Direct Materials

Back

Raw materials used in production

Front

Direct Labor

Back

Wages for workers directly involved in production

Front

Prime Cost

Back

Direct materials + Direct labor

Front

Factory Overheads

Back

Indirect costs of production

Front

Work in Progress (WIP)

Back

Partially completed goods

Front

Opening Inventory

Back

Inventory at the start of the period

Front

Closing Inventory

Back

Inventory at the end of the period

Front

Cost of Production

Back

Prime cost + Factory overheads + Opening WIP - Closing WIP

Front

Cost of Goods Manufactured

Back

Total cost of production for completed goods