Accounting – 5.5 Manufacturing accounts | e-Consult
5.5 Manufacturing accounts (1 questions)
Login to see all questions.
Click on a question to view the answer
Direct Costs:
- Direct Materials Used (£8,000): This is a direct cost because the materials are directly traceable to the production of the goods. They are an integral part of the finished product.
- Direct Labour Cost (£4,000): This is a direct cost because the labour is directly involved in the manufacturing process and can be directly attributed to the production of the goods.
Indirect Costs:
- Factory Overheads (£3,000): This is an indirect cost because these costs are incurred in the factory but cannot be directly traced to a specific product. They are necessary for the overall operation of the factory but are not a direct component of the goods themselves.
Calculation of Factory Overheads Allocated per Unit:
Factory Overheads per Unit = Total Factory Overheads / Number of Units Produced
Factory Overheads per Unit = £3,000 / 200 units = £15 per unit
Therefore, the factory overheads allocated per unit is £15.