Uses of Manufacturing Account - SS2 Accounting Past Questions and Answers - page 1
What is the primary purpose of a manufacturing account?
To track the costs associated with the production process
To track the costs associated with marketing
To track the costs associated with research and development
To track the costs associated with the administration
What type of costs are typically included in a manufacturing account?
Raw materials, labour, and overhead costs
Marketing, sales, and administration costs
Research and development, advertising, and legal costs
Travel, entertainment, and employee benefits costs
What is the benefit of using a manufacturing account to analyze profitability?
It allows management to identify areas where cost savings can be made
It provides information for budgeting and forecasting future production costs
It helps management to make informed decisions about pricing and inventory levels
All of the above
What is the purpose of calculating the cost of goods sold in a manufacturing account?
To comply with tax and regulatory requirements
To calculate the total cost of goods produced during the accounting period
To analyze the profitability of the company's manufacturing operations
To identify areas where cost savings can be made in the production process
What is the role of the manufacturing account in budgeting and forecasting?
It provides information on historical production costs
It allows for the calculation of estimated production costs for future periods
It helps management to identify trends in production costs over time
All of the above
How does a manufacturing account help management to make informed decisions about pricing and inventory levels?
A manufacturing account provides information on the cost of production, which can be used to determine the appropriate pricing for products and to optimize inventory levels to reduce costs.
What is the relationship between the cost of goods sold and the manufacturing account?
The cost of goods sold is calculated using information from the manufacturing account, such as the total cost of goods produced during the accounting period and the value of the inventory at the beginning and end of the period.