Index

What are manufacturing accounts/

Purpose.2

Classification of costs and

expenses.3

Work in
process
4

Trial
Balance
..5

Transfer at current market

value.6

Management
decisions7

Unit cost of
production
.8
 What are Manufacturing Accounts?

Statement used in accounting process of a manufacturing organization.

This financial statement does not show profit and loss figures but rather
the cost of direct materials and labour. A manufacturing account also
includes production overhead.
Manufacturing Business: Are those that take raw materials and, with the
help of labour and machinery, turn these raw materials into finish goods
(These business do not purchase finished goods and so do not have a
Purchases Account in the Trading Profit and Loss. This one is replaced by
the Production Cost of Goods Completed).

Raw
materiaPurpose
ls
The purpose of manufacturing accounts is to discover the value of a
product based on the price or value of the raw material, the machinery,
the workforce, the performance and the work methods they were used to
produce it. E.g.:

Machiner
y Quality /
Value

Workforc
Raw e
materials

Work Process Quality / Value

methods

Performan
ce Machinery

Performance
 Classification of costs and expenses

Classification of costs and expenses refers to the expenditure or sacrifice

made to acquire something of value. Which means the cost of a product
having in mind the cost that took to produce it, it is also included the time
that the product have been in market and if they are newer versions of it
shelf.
A good example of this will be the brand apple and the new Iphones: The
cost of producing an Iphone 6 its 200, when the Iphone 6 was the newest
product it was sold at 600. Now that the Iphone 7 is launched at a price
of 770 the price of the Iphone 6 has gone down to 300, the price has
gone down to other older versions of Iphone as well. They are a few
reason for getting the prices down: the first reason is that the product is
older and if it was at its original price it wouldnt shell any more, the
second reason is that the older versions of Iphone are getting an step
forwards for getting obsolete, which means that their lifetime is shorter
than the new versions, another reason is that Apple would like to clear up
older products, this can be more noticeable in smaller businesses.
Another way of selling old products are offers, this are normally used to
clear up and taking the minimum benefit of it.

Market price:
Market Price: 135
Market price: 770
300 Cost of
(Iphone 6) production: 200
(Iphone 5)
(Iphone 7)
Work in process

The work in process involves all the goods in production that have not yet
been completed. This means all the materials and pieces that are between
the raw materials and the final product in the production chain. Some of
the products will be lenses batteries, microchips, cases But only if by
putting them together they do another product, if they are the final
product it wouldnt be considered. The more elaborated the product is the
more in-between pieces will involve.
An example it will be a skateboard, the skateboard is composed of
different pieces like a sandpaper, screws, the board, the riser pad, the
truck, the wheels and the ball-bearings. This pieces they are made of lots
prime materials like good or different metals like aluminum and plastic.
The pieces they are putted together to build the final product, this means
that all of them separated wouldnt have a real use, but, when putted
together they do something like a skate.
 Metals
woo

Sandpaper

Board

Screws

Truck

Wheels

Plastic Ball-
Riser

Trial Balance

The Trial Balance is the list and total of all the expenses, credit or debit, of
all the accounts for an entity during a period of time, usually a moth.
Trial Balances are done for both individuals and enterprises, the way to do
a trial balance is easy. First divide the debit and credit expenses, in two
columns, during the time period. Second, list all the names of the
expenses in the rows, example: rent, necessary shopping, hygiene, leisure
expenses, petrol Third all it is needed to do is add all the expenses of
both columns, and it will be done. The expenses during the time period
can be subtracted from the total money in the account for knowing how
much money is left.
Here there are two examples:
Transfer at market value

This is basically the price that would be paid by a motivated buyer to a

motivated seller after a property's exposure to a marketplace of equally
capable buyers, each with full information about the property and the
market place and neither operating under any sort of outside influences.

Short definition= the price at which a security currently can be sold.

In other words, a subjective estimate of what a willing buyer would pay a

willing seller for a given asset, assuming both have a reasonable
knowledge of the asset's worth. Market value is important in both law and
accounting. In the former, it is often used in assessing damages as the
result of a lawsuit. In the latter, determining the market value of an asset
(e.g. after depreciation) is important to determining the amount of tax
owed on it. Value investors look for companies with market values below
their book values, believing these companies to be undervalued.
In a more general sense, if an item has not been priced for sale, its fair
market value is the amount a buyer and seller agree upon. That's
assuming that both know what the item is worth and neither is being
forced to complete the transaction.
For example, say a person is selling their house for $300,000. However, no
one is willing to buy the home for more than $250,000. In this case, even
though the house is being offered at a higher price, its market value is
$250,000:

Later
Initial price: Price at market value:
300,000 250,000$

Management decisions

Overall, Decision management, also known as enterprise decision

management (EDM) or business decision management (BDM) entails all
aspects of designing, building and managing the automated decision-
making systems that an organization uses to manage its interactions with
customers, employees and suppliers.
Computerization has changed the way organizations are approaching their
decision-making because it requires that they automate more decisions,
to handle response times and unattended operation required by
computerization, and because it has enabled "information-based
decisions" decisions based on analysis of historical behavioural data,
prior decisions, and their outcomes.
Short definition= Decision management is a process or set of processes
for improving and streamlining action items.
Another good definition would be: a course of action purposely chosen
from a set of alternatives to achieve organizational or managerial
objectives or goals.
The goal of decision management is to improve the decision making
process by using all available information to increase the precision,
consistency and agility of decisions and making good choices taking
known risks and time constraints into consideration. Decision
management makes use of tools such as business rules, business
intelligence (BI), continuous improvement (kaizen), artificial intelligence
(AI) and predictive analytics.

Designi
Custome
ng

Managi
Employe
ng

Supplie Buildin
g

Unit cost of production

A unit cost is the total expenditure incurred by a company to produce,

store and sell one unit of a particular product or service. Unit costs include
all fixed costs, or overhead costs, and all variable costs, or direct material
costs and direct labour costs, involved in production. Determining the unit
cost is a quick way to check if companies are efficient in producing their
products.
Unit cost is an important metric to look at when evaluating a "unit grower"
stock, or a stock that chiefly produces items that have a low fixed cost.
Generally, the larger a company grows, the lower the unit cost it can
achieve through economies of scale.
Companies that produce products or provide services often look at unit
costs as a way of measuring profitability. Being able to produce a product
at the lowest cost possible should be the goal of all companies looking to
 profit. The unit cost is not necessarily the retail cost of the product being
produced but rather the average cost of producing one unit of a particular
item. The unit cost is sometimes referred to as the breakeven point, or
minimum price, a company must sell the product to not incur losses. A
product with a unit cost of $10 per unit may be sold to customers at twice
the price, hence, gaining profit for the company.
Short definition: The unit cost is the cost incurred by a company to
produce, store and sell one unit of a particular product. Unit costs include
all fixed costs and all variable costs involved in production.
When your company produces large numbers of identical goods, you can
calculate the unit cost to track your manufacturing expenses. The total
amount of your fixed and variable costs makes up the total manufacturing
costs. These costs are accounted for as your products move through the
manufacturing process. At the end of the production run, you can use the
total fixed and variable costs to calculate your unit production costs. By
comparing the unit costs for similar production runs, you can determine if
the current costs exceed your budgeted costs.

Production Raw Quantity of final

Labo

Final product
cost