Lesson Notes By Weeks and Term - Senior Secondary 2

Manufacturing account IV

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Term: 1st Term

Week: 4

Class: Senior Secondary School 2

Age: 16 years

Duration: 40 minutes of 2 periods each

Date:       

Subject:      Financial accounting

Topic:-       Manufacturing account IV

SPECIFIC OBJECTIVES: At the end of the lesson, pupils should be able to

  1. Explain the differences between the trading account and the manufacturing account
  2. Prepare manufacturing statement and income statement

INSTRUCTIONAL TECHNIQUES: Identification, explanation, questions and answers, demonstration, videos from source

INSTRUCTIONAL MATERIALS: Videos, loud speaker, textbook, pictures

INSTRUCTIONAL PROCEDURES

PERIOD 1-2

PRESENTATION

TEACHER’S ACTIVITY

STUDENT’S ACTIVITY

STEP 1

INTRODUCTION

The teacher reviews the previous lesson on manufacturing account

Students pay attention

STEP 2

EXPLANATION

She explains the differences between the trading account and the manufacturing account

 

Students pay attention and participates

STEP 3

DEMONSTRATION

She shows the learners how to prepare manufacturing statement and income statement 

Students pay attention and participate

STEP 4

NOTE TAKING

The teacher writes a summarized note on the board

The students copy the note in their books

 

NOTE

MANUFACTURING ACCOUNT

DIFFERENCES BETWEEN MANUFACTURING ACCOUNT AND TRADING ACCOUNT

The manufacturing account helps to better the cost-effectiveness of

manufacturing activities. After the ascertainment of the costs of finished

goods, we need to transfer this cost to Trading Account.

The trading account shows Gross Profit.  Whereas, the Manufacturing Account depicts the cost of goods sold and also includes

direct expenses. Manufacturing account addresses the raw material and

work in progress and does not deal with the finished goods.

We debit all the direct production expenses such as depreciation on plant

and machinery and factory building, repairs on plant and machinery and

factory building, salary to the factory manager, wages, cartage on raw

materials, etc.

Thus, the cost of finished goods includes the cost of raw materials and all

direct expenses. All indirect expenses form a part of the Profit and Loss A/c

 

EXAMPLES.

The following information is available from the books of a manufacturing

company. Using this information, prepare the company's manufacturing

statement and income statement (in vertical form).

 

SOLUTION

 

 

 

EVALUATION:    1. Differentiate between manufacturing account and trading account

  1. Mr. Prasad runs a factory which produces caps. Following are the details

available in respect of his manufacturing activities for the year ended on

31.03.2018

Opening work-in-progress (4,000 units)

8,000

Closing work-in-progress (5,000 units)

10,000

Opening stock of Raw materials

75,000

Closing stock of Raw materials

85,000

Purchase of raw material

4,20,000

Hire charges of machine@$0.50 per unit manufactured

  

Rent of factory

1,50,000

Direct wages- @$0.70 per unit manufactured and @$0.30 per unit of closing W.I.P

  

Repairs and maintenance

100,000

units produced-2,60,000

  

 

Prepare a manufacturing Account of Mr. Prasad for the year ended

31.03.2018.

 

CLASSWORK: As in evaluation

CONCLUSION: The teacher commends the students positively