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Essay example - Project Management Accounting(BBAC501)

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Finance & Accounting
Pages 5 (1255 words)
Lecturer Subject Code Project Management Accounting (BBAC501) Colonial Tap Company (CTC  COLONIAL TAP COMPANY (CTC) FINANCIAL PERFORMANCE FOR THE YEAR ENDED Sales   $980,000 Less Expenses:     Material Purchased $300,000   Factory Wages-Production line $250,000   Production Supervisor’s Salary  $35,000   Rent  $80,000   Council Rates  $5,000   Sales Staff $110,000   Advertising  $18,000   Equipment Depreciation  $25,000   Electricity  $12,000   Manager’s Salary  $80,000   Truck Lease  $10,000   Total Expense   $925,000       Net Profit   $55,000  Comment on cost classification According to the financial statement pres…

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To put this into lump light it would be good to know what constitute a cost in manufacturing process. Manufacturing Overhead Costs Stocks are normally classified as an asset in the financial statements, and it is very pertinent note that each product mentioned as en inventory includes the costs of the following: 1. Direct material 2. Direct labor 3. Manufacturing (or factory) overhead Direct material and labour costs are directly traceable to the product being produced. Manufacturing (or factory) overhead on the other hand consist of costs which indirectly relate to factory and on this regard they are divided and allocated to each unit of product. Accordingly this cost are reported in balance sheet inform of finished goods and work in progress (WIP) (GAAP). There are also other costs that would be treated as manufacturing overhead depending on the circumstances for instance, a loyalty or property tax imposed on a factory building. ...
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