1

Basics of Accounting

Lecture no. 8

dr Wojciech Hasik

[e-mail]

Costs of manufacture settlement

option 1: finished goods measurement at real
cost of manufacture

option 2: finished goods measurement at
standard cost of manufacture

2

Finished goods measurement at real
cost of manufacture

Costs of basic activity

measurement of f.g. at real

cost after finishing of

technological process and

settling up financial period

costs of sales

recognition at the

moment of sale

Costs of sales

Finished goods

Production in progress

and semi finished goods

unfinished production

measurement at

balance sheet date

Finished goods measurement at
standard cost of manufacture

Costs of basic activity

measurement of cost of

manufacture (real) at

the and of settlement

period

f.g. storing before the

end of financial period

(no settlement of

costs)

Finished goods

Costs of manufacture

settlement

Deviation from standard

cost of manufacture

identification of

differences between real

and standard cost

1

2

3

3

Determining costs of sales

Finished goods

Deviation from standard

cost of manufacture

Costs of sales

1

accounting for sold goods

before calculation of real cost

of manufacture

2

settling up deviation from

standard cost on products

sold

[increasing and decreasing]

An example – initial assumptions

Company „X” is tail and brick manufacturer.

We’ve got the following balances of chosen accounts:

Costs of basic production

13 000,-

Indirect costs of production

10 500,-

General administrative costs

2 000,-

Selling costs

1 500,-

4

Case 1- finished goods treatment at real
cost of manufacture

1.

Indirect costs of manufacture were settled (assigned)…………?

2.

Finished goods are recognized (10 000 pcs. of tails) at real cost of
manufacture, work in progress was measured at 5 500,- ; cost of
one unit manufacture …………/pcs?

3.

Invoice for a customer for sold tails:

a)

net value: 3 000 pcs. @ 3,50

10 500,-

b)

VAT 22%

2 310,-

c)

gross

12 810,-

4.

Sold tails were freighted to a customer, cost of sold goods was
recognized (at value of real cost of manufacture …………/pcs

Case 2 - finished goods treatment at
standard cost of manufacture

1.

Finished goods are recognized (10 000 pcs. of tails) at standard cost of
manufacture of 2,10 per unit

21.000,-

2.

Invoice for a customer for sold tails:

a)

net value: 3 000 pcs. @ 3,50

10 500,-

b)

VAT 22%

2 310,-

c)

gross 12 810,-

3.

Sold tails were freighted to a customer, cost of sold goods was
recognized (at standard cost of manufacture 2,10/pcs 6 300,-

4.

Indirect costs of manufacture were settled (assigned)…………?

5.

The actual cost of manufacture was calculated, work in progress was
measured at 5 500,-

……………

6.

The deviation from standard cost of man. was calculated and assigned

7.

The deviation was assigned at finished goods left and sold