Question

3.Write whether following expenses are Manufacturing or Non manufacturing
1-   Expenses of accounting department
2-   Salaries of finished goods warehouse personnel
3-   Audit fee
4-   Depreciation of furniture in administrative office
5-   Lubricating oil for machinesImmersive Reader

Answer 1

Manufacturing expenses involve all the expenses that lead to bringing a product to its saleable condition.It includes all the expenses directly related with production or manufacturing in a manufacturing concern.

1 Expenses of accounting department Non manufacturing
2-   Salaries of finished goods warehouse personnel Non manufacturing*
3-   Audit fee   Non manufacturing
4-   Depreciation of furniture in administrative office Non manufacturing
5-   Lubricating oil for machines   Manufacturing

*since the world salaries is used the expenses cannot be treated as manufacturing.There is basic assumption the wages form part of manufacturing expenses in trading account and salaries are posted in the profit and loss as non manufacturing.

EXPERT TIP-Expenses that form part of trading account are manufacturing and the expenses that form part of profit and loss -non manufacturing.