IMC Group

Accounting for Manufacturing

Manufacturing nowadays is getting more export-oriented and started relying more on global supply chains. Increased global exposures demand manufacturing accountants to be more familiar with the regulatory requirements of other countries and better equipped with changing manufacturing practices for continuous improvements through quality, cost, and lead time optimization. There is an ever-increasing pressure for financial data analysis leading to waste identification and elimination.

Principles of Accounting for Manufacturing Company

Manufacturing businesses are unique as also the manufacturing accounting. The accounting for a manufacturing business deals with inventory valuation and cost of goods sold. In other businesses, these two aspects are handled in a more simplified manner.

Manufacturing businesses use certain raw materials and convert them into finished products through various manufacturing and value-added process stages using appropriate machinery and manpower. At any given point of time, a manufacturing business has raw materials inventory, in-process or semi-finished inventory, and finished goods inventory.

Inventory valuations are done through Direct cost allocation, overhead cost allocation, and impairment testing. Indirect cost allocation, costs are arrived at through standard costs or weighted average or cost layering. In overhead cost allocation, factory overheads are aggregated into cost pools and allocated to the number of goods produced over a reporting period. In impairment testing, inventories are written down to market value.

Selection criteria for Manufacturing Accounting Systems

Manufacturing Accounting Principles

Manufacturing accounting principles and systems deal with accounting software, and selecting the right kind of manufacturing accounting software is the main requirement.

Manufacturing Accounting Processes

Once the right software is selected, appropriate accounting processes need to be followed for the best utilization of financial data. The following are some accounting processes normally used in a manufacturing set up

Challenges in Accounting for Manufacturing

Accountants related to a manufacturing business face a lot of challenges and are forced to make agonizing decisions. Outsourcing accounting services for manufacturing always helps you mitigate the challenges. Accounting through a non-core activity is really vital for your business growth and survival. A few challenges are

Benefits of selecting IMC as your preferred Manufacturing Accounting Services

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Corporate Finance

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Global Trader Programme

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