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A motor car manufacturer, for instance, buys steel, rubber, aluminium, plastic, etc, that is used to manufacture motor vehicles that are sold to dealers (the trading concern). These dealers, in turn, sell vehicles to the customer.
From an accounting point of view the activities of manufacturing and trading enterprises are very similar, especially their administration, sales and financing activities. Therefore, the accounting principles and most of the procedures can be applied to both manufacturing and trading concerns. The main difference between the two is their method of cost accumulation and cost determination for (1) inventory valuation and (2) the calculation of the cost of goods sold. The difference arises from the fact that trading enterprises buy completed goods, while manufacturers make the goods sold by dealers.
The ‘accounting cost of goods manufactured’ item in the manufacturing enterprise therefore corresponds to the ‘accounting cost of good purchased’ item in the trading enterprise. In both cases these amounts represent the cost of finished goods available for sale. The trading enterprise, having purchased its goods in a ‘finished’ form, experiences little difficulty in determining their cost. The manufacturing enterprise, on the other hand, has to account for the cost of converting the raw materials into finished goods (also know as manufacturing costs).
In converting the raw materials into finished products, the manufacturer makes use of labour, machinery and equipment and also incurs other manufacturing costs such as power consumption, maintenance of machinery, etc. All these costs must be added to the cost of the raw materials to determine the cost of manufactured goods for any period.
Therefore, the accounting records of a manufacturing enterprise must be extended to make provision for recording the various additional costs peculiar to manufacturers.
The three most important elements of manufacturing costs are material, labour and manufacturing overheads. In accounting costing terminology, material and labour costs together are known as primary costs, while the accounting term conversion costs represents the combination of labour and general manufacturing costs.
By virtue of the nature of a manufacturing enterprise’s activities, it will require more accounting ledger accounts than a trading enterprise. The ledger must provide for aspects such as machinery and equipment, inventory, raw materials, work-in-progress, finished goods, etc. It is necessary to devote special attention to the various inventory accounts.
At any given time, a manufacturer will have different types of inventory on hand: material inventory ready for use in the manufacturing process; partially completed products still in the process of being manufactured; and finished goods that must be dispatched to dealers. Inventory accounting records and different accounting inventory accounts must be kept in order to determine the costs of each type of inventory at the end of a financial period. All three inventory accounts are asset accounts and are usually kept according to a perpetual accounting inventory system. At the same time they are control accounts supported by the appropriate subsidiary records…
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Since the very conception of the automobile, engineers and designers have been searching for was to make them more efficient and save on fuel consumption. Petrol fuels the majority of vehicles and diesel fuel is used in heavier automotive equipment. The internal combustion engine is considered to be a major if not the biggest source of environmental pollution and the cost of fuel is increasing every day.
With a constant rise in fuel costs and the environmental concerns regarding automobiles, vehicle engineers have had to develop more economical and environmentally safer alternatives to the internal combustion engine that powers most cars. This has led to the birth of the hybrid automobile. These hybrid automobiles offer a number of benefits. The hybrid automobile is a car that is powered by both an electric motor and a gasoline engine. Compared to non hybrid vehicles, the hybrid car saves on the cost of fuel by being more fuel efficient and has a lower rate of fuel consumption.
Hybrid cars operate on a dual mode where the electric motor, powered by batteries, takes over once the gasoline engine has gotten the vehicle up to speed. Braking and deceleration generates energy that is used to charge the electric motor’s batteries. This system allows the hybrid car to provide better fuel efficiency. This also means that the engine of a hybrid vehicle is shut the moment the car is stopped. Considered the biggest advantage to the hybrid car is the reduction of environmental pollution due to fewer emissions of carbon dioxide and other harmful gases in to our atmosphere. Automobile manufactures such as Honda, Toyota, and Ford have already introduced hybrid car models to the commercial market and several others are in development.
Currently there are two types of hybrid vehicles on the market. The first is the “Series” hybrid. A battery powered electric motor powers the Series hybrid car. It also has a gasoline powered engine but it does not singularly power the vehicle. The gasoline engine powers a generator which is used in turn to charge the batteries of the electric motor. The electric motor is left on during the vehicles entire operation however the gasoline engine can be switched on or off depending on the needs of the vehicle. This type of hybrid automobile provides better mileage in city traffic.
The second type of hybrid vehicle on the market is called the “Parallel” hybrid. The Parallel hybrid car, like the Series type, has a gasoline engine and an electric motor. The electric motor and the electric motor can both be used to turn the transmission and power the vehicle. The major difference between the two types of hybrid cars is that the Parallel hybrid uses its electric motor to boost the vehicles power when required to increase the car’s speed. The Parallel hybrid car is considered better suited for the open highway.
Hybrid automobiles provide several benefits due to some very unique features. The construction of the hybrid vehicle uses more lightweight materials …