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Determining manufacturing costs, profits and loss

What are the manufacturing costs?

Manufacturing costs are the funds and costs associated in the business for one time

Why do you need to determine the manufacturing costs?

What do the manufacturing costs include?

Method for determining depreciation

The depreciation each year can be determined each year as follows;

For example:

Bought tractor 1st May 2000

8,000 Baht

(Working age of 5 years, depreciation value is 8,000/5 = 1,600B)

Depreciation Year 1

1,600 Baht


6,400 Baht

Depreciation Year 2

1,600 Baht


4,800 Baht

Depreciation Year 3

1,600 Baht


3,200 Baht

Depreciation Year 4

1,600 Baht


1,600 Baht

Depreciation Year 5

1,600 Baht


0.00 Baht

Recording depreciation is capitalising your business. In the profit/loss book, this can be recorded on monthly, periodically, production season depending on the suitability in determining the profit and loss for each occupation. For example, flower planting determines depreciation for spraying equipment on a monthly basis, when they harvest the flowers and must determine the profit and loss of planting flowers on a monthly basis.

Profit and loss

This is determined by comparing the income with manufacturing costs.

Points to consider

Sometimes there are no costs, for example no costs occur when raw materials from the area are used. However, you should estimate their costs when thinking of the manufacturing costs. As, in the future, you may have to purchase those materials, when there greater amounts are required. For example, the bamboo around the village may disappear if a lot is used, so you may have to buy from other villages to use. To ensure a continuing supply of natural resources to be used in the future, everyone should help to conserve environment and natural resources by replanting the resources.

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