AccountiPro

accountipro logo
Get Started
accountipro logo

Contact Sales

(302) 205-9959

Manufacturing Accounting for Precision and Performance

We help manufacturers maintain financial clarity with accurate cost tracking, streamlined inventory accounting, and reliable reporting. Our solutions support efficiency, profitability, and growth at every stage of your operations.

Trusted by hundred of businesses

capterra
excellent
high-performer
How We Can Help

Accounting Expertise Tailored to Manufacturing Workflows

Reach out for more details
We support manufacturers with accounting solutions designed for production workflows, cost visibility, inventory movement, and multi-facility operations. Our team helps you stay organized, maintain financial accuracy, and gain clearer control over your entire manufacturing performance.

Cost Accounting & COGS Tracking

Track materials, labor, and overhead with accuracy to understand true production costs. We help you identify cost drivers, refine pricing, and maintain healthy margins as your manufacturing scales.

Inventory & Workflow Tracking

We maintain accurate records for raw materials, WIP, and finished goods. Our process reduces discrepancies, prevents stockouts, and ensures proper valuation across warehouses and production sites.

Job & Production Cost Analysis

Understand the true cost and profitability of each job, product line, or batch. We provide clear cost breakdowns that reveal efficiencies, bottlenecks, and improvement opportunities across your production cycle.

Cash Flow & Forecasting Support

Manufacturing cash cycles are complex, and we help you plan ahead with forecasts built around production schedules, material lead times, and payment patterns, ensuring smoother operations and stronger financial control.

Payroll & Labor Allocation

We manage payroll for production teams, shift workers, and hourly labor with accuracy, allocating labor costs to the right jobs or departments, processing overtime, and ensuring full compliance for reliable labor reporting.

Compliance & Tax Requirements

We handle depreciation schedules, asset management, and manufacturing-related tax filings while keeping you ahead of regulatory requirements and minimizing risks with audit-ready financials.
What We Offer

Accounting Designed for Today’s Manufacturing Operations

Accounting Designed for Today’s Manufacturing Operations

Optimize your manufacturing accounting with solutions built for modern production workflows.

Manufacturing Bookkeeping Support

Bookkeeping aligned with production activity and inventory movement to keep your records accurate and reliable.

Vendor & Payables Management

We manage purchase orders, vendor bills, and payment schedules for raw materials, parts, and equipment to keep your supply chain running smoothly.

AR Management for Customer Billing

We handle invoicing, credit terms, aging reports, and follow-ups to support timely payments and healthy cash flow.

Workforce Payroll Support

We process payroll accurately for production and shift teams, managing overtime, labor allocation, and compliance.

Manufacturing Financial Reporting

We deliver clear financial reports with production costs, margins, inventory trends, and plant-level performance insights.

Tax Compliance & Regulatory Support

We manage manufacturing tax filings, depreciation, and property tax while keeping your business compliant and audit-ready.
The AccountiPro Edge

What Sets Our Manufacturing Accounting Apart

We provide industry expertise and efficient workflows to help manufacturers operate with clarity.

Industry-Trained Accountants

Our team understands manufacturing cost structures, production cycles, and compliance needs, delivering accurate financial management tailored to your operations.

Deep Operational Alignment

We align our accounting processes with your production workflows, giving you financial clarity that matches the way your operations actually run.

High-Accuracy Financial Workflows

We maintain precise, repeatable workflows that support fast-moving manufacturing environments with zero compromise on accuracy.

Actionable Performance Insights

We help you interpret financial data to uncover cost drivers, production efficiency, and margin opportunities for smarter decision-making.

Still unsure about your accounting needs?
Talk to our specialized advisors

Schedule a consultation

We’re just one
consultation away!

Boost efficiency with our tech-powered tools. Automate data entry, get real-time reports, and experience faster, more accurate bookkeeping.
Connect today

Manufacturing Accounting Guide: Costing, Inventory & Financial Control

In contrast to service industries, manufacturing accounting is the backbone of any production-based business. From tracking raw materials, valuing work-in-progress and costing finished products, production-based industries have their fair share of challenges. Pricing decisions, inventory management and long-term financial stability all reinforce the need of accurate manufacturing bookkeeping.
This blog takes you through the essentials of cost accounting for manufacturing, highlights the methods of job costing and process costing as well as some insights into the practices business owners should adopt for improved decision-making in manufacturing.

What Is Manufacturing Accounting

Manufacturing accounting is the tracking and analyzing of financial data for production companies. The main objectives include:
  • Valuing inventory at each stage of production
  • Determining the cost of producing goods
  • Measuring profitability by product or job
  • Tracking overheads
  • Providing pricing data essential for decision-making

The Three Primary Costs in Manufacturing

At the heart of cost accounting for manufacturing are three categories of production costs:
  • Direct Materials: These are directly traceable to the finished product, such as steel for vehicle parts or yarn for clothes. These are tracked from purchase to usage.
  • Direct Labor: This includes the wages paid to labor who directly contribute to the manufacturing process, such as assemblers and machine operators.
  • Manufacturing Overhead: Overhead includes all other production costs that are not directly traceable to a product, such as factory rent, machine depreciation, utilities, and supervisor salaries. Nevertheless, these costs significantly affect pricing decisions.

Manufacturing Inventory Accounting: The Three Inventory Categories

A manufacturing company holds three types of inventory:
  • Raw Materials: These are unprocessed inventory items purchased for manufacturing.
  • Work-in-Progress (WIP) Inventory: These are partially completed goods. The cost is based on materials, labor, and overheads incurred to date. Work-in-Progress (WIP) accounting ensures these costs are captured accurately.
  • Finished Goods Inventory: Completed products that are ready for sale.
The flow of goods from raw materials to finished goods forms the backbone of cost accounting and financial reporting for manufacturers.

Work-in-Progress (WIP) Accounting Explained

WIP accounting tracks the costs of goods partially completed at any given time. This is more complex than it seems as it requires tracking of production stages, labor and material usage, overhead allocation to each stage and completing cost transfers when batches or jobs finish.
Accurate WIP accounting is crucial in maintaining correct COGS figures, producing periodic financial statements and identifying bottlenecks.
Companies with longer production cycles often invest in more powerful WIP management systems to main control.

Cost Accounting for Manufacturing: The Core Methods

Manufacturers typically use one of several costing systems to measure product cost and profitability. Some of them are listed below:
  • Job Costing: Job costing is used for customized product requirements, or when production is done in small batches. Examples include custom furniture and customized packaging.
    Each job has its own cost record.
    • It is necessary to assign direct materials and direct labor used for that job.
    • Apply overhead using a pre-determined rate such as per machine hour.
    • Calculate total cost per job.
    • Compare costs with price to assess actual profitability.
Job costing offers high visibility and is ideal for manufacturers who need to price based on unique product specifications.
  • Process Costing: This costing method is used for mass production processes such as chemical processing, beverage production, etc. Costs are tracked by department or production process rather than by job. It is quite simple for high-volume manufacturers. Process costing involves accumulating costs per production department, determining unit cost based on total output, and transferring costs when goods move to the next stage.
  • Activity-Based Costing (ABC): Allocation is done based on specific activities, known as cost drivers, such as number of production setups, machine maintenance cycles, and quality control tests. This is in contrast to volume-based measures such as labor or machine hours. This method provides precise cost insights but is quite complex to implement.
  • Standard Costing and Variance Analysis: Standard costing assigns predetermined costs for materials, labor, and overhead. Actual costs are then compared and analyzed for variances. This provides vital data for management to evaluate performance and factors leading to lower profits. Examples of variances include sales price variance, material usage variance, and overhead spending variance.

Overhead Allocation in Manufacturing Accounting

This is one of the most challenging tasks of manufacturing accounting. Poor allocation of overhead can result in incorrect product pricing, errors in inventory valuation and misleading profits.

Overheads are often allocated based on:
  • Machine hours
  • Direct labor hours
  • Units produced
  • Material costs
  • ABC activity drivers
The choice of allocation bases depends on the production process. As an example, one may use direct labor hours over machine hours when the production process is labor-intensive.

Manufacturing Bookkeeping: Essential Daily and Monthly Tasks

Key responsibilities include:
Daily Tasks:
  • Tracking raw materials used
  • Recording time cards to determine labor hours
  • Updating WIP levels
  • Monitoring output and wastage
Monthly Tasks:
  • Reconciliation of material inflows and usage
  • WIP valuations
  • Finished goods inventory reconciliation
  • Overhead allocation
  • Production variance analysis
  • Calculation of Cost of Goods Manufactured and Sold

Cost of Goods Manufactured are calculated as follows:

Beginning WIP + Direct Materials + Direct Labor + Manufacturing Costs − Closing WIP

Due to the complexity of manufacturing processes, many businesses adopt ERP systems to automate these workflows.

Technology in Modern Manufacturing Accounting

Todays advancements bring with them modern systems that integrate production with supply chain and other departments. Examples include:
  • ERP systems (SAP, Oracle, NetSuite)
  • MRP modules for material planning
  • Production scheduling software
  • Shop-floor data collection systems
  • Barcoding and inventory tracking tools
These systems reduce errors, improve visibility, and allow real-time monitoring of WIP, labor, and inventory levels.

Internal Controls and Best Practices for Manufacturing Accounting

Financial control is essential for preventing waste, fraud, and inefficiency. Key internal controls include:
  • Materials Controls: These include physical inventory counts and real-time bill of materials (BOM) tracking. Oftentimes, businesses experience discrepancies in inventory, inaccurate WIP, and BOMs. Therefore, it is equally important to maintain accurate BOMs, as errors in material costs will affect total costs.
  • Labor Controls: Make use of timekeeping systems to track labor hours. Any additional hours should be approved by supervisors first, and regular labor productivity measures are essential to maintain efficiency.
  • Overhead Controls: Manufacturers often struggle with overhead allocation errors. Move towards overhead allocation automation and make use of budgeting and variance analysis for stricter control.
  • Inventory Controls: Segregation of duties is important to prevent theft or fraud. Where possible, use barcode and RFID systems for real-time inventory tracking. This reduces shrinkage and unaccounted-for losses. WIP should also be monitored in real-time for added accuracy. Manufacturers with outdated systems are often unable to integrate production with accounting systems; such businesses should focus on streamlining data flow throughout the organization through automation tools.
Keep note that costs are ever-changing and monitoring these changes are significant in ensuring stable or growing profits.

Pricing and Profitability Analysis

There are several pricing methods that can be used by manufacturers, based on their specific objectives. Common methods used are:
  • Competitive pricing: based on competitors’ prices.
  • Value-based pricing: based on the perception customers place on the value of your product.
  • Cost-plus pricing: simply adding a fixed margin to cost.
  • Market-driven pricing: using supply and demand to determine price regardless of costs.
Cost accounting ensures costs are accurate enabling a proper analysis of profitability on a per product, per customer, per job or per production line basis. This enables identification of unprofitable lines, products or customers, allowing business owners to tweak their strategies for the long-term success of the business.
Manufacturing accounting is complex and requires tracking detailed production and cost information. With accurate methods like job costing or process costing—and good inventory and WIP management—manufacturers can improve efficiency, reduce waste, set better prices, and stay competitive.

Our Certifications & Affiliations

Certification & affilation

FAQs

Manufacturing involves complex cost structures, inventory layers, and production workflows requiring industry-specific expertise.

Yes — we manage full inventory accounting and valuation at every production stage.

Absolutely. We provide detailed job and batch cost reports to help you assess efficiency and margin performance.

Yes. We work with tools like Fishbowl, Katana, NetSuite, DEAR, Cin7, and other manufacturing systems.

We manage shift-based payroll, overtime, labor allocation, and workforce compliance.

Yes — we provide consolidated reporting for plants, warehouses, and production locations.

Yes — we maintain depreciation schedules and manage equipment accounting.

Yes — including depreciation, sales tax, property tax, and regulatory filings.

We analyze cost drivers, inefficiencies, and production data to identify opportunities for better margins.

OUR BLOGS

Helpful resources to keep you connected with
the accounting world

The current query has no posts. Please make sure you have published items matching your query.
View All

Streamline Your Manufacturing Accounting Today

Schedule a Consultation