What is a Factory Ledger?

A factory ledger is a cluster of accounts that contain the production costs of a business. These accounts typically include direct materials expense, direct labor expense, and factory overhead expense. These accounts may contain the bulk of the expense transactions generated by a business, and so are of particular interest to the cost accountant or financial analyst who is examining the financial performance of a firm. For these people, it makes sense to maintain a factory ledger as a subsidiary ledger, so that they can more easily investigate costs related to the cost of goods sold.