Accounting of production department includes investments in special forms of short term assets where stocks of materials and raw materials, combined with labor and other factors of production result in finished product. The manufacturing process begins by receiving orders from the customer, after which the production plan is compiled to find out what materials and raw materials are necessary for the production process. Having the production process completed, as well as the transfer of the product to the warehouse, sale of the product begins. When selling finished products an entrepreneur prepares bill of lading and sales invoice. The topic of the thesis was The accounting monitoring of the production expenses in the case of the company Šujica-wood Ltd. In the opening part of the thesis the research problem was defined as well as the research objectives, research methods and structure of the research. In the second part of the thesis the accounting of the production expenses was defined. In the initial part expenses are defined and their division and the legal framework which regulates areas of the production expenses. In the following section accounting monitoring of the production process is defined and its purpose. The third research part shows the accounting monitoring of the expenses of production within the company Šujica-wood Ltd. and basic information about the company Šujica-wood Ltd. whose main production activity is the production of sawn wood material. The task of accounting is to monitor, calculate and distribute the expenses of the elements involved in the production process. The company Šujica-wood increased the expenses according to operating results of 2015, but has also increased the total revenue which eventually resulted in increased profits. The reason for that lies in the fact that the company in accordance with its market research and satisfying the needs of customers has opened business machinery which resulted in an increase in the number of employees and positive business results as a whole. At the end of the thesis the conclusion about the overall research was brought, theoretical and empirical as well.