Use the information below to answer question .
Prime cost..................₦12 100
Lighting....................₦10 000
Heating.....................₦15 000
Factory overhead............?
The production department share of factory overhead is 1/4 and 1/2 of lighting and heating respectively.
The factory overhead is?
To find the factory overhead, we need to first determine the production department's share of the lighting and heating costs.
The lighting cost is ₦10,000, and the production department's share is 1/4, so their portion of the lighting cost is:
1/4 x ₦10,000 = ₦2,500
The heating cost is ₦15,000, and the production department's share is 1/2, so their portion of the heating cost is:
1/2 x ₦15,000 = ₦7,500
Therefore, the total production department's share of the overhead cost is:
₦2,500 + ₦7,500 = ₦10,000
We can now find the factory overhead by subtracting the prime cost and the production department's share of the overhead from the total cost of lighting and heating:
Total cost of lighting and heating = ₦10,000 + ₦15,000 = ₦25,000
Factory overhead = ₦25,000 - ₦12,100 - ₦10,000 = ₦2,900
Therefore, the factory overhead is ₦2,900. Answer option (iv) is the closest to this value.