Use the following information to answer the given question
Emeka Chukwudi (Nig.) Limited is a manufacturing company. Its books showed the following for the year ended 31st December, 1990
\(\begin{array}{c|c} \text{Opening stock - Raw materials} & 42,000 \\ \text{Purchases - Raw materials} & 265,000 \\ \text{Outwards} & 13,000 \\ \text{Returns outwards} & 13,000 \\ \text{Depreciation - plant and Machinery} & 10,000 \\ wages & 52,000 \\ \text{Closing stock - Raw materials} & 72,000 \\ \text{Direct expenses} & 11,000 \\ \text{Production Manager's salaries} & 18,000 \\ \text{Factory rent} & 15,000\end{array}\)
The cost of production is
To determine the cost of production, we need to calculate the total cost incurred in the production process. This includes the cost of raw materials used, direct expenses, wages, and other manufacturing overheads.
The calculation is as follows:
Total cost of raw materials = Opening stock + Purchases – Returns outwards – Closing stock
Total cost of raw materials = 42,000 + 265,000 – 13,000 – 72,000
Total cost of raw materials = N222,000
Direct expenses = N11,000
Wages = N52,000
Other manufacturing overheads = Depreciation + Production Manager's salaries + Factory rent
Other manufacturing overheads = N10,000 + N18,000 + N15,000
Other manufacturing overheads = N43,000
Therefore, the total cost of production = Total cost of raw materials + Direct expenses + Wages + Other manufacturing overheads
Total cost of production = N222,000 + N11,000 + N52,000 + N43,000
Total cost of production = N328,000
Hence, the cost of production is N328,000. Therefore, the option that best answers the question is option D.