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WAEC SSCE - Financial Accounting - 1992 (Objective)

Question 1 Report

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
Answer Details
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.
Read lesson note on Manufacturing Accounts (JAMB)
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