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WAEC SSCE - Financial Accounting - 2001 (Objective)

Question 1 Report

Use the following information to answer the given question
\(\begin{array}{c|c} & N \\ \hline \text{Opening stock of raw materials} & 8,000\\ \text{Purchases} & 45,000 \\ \text{Closing stock of raw materials} & 9,500 \\ \text{Direct wages} & 6,450 \\ \text{Indirect wages} & 2,800 \\ \text{Depreciation - Plant and Machinery} & 3,200 \\ \text{Factory rents and rates} & 350 \\ \text{Opening work-in-progress} & 3,250 \\ \text{Closing work-in-progress} & 3,750\end{array}\)
Prime cost is N53,000
Answer Details
Prime cost is the sum of direct materials and direct labor cost. From the given information, the direct wages cost is N6,450 and the opening and closing stock of raw materials is N8,000 and N9,500 respectively. Therefore, the direct materials cost is: Direct materials cost = Opening stock of raw materials + Purchases - Closing stock of raw materials Direct materials cost = N8,000 + N45,000 - N9,500 Direct materials cost = N43,500 Hence, the prime cost can be calculated as follows: Prime cost = Direct materials cost + Direct wages Prime cost = N43,500 + N6,450 Prime cost = N49,950 Therefore, the correct option is (iii) N49,950.
Read lesson note on Manufacturing Accounts (JAMB)
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