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JAMB Principles of Accounts 1995 Question 28

Question 28

Manufacturing Accounts

The following information is provided for Amusa Company Limited, a manufacturer:
Prime cost ₦999 000
Manufacturing overhead ₦132 000
Closing work in progress ₦75 000
Value of finished goods transferred to the Trading Account ₦1 116 000
If included in the manufacturing overhead were rents of ₦5 000 paid in advance, what is the opening work in progress for the period?

  1. A.₦85 000
  2. B.₦80 000
  3. C.₦70 000
  4. D.₦65 000
Show the answer and explanation

Answer: D (₦65 000)

Explanation

Correct overhead = 132 000 − 5 000 prepaid = ₦127 000. 1 116 000 = 999 000 + 127 000 + opening WIP − 75 000, so opening WIP = ₦65 000.