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JAMB Principles of Accounts 1997 Question 31

Question 31

Manufacturing Accounts

Emeka Manufacturing Company (Extract) Manufacturing Account.
Direct material ₦5 000
Direct labour ₦4 500
Direct expenses ₦3 000
Factory overhead ₦2 500
Selling and distribution ₦1 500
Calculate the production cost

  1. A.₦16 500
  2. B.₦15 000
  3. C.₦14 000
  4. D.₦12 500.
Show the answer and explanation

Answer: B (₦15 000)

Explanation

Production cost = prime cost 12 500 + factory overhead 2 500 = ₦15 000; selling costs are not production costs.