JAMB Principles of Accounts 2002 Question 18

Question 18

Manufacturing Accounts

Use the information below to answer questions 18 and 19.
(₦)
Stock of raw materials (1st January) 3000
Direct wages 2500
Direct expenses 1000
Factory overheads 2000
Cost of raw materials used 5500
Stock of finished goods (31st December) 2000
Determine the prime cost

A.₦7500
B.₦6500
C.₦9000
D.₦8000.

Show the answer and explanation

Answer: C (₦9000)

Explanation

Prime cost = raw materials used 5 500 + direct wages 2 500 + direct expenses 1 000 = ₦9 000.