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JAMB Principles of Accounts 2013 Question 25

Question 25

Manufacturing Accounts

When goods produced are transferred at cost plus mark-up before sale, the difference between the cost and the transferred price is a

  1. A.discount.
  2. B.sales commission.
  3. C.manufacturing profit.
  4. D.factory reserves.
Show the answer and explanation

Answer: C (manufacturing profit.)

Explanation

The mark-up added when goods move from factory to trading account is the manufacturing profit.