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UI Post-UTME Financial Accounting 2025 (Model questions) Question 22

Question 22

Manufacturing Accounts

The following data relates to a manufacturing company: Opening raw materials: ₦30,000 Purchases of raw materials: ₦150,000 Closing raw materials: ₦20,000 Direct labour: ₦80,000 Factory overhead: ₦40,000 Opening WIP: ₦15,000 Closing WIP: ₦10,000. Which of the following are CORRECT?
I. Raw materials consumed = ₦160,000
II. Prime cost = ₦240,000
III. Cost of production = ₦285,000
IV. Factory overhead is part of the prime cost

  1. A.I, II and III only
  2. B.I and IV only
  3. C.II, III and IV only
  4. D.All of the above
Show the answer and explanation

Answer: A (I, II and III only)

Explanation

Materials consumed = 30,000 + 150,000 − 20,000 = ₦160,000; prime cost = 160,000 + 80,000 = ₦240,000; cost of production = 240,000 + 40,000 + 15,000 − 10,000 = ₦285,000. Overheads are not part of prime cost.