WAEC Financial Accounting 1992 Question 26

Question 26

Manufacturing Accounts

Emeka Chukwudi (Nig.) Limited is a manufacturing company. Its books showed the following for the year ended 31st December, 1990.
Opening Stock - Raw materials: ₦42,000
Purchases - Raw materials: ₦265,000
Returns Outwards: ₦13,000
Depreciation – Plant and Machinery: ₦10,000
Wages: ₦52,000
Closing Stock – Raw materials: ₦72,000
Direct expenses: ₦11,000
Production Manager's salaries: ₦18,000
Factory rent: ₦15,000

The Prime cost is

A.₦298,000
B.₦285,000
C.₦274,000
D.₦235,000
E.₦220,000

Show the answer and explanation

Answer: B (₦285,000)

Explanation

Materials used 42,000 + 265,000 − 13,000 − 72,000 = 222,000; + wages 52,000 + direct expenses 11,000 = ₦285,000.