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WAEC Financial Accounting 1998 Question 45

Question 45

Manufacturing Accounts

Opening stock of Raw Materials: N5,800
Closing stock of Raw Materials: N4,500
Raw Materials Purchased: N19,000
Carriage outwards: N1,300
Direct labour: N4,000
Electricity (Factory): N2,500
Supervisor's salary: N5,500
Depreciation of Plant: N1,500
Sales: N58,000
Closing stock (Finished Goods): N4,500
Administrative Expenses: N5,500
Selling and Distribution Expenses: N3,000
The gross profit is

  1. A.N33,800
  2. B.N28,700
  3. C.N25,600
  4. D.N19,000
  5. E.N18,900.
Show the answer and explanation

Answer: B (N28,700)

Explanation

Cost of sales = 33,800 − closing finished goods 4,500 = 29,300; gross profit = 58,000 − 29,300 = N28,700.