The table below details the transactions within a cassava-to-biscuit supply chain: | Stage of Production | Gross Output Value (₦) | Cost of Intermediate Inputs (₦) | |---|---|---| | Cassava Farming | 140,000 | 0 | | Starch Processing | 290,000 | 140,000 | | Biscuit Manufacturing | X | 290,000 | | Re

The table below details the transactions within a cassava-to-biscuit supply chain: | Stage… — JAMB UTME

The table below details the transactions within a cassava-to-biscuit supply chain:

Stage of Production	Gross Output Value (₦)	Cost of Intermediate Inputs (₦)
Cassava Farming	140,000	0
Starch Processing	290,000	140,000
Biscuit Manufacturing	$X$	290,000
Retail Distribution	680,000	490,000

If the net value added at the Biscuit Manufacturing stage is $\text{₦}200,000$ , what is the value of gross output $X$ at the Biscuit Manufacturing stage, and what is the total amount of double counting that would occur if national income were calculated by summing the gross output values of all four stages?

$X = \text{₦}490,000$ and double counting = $\text{₦}920,000$ Answer
B
$X = \text{₦}490,000$ and double counting = $\text{₦}1,600,000$
C
$X = \text{₦}290,000$ and double counting = $\text{₦}720,000$
D
$X = \text{₦}490,000$ and double counting = $\text{₦}680,000$

Answer

Gross output

X = \text{₦}490,000

and double counting =

\text{₦}920,000

The gross output

X

at the Biscuit Manufacturing stage is derived by adding its value added (

\text{₦}200,000

) to its intermediate input cost (

\text{₦}290,000

), yielding

\text{₦}490,000

. Summing the gross output across all stages gives

\text{₦}1,600,000

, whereas the true national income contribution (total value added) is

\text{₦}680,000

. Subtracting net value added from total gross output isolates the double counting error of

\text{₦}920,000

Step-by-Step Solution

Calculate the unknown gross output

X

for Biscuit Manufacturing

X = \text{Cost of Intermediate Inputs} + \text{Value Added} = \text{₦}290,000 + \text{₦}200,000 = \text{₦}490,000

Value added is defined as Gross Output Value minus Intermediate Input Costs.

Calculate total Gross Output by summing sales across all four production stages

\text{Total Gross Output} = \text{₦}140,000 + \text{₦}290,000 + \text{₦}490,000 + \text{��}680,000 = \text{₦}1,600,000

The output method gross figure is the unadjusted sum of all transactions.

Determine the true Net Contribution (Total Value Added) to National Income

\text{Net Contribution} = (140,000 - 0) + (290,000 - 140,000) + 200,000 + (680,000 - 490,000) = \text{₦}680,000

The net contribution equals the sum of value added at all stages, which also equals the final sale price at Retail Distribution.

Calculate the amount of double counting that occurs when summing gross output values

\text{Double Counting Amount} = \text{Total Gross Output} - \text{Net Value Added} = \text{₦}1,600,000 - \text{₦}680,000 = \text{₦}920,000

Double counting represents the repetitive inclusion of intermediate input values across successive production stages.

Key Concept

Output (Value Added) Method and Double Counting Avoidance

Estimated Time:2m 0s

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