The following financial information was extracted from the records of Eko Industrial Manufacturing Company for the year ended 31 December 2025:
| Financial Account Item | Amount (₦) |
|---|---|
| Opening Inventory of Raw Materials | 50,000 |
| Purchases of Raw Materials | 200,000 |
| Carriage Inwards on Raw Materials | 10,000 |
| Closing Inventory of Raw Materials | 40,000 |
| Direct Factory Wages | 150,000 |
| Direct Manufacturing Expenses | 30,000 |
| Factory Rent and Utilities | 60,000 |
| Depreciation of Factory Machinery | 40,000 |
| Opening Work-in-Progress | 35,000 |
| Closing Work-in-Progress | 15,000 |
What is the total Cost of Production for the year?
- ₦520,000Answer
- B₦480,000
- C₦420,000
- D₦500,000
Answer
The total Cost of Production for the year is ₦520,000.
The total Cost of Production of ₦520,000 is correctly calculated by summing the Prime Cost (₦400,000), Factory Overheads (₦100,000), and Opening Work-in-Progress (₦35,000), then subtracting Closing Work-in-Progress (₦15,000).
Step-by-Step Solution
Key Concept
Calculation of Cost of Production in Manufacturing Accounts
Estimated Time:1m 30s