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Zorluk: OrtaValuation and Adjustment for Work-in-Progress (WIP)

A manufacturing enterprise provided the following figures for the financial year ended 31 December 2025:

ItemAmount
Direct manufacturing costs₦180,000\text{₦}180,000
Factory overhead expenses₦65,000\text{₦}65,000
Work-in-progress (1 January 2025)₦22,000\text{₦}22,000
Work-in-progress (31 December 2025)₦18,000\text{₦}18,000

What is the total cost of production transferred to the trading account?

  1. A
    ₦241,000\text{₦}241,000
  2. B
    ₦245,000\text{₦}245,000
  3. ₦249,000\text{₦}249,000Cevap
  4. D
    ₦263,000\text{₦}263,000

Cevap

The total cost of production transferred to the trading account is ₦249,000\text{₦}249,000.
The cost of production is computed as: Total Manufacturing Costs (Direct Costs + Factory Overheads) + Opening Work-in-Progress - Closing Work-in-Progress. Substituting the given amounts: ₦180,000+₦65,000+₦22,000−₦18,000=₦249,000\text{₦}180,000 + \text{₦}65,000 + \text{₦}22,000 - \text{₦}18,000 = \text{₦}249,000.

Adım Adım Çözüm

1
Calculate total manufacturing cost incurred before WIP adjustment.
Direct Costs+Factory Overheads=₦180,000+₦65,000=₦245,000\text{Direct Costs} + \text{Factory Overheads} = \text{₦}180,000 + \text{₦}65,000 = \text{₦}245,000
Prime costs and factory overheads combine to form total incurred cost during the production period.
2
Adjust for Opening Work-in-Progress (WIP).
₦245,000+₦22,000=₦267,000\text{₦}245,000 + \text{₦}22,000 = \text{₦}267,000
Opening WIP represents goods partially completed in the previous period that were completed during the current period.
3
Deduct Closing Work-in-Progress (WIP).
Cost of Production=₦267,000−₦18,000=₦249,000\text{Cost of Production} = \text{₦}267,000 - \text{₦}18,000 = \text{₦}249,000
Closing WIP represents uncompleted goods at year-end, which must be carried forward to the next period.

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Valuation and Adjustment for Work-in-Progress (WIP) in Manufacturing Accounts
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Valuation and Adjustment for Work-in-Progress (WIP)

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