Preparation of Manufacturing Account and Cost of Production Alıştırma Soruları — JAMB UTME

Soru 1Soru →

The following financial figures were extracted from the books of Kemi Manufacturing Enterprises for the year ended 31st December 2025:

- Prime Cost: $\text{N}150,000$
- Factory Overheads: $\text{N}45,000$
- Opening Work-in-Progress: $\text{N}12,000$
- Closing Work-in-Progress: $\text{N}17,000$

What is the Cost of Production for the year?

Cevabı ve açıklamayı göster

Cevap: 190000

Cevap

The Cost of Production is 190,000 Naira.

The Cost of Production is calculated using the formula: Prime Cost + Factory Overheads + Opening Work-in-Progress - Closing Work-in-Progress. Substituting the values:

\text{N}150,000 + \text{N}45,000 + \text{N}12,000 - \text{N}17,000 = \text{N}190,000

.

Adım Adım Çözüm

1

Add Factory Overheads to Prime Cost

\text{N}150,000 + \text{N}45,000 = \text{N}195,000

Factory overheads are added to prime cost to determine the total factory cost before work-in-progress adjustments.

2

Add Opening Work-in-Progress

\text{N}195,000 + \text{N}12,000 = \text{N}207,000

Opening work-in-progress represents unfinished goods from the previous period completed in the current period.

3

Deduct Closing Work-in-Progress

\text{N}207,000 - \text{N}17,000 = \text{N}190,000

Closing work-in-progress represents unfinished goods at the end of the period and must be deducted to find the cost of fully produced goods.

Anahtar Kavram

Calculation of Cost of Production from Prime Cost, Factory Overheads, and Work-in-Progress adjustments.

Soru 2Soru →

A cost accountant is reviewing the components of a Manufacturing Account for a furniture manufacturing firm. Match each specific production cost item or adjustment on the left with its appropriate treatment in the Cost of Production schedule on the right.

Soldaki öğeye tıklayın, sonra eşleşen sağdaki öğeye tıklayın

Cevabı ve açıklamayı göster

Cevap

Royalty paid per unit of item produced matches with direct expense in Prime Cost; Factory supervisor's salary and plant depreciation matches with indirect manufacturing costs under Factory Overheads; Net decrease in Work-in-Progress matches with being added to Prime Cost and Factory Overheads; Carriage inwards on raw materials matches with being added to direct materials cost to find cost of raw materials consumed.

Each item is correctly matched according to standard cost accounting rules for manufacturing accounts: Carriage inwards adds to raw materials cost, royalties form part of direct expenses within Prime Cost, supervisory salaries and plant depreciation are factory overheads, and a net decrease in WIP increases the overall cost of production.

Adım Adım Çözüm

1

Classify direct costs

Identify that raw material carriage inwards increases the raw material purchase cost, while unit-based production royalties are direct expenses forming part of Prime Cost.

Direct costs are expenses directly traceable to the unit of output.

2

Classify indirect costs

Group factory supervisor salaries and plant depreciation into Factory Overheads.

Indirect manufacturing costs support production but cannot be assigned directly to individual units.

3

Apply Work-in-Progress adjustment rules

Determine that a net decrease in WIP (

Opening\ WIP > Closing\ WIP

) represents additional cost absorbed during the period, thereby increasing the Cost of Production.

Cost of Production = Prime Cost + Factory Overheads + Opening WIP - Closing WIP.

Anahtar Kavram

Preparation of Manufacturing Account and Cost of Production

Tahmini Süre:1m 30s

Soru 3Soru →

During the financial year ended 31 December 2025, Tunde Industrial Crafts reported the following manufacturing cost figures:

- Direct materials consumed: ₦450,000
- Direct wages paid: ₦220,000
- Direct expenses: ₦80,000
- Factory overheads: ₦150,000
- Work-in-progress (1 January 2025): ₦60,000
- Work-in-progress (31 December 2025): ₦40,000

What is the total cost of production for the year?

₦920,000

₦880,000

₦900,000

₦770,000

Cevabı ve açıklamayı göster

Cevap: ₦920,000

Cevap

The total cost of production for the year is ₦920,000.

The correct total cost of production is derived by first adding direct materials (₦450,000), direct wages (₦220,000), and direct expenses (₦80,000) to find Prime Cost of ₦750,000. Adding factory overheads (₦150,000) gives ₦900,000. Adjusting for work-in-progress (+ ₦60,000 opening WIP - ₦40,000 closing WIP) yields ₦920,000.

Adım Adım Çözüm

1

Calculate Prime Cost

Prime Cost = Direct Materials (₦450,000) + Direct Wages (₦220,000) + Direct Expenses (₦80,000) = ₦750,000

Prime cost comprises all direct manufacturing expenditures.

2

Add Factory Overheads to Prime Cost

Total Factory Overhead Cost = ₦750,000 + ₦150,000 = ₦900,000

Factory overheads represent indirect factory operational expenses.

3

Adjust for Opening and Closing Work-in-Progress

Cost of Production = ₦900,000 + Opening WIP (₦60,000) - Closing WIP (₦40,000) = ₦920,000

Opening work-in-progress is added to current production expenditures while uncompleted closing work-in-progress is deducted.

Anahtar Kavram

Preparation of Manufacturing Account and Cost of Production

Tahmini Süre:1m 30s

Soru 4Soru →

Match each manufacturing accounting item or formula on the left with its correct accounting classification or term on the right.

Soldaki öğeye tıklayın, sonra eşleşen sağdaki öğeye tıklayın

Cevabı ve açıklamayı göster

Cevap

The correct matches are: (1) Prime Cost + Factory Overheads + Opening WIP - Closing WIP matches Cost of Production; (2) Raw Materials Consumed + Direct Wages + Royalties matches Prime Cost; (3) Factory Building Rent + Plant Depreciation + Factory Supervisor Salary matches Factory Overheads; (4) Market Value of Finished Goods Produced - Cost of Production matches Manufacturing Profit.

Each item on the left represents a fundamental accounting equation or cost combination that uniquely aligns with its standard accounting terminology on the right in manufacturing account preparation.

Adım Adım Çözüm

1

Determine the formula for Cost of Production

Prime Cost + Factory Overheads + Opening Work-in-Progress - Closing Work-in-Progress = Cost of Production

The cost of completed production requires combining prime costs with indirect factory expenses and adjusting for incomplete goods at the start and end of the period.

2

Identify the elements constituting Prime Cost

Raw Materials Consumed + Direct Wages + Royalties / Direct Production Expenses = Prime Cost

Prime cost is strictly the sum of directly traceable manufacturing costs.

3

Categorize indirect factory costs

Factory Building Rent + Plant Depreciation + Factory Supervisor's Salary = Factory Overheads

Expenses necessary to maintain factory operations that cannot be directly traced to individual products are classified as factory overheads.

4

Calculate Manufacturing Profit

Market Value of Finished Goods Produced - Cost of Production = Manufacturing Profit

When a firm transfers finished goods at market value, the differential over actual production cost measures the profitability of the manufacturing operation.

Anahtar Kavram

Classification and formulation of manufacturing account components and Cost of Production

Soru 5Soru →

The following details were extracted from the accounting records of Binta Manufacturing Ltd. for the year ended 31 December 2025:

Item	Amount (₦)
Stock of raw materials (1 January 2025)	45,000
Stock of raw materials (31 December 2025)	38,000
Purchases of raw materials	180,000
Carriage inwards on raw materials	12,000
Return outwards of raw materials	7,000
Direct factory labor paid	95,000
Direct factory labor accrued at year-end	5,000
Royalties paid on production	15,000
Factory power and lighting	34,000
Depreciation of factory machinery	22,000
Work-in-progress (1 January 2025)	28,000
Work-in-progress (31 December 2025)	31,000

What is the total Cost of Production for the year?

Cevabı ve açıklamayı göster

Cevap: 360000

Cevap

The total Cost of Production for the year is ₦360,000.

The Cost of Production is correctly determined by summing Prime Cost (₦307,000) and Factory Overheads (₦56,000), giving a gross production cost of ₦363,000, and adjusting for work-in-progress by adding opening WIP (₦28,000) and deducting closing WIP (₦31,000) to arrive at ₦360,000.

Adım Adım Çözüm

1

Calculate Cost of Raw Materials Consumed

₦192,000

Raw materials consumed equals opening stock of raw materials plus net purchases and carriage inwards, less closing stock of raw materials:

45,000 + 180,000 + 12,000 - 7,000 - 38,000 = 192,000

.

2

Calculate Total Direct Labor Cost

₦100,000

Direct labor must include accrued wages incurred during the accounting period:

95,000 + 5,000 = 100,000

.

3

Determine Prime Cost

₦307,000

Prime Cost is the sum of direct raw materials consumed, direct labor, and direct expenses (royalties):

192,000 + 100,000 + 15,000 = 307,000

.

4

Calculate Total Factory Overheads

₦56,000

Factory Overheads include all indirect manufacturing costs (factory power and lighting + machinery depreciation):

34,000 + 22,000 = 56,000

.

5

Compute Total Manufacturing Operations Cost before Work-in-Progress Adjustments

₦363,000

Add Factory Overheads to Prime Cost:

307,000 + 56,000 = 363,000

.

6

Adjust for Opening and Closing Work-in-Progress to derive Cost of Production

₦360,000

Add opening work-in-progress and subtract closing work-in-progress from total manufacturing operations cost:

363,000 + 28,000 - 31,000 = 360,000

.

Anahtar Kavram

Manufacturing Account Preparation and Calculation of Cost of Production

Soru 6Soru →

Match each manufacturing accounting transaction or component adjustment on the left with its correct financial treatment or resulting calculation on the right.

Soldaki öğeye tıklayın, sonra eşleşen sağdaki öğeye tıklayın

Cevabı ve açıklamayı göster

Cevap

Direct costs adjustments add

₦40,000

to Prime Cost; factory overheads and Work-in-Progress net to adding

₦110,000

to Prime Cost; market value transfer equals

₦600,000

debited to Trading Account; and provision for unrealized profit equals

₦15,000

.

Each item accurately maps to its double-entry or financial statement presentation rule: direct expenses and direct labor additions increase Prime Cost; factory overheads combined with opening WIP minus closing WIP adjust Prime Cost to arrive at Cost of Production; transfer at market value includes manufacturing profit debited to Trading Account; and unrealized profit on closing inventory is isolated using the margin ratio derived from mark-up.

Adım Adım Çözüm

1

Calculate Prime Cost adjustments

Direct carriage (

₦15,000

) and accrued direct labor (

₦25,000

) are direct expenses and direct wages respectively. Adding them gives

₦40,000

added to Prime Cost components.

Direct costs form part of Prime Cost before adding overheads.

2

Calculate net overhead and Work-in-Progress adjustment to Prime Cost

\text{Factory Overheads} + \text{Opening WIP} - \text{Closing WIP} = ₦120,000 + ₦35,000 - ₦45,000 = ₦110,000

.

Cost of Production = Prime Cost + Factory Overheads + Opening WIP - Closing WIP.

3

Determine market value transfer of completed goods

\text{Market Value} = ₦500,000 + (0.20 \times ₦500,000) = ₦600,000

.

Finished goods transferred at market value are debited to the Trading Account at Cost of Production plus Manufacturing Profit.

4

Calculate provision for unrealized profit on closing inventory

\text{Margin} = \frac{\text{Mark-up}}{100 + \text{Mark-up}} = \frac{25}{125} = 20\%

.

\text{Unrealized profit} = 20\% \times ₦75,000 = ₦15,000

.

Closing inventory at market value must be reduced by the profit element to state it at actual production cost on the Balance Sheet.

Anahtar Kavram

Preparation of Manufacturing Account and Cost of Production

Soru 7Soru →

Apex Manufacturing Enterprise provided the following extract from its financial records for the year ended 31 December 2025:

- Opening stock of raw materials: $\text{₦}45,000$
- Purchases of raw materials: $\text{₦}180,000$
- Carriage inwards on raw materials: $\text{₦}15,000$
- Closing stock of raw materials: $\text{₦}35,000$
- Direct factory wages: $\text{₦}120,000$
- Factory power and fuel: $\text{₦}40,000$
- Depreciation of factory equipment: $\text{₦}25,000$
- Work-in-progress (1 January 2025): $\text{₦}18,000$
- Work-in-progress (31 December 2025): $\text{₦}23,000$

What is the total cost of production for the year?

Cevabı ve açıklamayı göster

Cevap: 385000

Cevap

The total cost of production for the year is ₦385,000.

The correct cost of production is computed by combining raw materials consumed (₦205,000), direct wages (₦120,000), and factory overheads (₦65,000) to arrive at manufacturing costs before WIP adjustments (₦390,000), then adding opening work-in-progress (₦18,000) and deducting closing work-in-progress (₦23,000), yielding exactly ₦385,000.

Adım Adım Çözüm

1

Determine the cost of raw materials consumed

Raw Materials Consumed = ₦45,000 + ₦180,000 + ₦15,000 - ₦35,000 = ₦205,000

Carriage inwards is added to raw materials purchases while closing stock of raw materials is subtracted from total materials available for use.

2

Calculate the Prime Cost

Prime Cost = Direct Materials Consumed (₦205,000) + Direct Factory Wages (₦120,000) = ₦325,000

Prime Cost consists of all direct manufacturing costs including direct raw materials and direct labor.

3

Determine Total Factory Overheads

Factory Overheads = Factory Power and Fuel (₦40,000) + Depreciation of Factory Equipment (₦25,000) = ₦65,000

Factory overheads encompass all indirect expenses incurred within the factory environment.

4

Adjust Prime Cost and Overheads for Work-in-Progress (WIP) to obtain Cost of Production

Cost of Production = Prime Cost (₦325,000) + Factory Overheads (₦65,000) + Opening WIP (₦18,000) - Closing WIP (₦23,000) = ₦385,000

Opening WIP is added because it represents partially finished goods completed in the current period, while closing WIP is deducted because it remains incomplete at year end.

Anahtar Kavram

Preparation of Manufacturing Account and Cost of Production

Soru 8Soru →

The following balances were extracted from the books of Zenith Manufacturing Works for the financial year ended 31 December 2025:

Item	Amount (₦)
Direct raw materials consumed	500,000
Direct factory wages paid	220,000
Accrued direct factory wages at year-end	30,000
Factory overhead expenses	180,000
Carriage outwards	40,000
Work-in-progress (1 January 2025)	80,000
Work-in-progress (31 December 2025)	30,000

What is the total cost of production to be transferred to the Trading Account for the year?

₦880,000

₦980,000

₦920,000

₦1,020,000

Cevabı ve açıklamayı göster

Cevap: ₦980,000

Cevap

The total cost of production transferred to the Trading Account is ₦980,000.

The cost of production is computed by combining prime cost (direct materials consumed ₦500,000 plus total direct labour of ₦250,000) with factory overheads (₦180,000), giving total manufacturing costs of ₦930,000. Adjusting for work-in-progress by adding opening WIP (₦80,000) and deducting closing WIP (₦30,000) results in ₦980,000.

Adım Adım Çözüm

1

Calculate Total Direct Labour Cost

₦220,000 + ₦30,000 = ₦250,000

Accrued direct wages at year-end must be added to direct wages paid to establish the full direct labour expense for the period.

2

Calculate Prime Cost

₦500,000 + ₦250,000 = ₦750,000

Prime Cost is the sum of direct raw materials consumed, direct labour, and direct expenses.

3

Add Factory Overheads

₦750,000 + ₦180,000 = ₦930,000

Factory overheads are indirect production costs added to Prime Cost.

4

Adjust for Opening and Closing Work-in-Progress (WIP)

₦930,000 + ₦80,000 - ₦30,000 = ₦980,000

Opening work-in-progress is added because it represents incomplete work from the previous period completed now, while closing work-in-progress is subtracted as it remains unfinished at year-end.

Anahtar Kavram

Calculation of Cost of Production in Manufacturing Accounts

Soru 9Soru →

Kano Industrial Processing Ltd provides the following figures extracted from its books for the financial year ended 31 December 2025:

- Raw materials inventory (1 January 2025): $₦45,000$
- Purchases of raw materials: $₦220,000$
- Carriage inwards on raw materials: $₦12,000$
- Returns outwards of raw materials: $₦8,000$
- Raw materials inventory (31 December 2025): $₦35,000$
- Direct wages paid: $₦150,000$ (with $₦10,000$ accrued at year-end)
- Direct factory expenses: $₦25,000$
- Factory power and lighting paid: $₦40,000$ (includes $₦4,000$ prepaid for 2026)
- Factory supervisor's salary: $₦65,000$
- Depreciation of factory plant and machinery: $₦30,000$
- Work-in-progress inventory (1 January 2025): $₦28,000$
- Work-in-progress inventory (31 December 2025): $₦34,000$

What is the total Cost of Production transferred to the Trading Account for the year ended 31 December 2025?

Cevabı ve açıklamayı göster

Cevap: 544000

Cevap

The total Cost of Production transferred to the Trading Account is ₦544,000.

The Cost of Production is calculated by aggregating Prime Cost (

₦419,000

) and Total Factory Overheads (

₦131,000

), yielding a gross production cost of

₦550,000

. Adjusting for Work-in-Progress by adding Opening WIP (

₦28,000

) and subtracting Closing WIP (

₦34,000

) results in a final Cost of Production of

₦544,000

.

Adım Adım Çözüm

1

Calculate Cost of Raw Materials Consumed

₦234,000

Cost of Raw Materials Consumed is calculated as Opening Stock (

₦45,000

) + Purchases (

₦220,000

) + Carriage Inwards (

₦12,000

) - Returns Outwards (

₦8,000

) - Closing Stock (

₦35,000

).

2

Calculate Direct Costs and Prime Cost

₦419,000

Direct Wages are adjusted for year-end accrual (

₦150,000 + ₦10,000 = ₦160,000

). Prime Cost = Raw Materials Consumed (

₦234,000

) + Direct Wages (

₦160,000

) + Direct Expenses (

₦25,000

).

3

Calculate Factory Overheads

₦131,000

Factory Power is adjusted for prepayment (

₦40,000 - ₦4,000 = ₦36,000

). Total Factory Overheads = Factory Power (

₦36,000

) + Supervisor's Salary (

₦65,000

) + Factory Plant Depreciation (

₦30,000

).

4

Calculate Net Cost of Production including Work-in-Progress adjustments

₦544,000

Cost of Production = Prime Cost (

₦419,000

) + Factory Overheads (

₦131,000

) + Opening WIP (

₦28,000

) - Closing WIP (

₦34,000

) = ₦544,000.

Anahtar Kavram

Preparation of Manufacturing Account and Cost of Production

Tahmini Süre:3m 0s

Soru 10Soru →

The following balances were extracted from the accounting records of Plateau Manufacturing Ltd for the financial year ended 31 December 2025:

Accounting Item	Amount (₦)
Opening inventory of raw materials	45,000
Purchases of raw materials	180,000
Carriage inwards on raw materials	12,000
Closing inventory of raw materials	35,000
Direct wages paid (₦5,000 accrued at year end)	90,000
Direct factory expenses	28,000
Factory supervisor's salary	40,000
Depreciation of factory plant	35,000
Factory power and fuel	22,000
Opening work-in-progress	18,000
Closing work-in-progress	24,000

What is the total Cost of Production for the year?

Cevabı ve açıklamayı göster

Cevap: 416000

Cevap

The Cost of Production for the year is ₦416,000.

The Cost of Production is ₦416,000. It is derived by first calculating Raw Materials Consumed (₦45,000 + ₦180,000 + ₦12,000 - ₦35,000 = ₦202,000). Adding Direct Labor inclusive of accruals (₦90,000 + ₦5,000 = ₦95,000) and Direct Expenses (₦28,000) yields a Prime Cost of ₦325,000. Adding total Factory Overheads (₦40,000 + ₦35,000 + ₦22,000 = ₦97,000) gives total factory costs of ₦422,000. Finally, adjusting for Work-in-Progress (+ ₦18,000 Opening WIP - ₦24,000 Closing WIP) gives ₦416,000.

Adım Adım Çözüm

1

Calculate Cost of Raw Materials Consumed

₦202,000

Raw materials consumed equals opening raw materials inventory (��45,000) plus purchases (₦180,000) plus carriage inwards (₦12,000) minus closing raw materials inventory (₦35,000).

2

Calculate Prime Cost

₦325,000

Prime Cost is the sum of raw materials consumed (₦202,000), total direct wages incurred including year-end accruals (₦90,000 paid + ₦5,000 accrued = ₦95,000), and direct expenses (₦28,000).

3

Calculate Total Factory Overheads

₦97,000

Factory Overheads comprise indirect manufacturing expenses: factory supervisor salary (₦40,000), plant depreciation (₦35,000), and factory power and fuel (₦22,000).

4

Adjust for Work-in-Progress to determine Cost of Production

₦416,000

Cost of Production is Prime Cost (₦325,000) plus Factory Overheads (₦97,000) plus Opening Work-in-Progress (₦18,000) minus Closing Work-in-Progress (₦24,000).

Anahtar Kavram

Calculation of Manufacturing Account components including Prime Cost, Factory Overheads, and Work-in-Progress adjustments.

Soru 11Soru →

Match each key manufacturing account component on the left with its corresponding accounting formula or descriptive definition on the right.

Soldaki öğeye tıklayın, sonra eşleşen sağdaki öğeye tıklayın

Cevabı ve açıklamayı göster

Cevap

Cost of Raw Materials Consumed matches Opening stock of raw materials + Purchases of raw materials + Carriage inwards - Closing stock of raw materials; Prime Cost matches Cost of raw materials consumed + Direct factory labor wages + Direct manufacturing expenses; Factory Overheads matches Indirect production expenses such as factory power, factory supervisor salaries, and plant depreciation; Cost of Production matches Prime cost + Factory overheads + Opening work-in-progress - Closing work-in-progress.

Each manufacturing cost term aligns with its correct standard accounting definition. Cost of Raw Materials Consumed measures materials physically used; Prime Cost aggregates direct expenses; Factory Overheads encompass indirect plant costs; and Cost of Production combines prime cost and overheads adjusted for net work-in-progress.

Adım Adım Çözüm

1

Determine the formula for Cost of Raw Materials Consumed

Opening stock of raw materials + Purchases + Carriage inwards - Closing stock of raw materials

This formula tracks the physical movement and cost of raw materials actually used during the manufacturing period.

2

Determine the composition of Prime Cost

Cost of raw materials consumed + Direct wages + Direct expenses

Prime cost aggregated all direct inputs that can be traced directly to the production units.

3

Identify the definition of Factory Overheads

Indirect production expenses such as factory power, supervisor salaries, and plant depreciation

Overheads represent operational costs incurred in the factory area that cannot be directly assigned to specific units of production.

4

Determine the calculation for Cost of Production

Prime cost + Factory overheads + Opening work-in-progress - Closing work-in-progress

Cost of production reflects the total manufacturing cost transferred to finished goods after accounting for partially completed units.

Anahtar Kavram

Manufacturing Account Components and Cost Structure Determination

Soru 12Soru →

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?

₦520,000

₦480,000

₦420,000

₦500,000

Cevabı ve açıklamayı göster

Cevap: ₦520,000

Cevap

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).

Adım Adım Çözüm

1

Calculate Cost of Raw Materials Consumed

��50,000 + ₦200,000 + ₦10,000 - ₦40,000 = ₦220,000

Carriage inwards is added to raw material purchases while closing raw material inventory is deducted.

2

Calculate Prime Cost

₦220,000 (Raw Materials) + ₦150,000 (Direct Wages) + ₦30,000 (Direct Expenses) = ₦400,000

Prime cost is the sum of all direct costs of production.

3

Calculate Total Factory Overheads

₦60,000 (Factory Rent) + ₦40,000 (Depreciation) = ₦100,000

Factory overheads consist of all indirect manufacturing expenses incurred in the factory.

4

Calculate Cost of Production

₦400,000 (Prime Cost) + ₦100,000 (Factory Overheads) + ₦35,000 (Opening WIP) - ₦15,000 (Closing WIP) = ₦520,000

Cost of production is obtained by adding factory overheads and opening work-in-progress to prime cost, and deducting closing work-in-progress.

Anahtar Kavram

Calculation of Cost of Production in Manufacturing Accounts

Tahmini Süre:1m 30s

Soru 13Soru →

Match each component of the Manufacturing Account on the left with its correct accounting valuation formula or descriptive definition on the right.

Soldaki öğeye tıklayın, sonra eşleşen sağdaki öğeye tıklayın

Cevabı ve açıklamayı göster

Cevap

Cost of Raw Materials Consumed matches Opening Stock of Raw Materials + Purchases + Carriage Inwards - Closing Stock of Raw Materials; Prime Cost matches Cost of Raw Materials Consumed + Direct Wages + Direct Factory Expenses; Factory Overheads matches Indirect Factory Wages + Factory Rent + Factory Machinery Depreciation + Indirect Materials; Cost of Production matches Prime Cost + Factory Overheads + Opening Work-in-Progress - Closing Work-in-Progress.

Each manufacturing accounting term is correctly paired with its defining formula. Raw materials consumed aggregates direct raw material movements. Prime cost sums all direct inputs. Factory overheads accumulate indirect factory costs. Cost of production incorporates prime cost, factory overheads, and work-in-progress adjustments.

Adım Adım Çözüm

1

Identify the formula for Direct Materials Consumed

Opening stock of raw materials plus purchases plus carriage inwards minus closing stock of raw materials.

Carriage inwards adds to the cost of raw material acquisition, while closing inventory is subtracted to determine net raw material used in production.

2

Determine Prime Cost composition

Sum of all direct costs (Direct Raw Materials + Direct Wages + Direct Expenses).

Prime Cost includes only direct costs traceable directly to units produced.

3

Identify Factory Overheads

Aggregation of indirect manufacturing costs such as indirect labor, factory building rent, factory power, and plant depreciation.

Overheads represent operational costs essential for factory operations but not directly assignable to specific finished goods.

4

Formulate the total Cost of Production

Prime Cost + Factory Overheads + Opening Work-in-Progress - Closing Work-in-Progress.

Cost of production measures the total cost transferred to the trading account for completed goods during the period.

Anahtar Kavram

Preparation of Manufacturing Account and Cost of Production

Tahmini Süre:1m 30s

Preparation of Manufacturing Account and Cost of Production

Cevap

Adım Adım Çözüm

Anahtar Kavram

Sık Yapılan Hatalar

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Sık Yapılan Hatalar

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