Given: N - Prime cost N220,000,
Factory cost N32,000, Work in progress at beginning N25,000, Work In progress at close N19,000, Administrative expenses N21,000, Determine the production cost.
Factory cost N32,000, Work in progress at beginning N25,000, Work In progress at close N19,000, Administrative expenses N21,000, Determine the production cost.
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Correct Answer: Option C
Explanation:
To determine the production cost, we use the following information:
- Prime Cost = ₦220,000
- Factory Cost = ₦32,000
- Work in Progress (beginning) = ₦25,000
- Work in Progress (end) = ₦19,000
- Administrative Expenses (not needed for production cost)
Formula for Production Cost:
\[
\text{Production Cost} = \text{Prime Cost} + \text{Factory Cost} + \left( \text{Opening Work in Progress} - \text{Closing Work in Progress} \right)
\]
Calculation:
\[
\text{Production Cost} = 220,000 + 32,000 + (25,000 - 19,000)
\]
\[
\text{Production Cost} = 220,000 + 32,000 + 6,000
\]
\[
\text{Production Cost} = ₦258,000
\]
To determine the production cost, we use the following information:
- Prime Cost = ₦220,000
- Factory Cost = ₦32,000
- Work in Progress (beginning) = ₦25,000
- Work in Progress (end) = ₦19,000
- Administrative Expenses (not needed for production cost)
Formula for Production Cost:
\[
\text{Production Cost} = \text{Prime Cost} + \text{Factory Cost} + \left( \text{Opening Work in Progress} - \text{Closing Work in Progress} \right)
\]
Calculation:
\[
\text{Production Cost} = 220,000 + 32,000 + (25,000 - 19,000)
\]
\[
\text{Production Cost} = 220,000 + 32,000 + 6,000
\]
\[
\text{Production Cost} = ₦258,000
\]