₦Manufacturing wages42,000Factory rent880Raw materials: Stock 1/1/161,000Purchases16,000Stock 31/12/161,400Depreciation of Plants and…

JAMB Accounting 2023 46 views

₦Manufacturing wages42,000Factory rent880Raw materials: Stock 1/1/161,000Purchases16,000Stock 31/12/161,400Depreciation of Plants and…

₦
Manufacturing wages 42,000
Factory rent 880
Raw materials: Stock 1/1/16 1,000
Purchases 16,000
Stock 31/12/16 1,400
Depreciation of Plants and Machinery 800
Royalties 300
Indirect wages 18,000
General indirect expenses 620

What is the value of the indirect manufacturing cost?

  1. ₦57,900
  2. ₦23,000
  3. ₦20,300 ✓
  4. ₦18,200

Explanation

Indirect manufacturing costs (factory overheads) include: Factory rent ₦880 + Depreciation ₦800 + Indirect wages ₦18,000 + General indirect expenses ₦620 = ₦20,300.

These are overhead costs that support production but aren’t directly traceable to specific products. Prime cost (₦57,900) is separate and includes only direct costs.

Remember: Indirect costs = overheads that keep the factory running but don’t directly make products.

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