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Prepare Auchi Polytechnic Paint Manufacturing Account for the year ended 31st December, 2024. For maximum score, indicate; Cost Raw Materials Available for production, Cost of Raw Materials Used for Production, Prime Cost, Total Cost of Production.

Accounting

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Here is the Manufacturing Account for Auchi Polytechnic Paint Manufacturing Company for the year ended 31st December 2024. All figures are in N'000.

Auchi Polytechnic Paint Manufacturing Account
For the year ended 31st December 2024

Step 1: Calculate Net Purchases of Raw Materials.

Raw material purchased=120,000Add: Carriage inward of raw materials=10,000Less: Return outward of raw material=(5,000)Net Purchases of Raw Materials=120,000+10,000−5,000=125,000\begin{align*} \text{Raw material purchased} &= 120,000 \\ \text{Add: Carriage inward of raw materials} &= 10,000 \\ \text{Less: Return outward of raw material} &= (5,000) \\ \text{Net Purchases of Raw Materials} &= 120,000 + 10,000 - 5,000 \\ &= 125,000 \end{align*}

Step 2: Calculate Cost Raw Materials Available for production (i).

Opening Raw materials (1st January, 2024)=30,500Add: Net Purchases of Raw Materials=125,000Cost Raw Materials Available for production=30,500+125,000=155,500\begin{align*} \text{Opening Raw materials (1st January, 2024)} &= 30,500 \\ \text{Add: Net Purchases of Raw Materials} &= 125,000 \\ \text{Cost Raw Materials Available for production} &= 30,500 + 125,000 \\ &= 155,500 \end{align*}

Part i· 1 step

Cost Raw Materials Available for production:* N’000 155,500\boxed{\text{N'000 } \textbf{155,500}}

  1. Calculate Cost of Raw Materials Used for Production (ii).

    Cost Raw Materials Available for production=155,500Less: Closing Raw materials (31st December, 2024)=(25,000)Cost of Raw Materials Used for Production=155,500−25,000=130,500\begin{align*} \text{Cost Raw Materials Available for production} &= 155,500 \\ \text{Less: Closing Raw materials (31st December, 2024)} &= (25,000) \\ \text{Cost of Raw Materials Used for Production} &= 155,500 - 25,000 \\ &= 130,500 \end{align*}

Part ii· 1 step

Cost of Raw Materials Used for Production:* N’000 130,500\boxed{\text{N'000 } \textbf{130,500}}

  1. Calculate Prime Cost (iii).

    Cost of Raw Materials Used for Production=130,500Add: Direct labour - wages=50,000Add: Direct expense=20,000Prime Cost=130,500+50,000+20,000=200,500\begin{align*} \text{Cost of Raw Materials Used for Production} &= 130,500 \\ \text{Add: Direct labour - wages} &= 50,000 \\ \text{Add: Direct expense} &= 20,000 \\ \text{Prime Cost} &= 130,500 + 50,000 + 20,000 \\ &= 200,500 \end{align*}

Part iii· 2 steps

Prime Cost:* N’000 200,500\boxed{\text{N'000 } \textbf{200,500}}

  1. Calculate Factory Overheads.

    Depreciation: Factory machinery=1,500Factory rent=3,000Factory electricity=6,600Total Factory Overheads=1,500+3,000+6,600=11,100\begin{align*} \text{Depreciation: Factory machinery} &= 1,500 \\ \text{Factory rent} &= 3,000 \\ \text{Factory electricity} &= 6,600 \\ \text{Total Factory Overheads} &= 1,500 + 3,000 + 6,600 \\ &= 11,100 \end{align*}

  2. Calculate Total Cost of Production (iv).

    Prime Cost=200,500Add: Total Factory Overheads=11,100Total Manufacturing Cost=200,500+11,100=211,600Add: Work in progress 1/1/2024 (Opening WIP)=40,000Less: Work in progress 31/12/2024 (Closing WIP)=(15,000)Total Cost of Production=211,600+40,000−15,000=236,600\begin{align*} \text{Prime Cost} &= 200,500 \\ \text{Add: Total Factory Overheads} &= 11,100 \\ \text{Total Manufacturing Cost} &= 200,500 + 11,100 \\ &= 211,600 \\ \text{Add: Work in progress 1/1/2024 (Opening WIP)} &= 40,000 \\ \text{Less: Work in progress 31/12/2024 (Closing WIP)} &= (15,000) \\ \text{Total Cost of Production} &= 211,600 + 40,000 - 15,000 \\ &= 236,600 \end{align*}

Part iv

Total Cost of Production:* N’000 236,600\boxed{\text{N'000 } \textbf{236,600}}

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