Use the following information to answer the given question
\(\begin{array}{c|c} & N \\ \hline \text{Opening stock of raw materials} & 8,000\\ \text{Purchases} & 45,000 \\ \text{Closing stock of raw materials} & 9,500 \\ \text{Direct wages} & 6,450 \\ \text{Indirect wages} & 2,800 \\ \text{Depreciation - Plant and Machinery} & 3,200 \\ \text{Factory rents and rates} & 350 \\ \text{Opening work-in-progress} & 3,250 \\ \text{Closing work-in-progress} & 3,750\end{array}\)
Production cost is
The correct answer is C. N55,800
The production cost is calculated as follows:
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Cost of raw materials used = Opening stock of raw materials + Purchases - Closing stock of raw materials = 8,000 + 45,000 - 9,500 = 43,500
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Prime cost = Cost of raw materials used + Direct wages = 43,500 + 6,450 = 49,950
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Factory overheads = Indirect wages + Depreciation - Plant and Machinery + Factory rents and rates = 2,800 + 3,200 + 350 = 6,350
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Total factory cost = Prime cost + Factory overheads = 49,950 + 6,350 = 56,300
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Cost of production = Total factory cost + Opening work-in-progress - Closing work-in-progress = 56,300 + 3,250 - 3,750 = 55,800
So, the correct answer is C. N55,800.
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