Mistlo
Nigeria Ltd, a manufacturing drilling company in Ughelli in the year 2010. The
following cost data where available.
Nigeria Ltd, a manufacturing drilling company in Ughelli in the year 2010. The
following cost data where available.
Wages
(labour) 17,200
(labour) 17,200
Salaries
(office) 11,600
(office) 11,600
Electricity
(factory) 2,100
(factory) 2,100
Electricity
(office) 420
(office) 420
Water use in
the factory 1,780
the factory 1,780
Transportation
of finished goods to distributors 2,100
of finished goods to distributors 2,100
Depreciation
of factory equipment 15,000
of factory equipment 15,000
Depreciation
of motor vehicle 2,000
of motor vehicle 2,000
You are
required to compute
required to compute
1.) Prime cost
2.) Factory cost
3.) The selling
and admin overhead cost
and admin overhead cost
4.) The total
cost
cost
5.) Show the
above in a cost statement.
above in a cost statement.
Solution
1.)
MISTLO NIGERIA LTD
COMPUTATION OF PRIME COST FOR THE YEAR 2010
Direct
material (metal) 75,800
material (metal) 75,800
Direct wages
(labour) 17,200
(labour) 17,200
93,000
2)
COMPUTATION OF FACTORY COST FOR THE YEAR 2010
COMPUTATION OF FACTORY COST FOR THE YEAR 2010
Prime cost 93,000
Electricity
(factory) 2,100
(factory) 2,100
Water 1,780
Depreciation of factory equipment 15,000
111,880
3) COMPUTATION
OF SELLING/ADMIN EXPENSES FOR THE YEAR 2010
OF SELLING/ADMIN EXPENSES FOR THE YEAR 2010
Transportation
of finish goods 2,100
of finish goods 2,100
Depreciation
of motor vehicle 2,000
of motor vehicle 2,000
Salaries
(office) 11,600
(office) 11,600
Electricity 420
16,120
4) COMPUTATION
OF TOTAL COST OF PRODUCTION FOR THE YEAR 2010
OF TOTAL COST OF PRODUCTION FOR THE YEAR 2010
Prime cost 93,000
Add factory overhead 18,880
Factory/production cost 111,880
Add
Selling and admin expenses 16,120Total cost of production 128,000
(To get factory
overhead is 111,880 – 93,000 = 18,880)
overhead is 111,880 – 93,000 = 18,880)
5)
MISTLO NIGERIA LTD
MISTLO NIGERIA LTD
COMPUTATION OF THE COST
STATEMENT FOR YEAR 2010
STATEMENT FOR YEAR 2010
Direct material 75,800
Direct Labour 17,200Prime cost 93,000
Add
Electricity
(Factory) 2,100
(Factory) 2,100
Water 1,780
Depreciation of factory equipment 15,000 18,880
Factory
overhead 111,880
overhead 111,880
Add
Transportation
of finished goods 2,100
of finished goods 2,100
Depreciation
of motor vehicle 2,000
of motor vehicle 2,000
Salaries
(office) 11,600
(office) 11,600
Electricity
420
420
Selling/Admin expenses 16,120Total Cost of Production 128,000
