NABTEB Accounting 2024 Theory — Question 16

Model answer

Essyway Limited Manufacturing, Trading, Profit and Loss Account for the year ended 31 December 2021 (GH¢): Opening stock of raw material 60,400; Add purchases of raw material 140,500; Cost of raw material available for use 200,900; Less closing stock of raw material 52,600; Cost of raw material consumed 148,300; Add direct labour 70,300; Direct expenses 10,000; Prime cost 228,600; Add factory overhead expenses (depreciation of P/M 34,400; factory rent (3/5x12,000) 7,200; factory rent (3/5x13,000) 7,800; depreciation of vehicles 1,360) = 271,360; Add opening WIP 45,000; Less closing WIP 40,200; Cost of production 276,160. Sales 342,000; Cost of production 276,160; Add opening stock finished goods 39,200; Cost of goods available for sale 315,360; Less closing stock 20,900; Cost of goods sold 294,460; Gross profit 47,540. Less expenses: office rent (2/5x12,000) 4,800; office electricity (2/5x13,000) 5,200; depreciation of vehicles (2/5x5,600) 2,240; delivery expenses 10,000; discount allowed 5,000; Net profit c/d 20,300.