Neco 2019 Financial Accounting Question 40

Practice objective / multiple choice question 40 from the 2019 Neco Financial Accounting examination.

Neco 2019 Financial Accounting Objective / Multiple Choice Hard Difficulty
Question 40 NECO • 2019 • FINANCIAL_ACCOUNTING • objective

The following data relate to a manufacturing concern for the year:\n- Opening raw materials \(\text{₦}120,000\), purchases of raw materials \(\text{₦}300,000\), closing raw materials \(\text{₦}100,000\).\n- Direct labour \(\text{₦}200,000\). Overhead is applied at 150% of direct labour.\n- Actual overhead incurred \(\text{₦}340,000\).\n- Opening work‑in‑progress (WIP) \(\text{₦}80,000\), closing WIP \(\text{₦}70,000\).\n- Opening finished goods \(\text{₦}150,000\), closing finished goods \(\text{₦}130,000\).\n- Units produced and sold: 800 units. Selling price per unit \(\text{₦}1,200\).\nCalculate: (a) Total manufacturing cost, (b) Cost of goods manufactured, (c) Cost of goods sold, (d) Gross profit, and (e) Overhead variance (state whether under‑ or over‑applied).

Answer Options

Correct Answer A. Total manufacturing cost = \(\text{₦}820,000\); Cost of goods manufactured = \(\text{₦}830,000\); Cost of goods sold = \(\text{₦}850,000\); Gross profit = \(\text{₦}110,000\); Overhead variance = \(\text{₦}40,000\) under‑applied.
B. Total manufacturing cost = \(\text{₦}800,000\); Cost of goods manufactured = \(\text{₦}820,000\); Cost of goods sold = \(\text{₦}840,000\); Gross profit = \(\text{₦}120,000\); Overhead variance = \(\text{₦}20,000\) over‑applied.
C. Total manufacturing cost = \(\text{₦}810,000\); Cost of goods manufactured = \(\text{₦}820,000\); Cost of goods sold = \(\text{₦}845,000\); Gross profit = \(\text{₦}115,000\); Overhead variance = \(\text{₦}10,000\) over‑applied.
D. Total manufacturing cost = \(\text{₦}830,000\); Cost of goods manufactured = \(\text{₦}840,000\); Cost of goods sold = \(\text{₦}860,000\); Gross profit = \(\text{₦}100,000\); Overhead variance = \(\text{₦}30,000\) under‑applied.
Correct Answer
A
Correct Option:
Total manufacturing cost = \(\text{₦}820,000\); Cost of goods manufactured = \(\text{₦}830,000\); Cost of goods sold = \(\text{₦}850,000\); Gross profit = \(\text{₦}110,000\); Overhead variance = \(\text{₦}40,000\) under‑applied.

About This Question

This is Neco 2019 Financial Accounting Question 40. It is one of the objective questions from the 2019 Neco Financial Accounting examination.

Difficulty level: Hard .

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