Neco Model Questions Vol1 2024 Financial Accounting Question 22

Given the following data for a manufacturing company for the month, compute the gross profit after adjusting for over‑ or under‑applied overhead. - Opening raw‑materials inventory: ₦15,000 - Purchases of raw materials: ₦45,000 - Direct labour incurred: ₦30,000 - Manufacturing overhead is applied at 150 % of direct labour cost. - Closing raw‑materials inventory: ₦10,000 - Opening work‑in‑process (WIP): ₦20,000; closing WIP: ₦12,000 - Opening finished‑goods inventory: ₦25,000; closing finished‑goods inventory: ₦30,000 - Sales revenue: ₦120,000 - Selling and distribution expenses: ₦15,000 - Administrative expenses: ₦10,000 - Actual overhead incurred: ₦48,000 Determine the amount of under‑applied overhead and the resulting gross profit (sales less adjusted cost of goods sold).