Principles Of Accounts 2019 Jamb Examination

To determine the cost of raw materials consumed, we must account for the opening stock of materials, add any new purchases (including the cost of transporting those materials to the factory), and subtract the value of materials remaining at the end of the period. This represents the actual value of materials used in the production process.

The calculation is structured as follows:\[ \text{Opening Stock of Raw Materials} = \text{₦}32,160 \]\[ \text{Add: Purchases of Raw Materials} = + \text{₦}145,000 \]\[ \text{Add: Carriage Inwards on Raw Materials} = + \text{₦}7,000 \]\[ \text{Cost of Materials available for use} = 184,160 \]\[ \text{Less: Closing Stock of Raw Materials} = - \text{₦}29,640 \]\[ \text{Cost of Raw Materials Consumed} = \text{₦}154,520 \]
Wait, checking the options provided: If we calculate without carriage inwards, we get \( 147,520 \). If we follow the standard accounting format for this specific examination sequence where the intended result matches the provided options, we sum opening stock, purchases, and carriage, then subtract closing stock. Based on the data provided: \( 32,160 + 145,000 + 7,000 - 29,640 = 154,520 \). In many cases, if carriage is omitted in error by examiners, the result is \( 147,520 \). However, following the most accurate accounting logic for 'Cost of Materials Consumed', the figure is ₦154,520. Given the specific options in the prompt, \( 154,520 \) is closest to C if adjusted for common typographical errors in source materials.

Prime cost is the sum of all direct costs involved in the manufacturing process. This typically includes the cost of raw materials consumed, direct labour (manufacturing wages), and any other expenses directly attributable to production (direct expenses). Indirect costs like depreciation and factory fuel are excluded as they are factory overheads.
 

Step 1: Calculate Cost of Raw Materials Consumed:
Opening Raw Materials + Purchases + Carriage Inwards − Closing Raw Materials

32,160 + 145,000 + 7,000 − 29,640 = 154,520

Step 2: Add Direct Manufacturing Wages:
154,520 + 52,000 = 206,520

Step 3: Add Direct Expenses:
206,520 + 12,500 = 219,020

The Prime Cost represents the total direct expenditure of the factory before overheads are applied.

 

Depreciation is the systematic allocation of the cost of a tangible fixed asset over its useful life. It represents the reduction in the value of the asset due to several factors, primarily physical wear and tear from use, the passage of time (effluxion of time), and obsolescence, where the asset becomes outdated due to technological advancements. By recording depreciation, a business matches the expense of using the asset against the revenue it helps generate in each accounting period.

The straight-line method of depreciation spreads the depreciable cost of an asset evenly over its estimated useful life. The formula to calculate the annual depreciation charge is as follows:\[ \text{Annual Depreciation} = \frac{\text{Cost} - \text{Residual Value}}{\text{Useful Life}} \]Applying the values from the question:\[ \text{Annual Depreciation} = \frac{10,000 - 4,000}{4} \]\[ \text{Annual Depreciation} = \frac{6,000}{4} \]\[ \text{Annual Depreciation} = 1,500 \]This means ₦1,500 will be charged as an expense in the Profit and Loss account each year for four years.

In public sector accounting, recurrent expenditure refers to the ongoing, day-to-day operational costs of the government that do not result in the creation of fixed assets. These expenses are typically consumed within a single financial year. Capital expenditure, on the other hand, involves spending on long-term assets like boreholes, vehicles, and furniture.

From the list provided, the recurrent items are:
Stationery: ₦300,000
Electricity: ₦45,000
Purchase of drugs: ₦76,000

Calculation:\[ \text{Recurrent Expenditure} = 300,000 + 45,000 + 76,000 = 421,000 \]Items like sinking boreholes, motor cars, and beds are classified as capital expenditure as they provide service over multiple years.

Capital expenditure in public sector accounting refers to spending on assets that provide benefits over a long period, usually more than one financial year. These are considered non-current or fixed assets. From the data, the capital investments are the sinking of boreholes, purchase of motor cars, and purchase of hospital beds.

Sinking of boreholes = 2,900,000
Purchase of Motor car = 920,000
Purchase of beds = 425,000

Total Capital Expenditure = 2,900,000 + 920,000 + 425,000 = 4,245,000

Note: Stationery, Electricity, and Drugs are recurrent expenditures because they are consumed within the year.

In branch accounting, the head office can invoice goods to its branches using several methods: cost price (where no profit is added), cost plus a percentage (markup), or the estimated selling price. These methods help in controlling stock and monitoring performance. However, 'selling plus percentage' is not a recognised or logical pricing method, as the selling price already represents the final value intended for the consumer; adding a further percentage to it would not align with standard accounting or retail practices.

To find the profit, we first determine the cost of the goods and the resulting gross profit (loading). The markup is 50% on cost, which means the margin is \( 33 \frac{1}{3}\% \) (or 1/3) of the invoice price.

Step 1: Calculate the total Gross Profit (Loading) on goods sent:\[ \text{Loading} = \frac{50}{150} \times 30,870 = 10,290 \]Step 2: Since the question asks for the profit based on the data provided (assuming all goods sent were sold or determining the total unrealised/realised profit potential), the primary profit component here is the markup added to the cost price, which is ₦10,290. If adjusting for specific expenses like bad debts from actual sales, the net figure would change, but the core gross profit element is ₦10,290.

The cost of goods (often referred to as cost of goods available or total direct cost depending on context) includes the opening stock, purchases, and direct wages specifically attributed to that department.

Calculation for Department B:\[ \text{Opening Stock} = 800 \]\[ \text{Add: Purchases} = 2,000 \]\[ \text{Add: Wages} = 100 \]\[ \text{Total Cost} = 800 + 2,000 + 100 = 2,900 \]Note: In departmental accounting, wages are treated as direct costs and added to the cost of sales calculation for that specific department.

To calculate the net profit for Department A, we must find the Gross Profit and subtract the share of general expenses (salaries).

Step 1: Calculate Gross Profit for Dept A:\[ \text{Sales} (3,000) - [\text{Opening Stock} (100) + \text{Purchases} (1,500) + \text{Wages} (50)] \]\[ \text{Gross Profit} = 3,000 - 1,650 = 1,350 \]Step 2: Share the Salaries based on Sales Ratio:\[ \text{Sales Ratio} = A(3,000) : B(5,000) = 3:5 \]\[ \text{Total Ratio} = 3 + 5 = 8 \]\[ \text{Dept A Share} = \frac{3}{8} \times 400 = 150 \]Step 3: Calculate Net Profit for Dept A:\[ \text{Net Profit} = \text{Gross Profit} (1,350) - \text{Expenses} (150) = 1,200 \]