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Answers to supplementary objective test questions

CHAPTER 15 – THE MANUFACTURING ACCOUNT

15.1 Factory cost of goods completed is found as follows:

$
Opening inventory of raw materials 20,000
Purchases of raw materials 100,000
Less: closing inventory of raw materials (22,000)

–––––––
98,000
Direct wages 80,000
–––––––
Prime cost 178,000

Production overheads 120,000
–––––––
298,000
Less: Increase in work in progress (4,000 – 8,000) (4,000)

–––––––
Factory cost of goods completed 294,000

15.2 C

An increase in work in progress means more goods are partly complete, thus
the value of completed goods will be lower. A and B are incorrect as work in
progress has no effect on prime cost.

CHAPTER 16 – INCOMPLETE RECORDS

16.1 $2,160,000

$ $ %
Sales (100/70 × $1,512,000) 2,160,000 100
Cost of sales
Opening inventory 154,000

Purchases 1,526,000
Closing inventory (168,000) (1,512,000) 70
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648,000 30

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