The following balances was exgtracted from the books of Oluwalambe Ltd, manufacturer, on 31st December 2007
| Stock of raw materials 1 – 1 – 2007 | 8000 |
|
Purchase of raw materials |
450000 |
|
Stock of raw materials 31 – 12 – 2007 |
95000 |
|
Direct wages |
65000 |
|
Indirect wages |
28000 |
|
Depreciation on plants |
32000 |
|
Factory rent |
3500 |
|
Work in progress 1- 1- 2007 |
32500 |
|
Work in progress 31 – 12- 2007 |
37500 |
Factory overhead cost is
-
#63,500
- #68,500
- #58,500
- #12,800
The correct answer is: A
Explanation
Factory Overhead Cost = Indirect Wages + Depreciation on Plants + Factory Rent
Factory Overhead Cost = #28,000 + #32,000 + #3,500
Factory Overhead Cost = #63,500