JAMB Accounts Principles of Accounts 2024 Paper

Concept:Factory overhead is the total of all indirect expenses incurred in the production department during a period.These costs cannot be traced directly to a single unit of product.Examples include indirect wages, plant depreciation, and factory rent.Explanation:Factory overhead is calculated by adding all the indirect factory costs that appear in the balances given.The relevant items from the books of Oluwalambe Ltd are:Indirect wages: $\#28{,}000$Depreciation on plant: $\#32{,}000$Factory rent: $\#3{,}500$Add these amounts together to find the total factory overhead:$\#28{,}000 + \#32{,}000 + \#3{,}500 = \#63{,}500$Direct materials and direct labour are excluded, because they are prime costs, not factory overhead.Therefore, the factory overhead cost for the year ended 31st December 2007 is $\#63{,}500$.Answer:The factory overhead cost is $\#63{,}500$.Hence, the correct option is A.