Question Tag: Trade Discount

Ebuka and Sons Enterprises is a manufacturing business entity that imports some of its raw materials from overseas. The business recently took delivery of some materials as detailed below:

1. 2,000kg of materials at ₦625 per kg subject to a trade discount of 5%.
2. Import duties and other non-recoverable taxes paid amounted to ₦266,000.
3. A 3% early payment discount allowance enjoyed by the enterprise amounted to ₦37,500.
4. Delivery cost on materials imported from the custom warehouse to the production plant is ₦125,000.
5. 3,500kg of local materials at ₦250 per kg subject to a trade discount of ₦50,000.
6. Carriage inwards on local materials purchased was ₦205,000.
7. Special toll fare paid to the commodity board for local materials purchased was ₦25,000.

Required:
i. Calculate the total cost of inventory of raw materials. (3 Marks)
ii. It is estimated that these materials can produce 5,000 units of the finished product. Calculate the material cost per unit of the finished product. (2 Marks)