Reference no: EM132758519

The Bulacan Manufacturing Company produces only for customer order and most work is shipped within thirty-six hours of the receipt of an order. Bulacan uses a raw and in process (RIP) inventory account and expenses all conversion costs to the cost of goods sold account. Work is shipped immediately upon completion, so there is no finished goods account. At the end of each month, inventory is counted, its conversion cost component is estimated, and the RIP account balance is adjusted accodingly. Raw material cost is backflushed from RIP to Cost of Goods Sold.

The following information is for the month of May:

Beginning balance of RIP account, including P1,300 of conversion cost P 12,300

Raw materials received on credit 246,000

Ending RIP inventory per physical count, including P2,100 conversion cost estimate 12,100

Problem 1: Compute the amount to be backflushed from RIP to Cost of Goods Sold:

a. P246,000

b. P247,000

c. 246,200

d. 245,000