Reference no: EM132597780

Part of the inventory of the Jac Manufacturing Company was damaged in the October 15, 20x0 fire. The inventories on January 1, 20x0 were: Finished goods, P2,000,000; Work in process, 1,500,000; Raw materials, 1,800,000; Factory supplies, 650,000. Raw material purchases from January 1 to October 15, 20x0 were P14,500,000 with freight-in of P250,000. Direct labor cost amounted to P4,800,000 and manufacturing overhead was applied at 80% of direct labor cost. Sales were P35,000,000. A physical count of the inventories saved revealed that they had an aggregated value of P6,150,000 consisting of finished goods of P3,000,000, raw materials of P2,700,000, and factory supplies of P450,000. Factory supplies were not affected. The gross profit rate for the last five years was maintained at 40% of sales.

Question 1: Determine the estimated value of the inventory burned on October 15, 20x0.