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On June 1, 2020, COVID Inc. acquired a raw material inventory with a list price of P5,500 subject to 5% and 2% trade discount payable 1/10, n/30. The related payable was paid on June 10, 2020. At month end, a total of P3,000 and P2,500 of direct labor cost and factory overhead respectively were incurred to convert the item to finished goods. The cost allocation report showed that there were a total of P8,500 prime cost and P5,500 of conversion cost incurred for this item.
Question 1: How much is the initial cost of inventory using net method?
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