Reference no: EM132807981

Karen Factory started operations in 2010. It manufactures bath towels. 60% of the production are "Class A" which sell for P500 per dozen and 40% are "Class B" which sell for P250 per dozen. During 2018, 6,000 dozens were produced at an average cost of P360 per dozen. The inventory at the end of the year was as follows:

220 dozens "C1ass A" @ P360 P 79,200

300 dozens "Class B" @ P360 108,000

Using the relative sales value method, which management considers as a more equitable basis of cost distribution, answer the following:

Problem 1: How much of the total cost should be allocated to Class A

Problem 2: How much of the total cost should be allocated to Class B

Problem 3: How much is the value of the inventory as of December 31, 2018

Problem 4: How much is the cost of sale as of December 31, 2018

Problem 5: How much is the gross profit in 2018?