Reference no: EM132770441

Paz Company has a cycle of 3 days, uses a Raw and In Process Account (RIP) and charges all conversion costs to cost of goods sold. At the end of each month, all inventories are counted, conversion costs components are estimated and inventory account balances are adjusted. Raw material cost is backflused from Raw and in Process (RIP) Account to finished goods.

The following information is provided for the month of June:

Beginning Balance of RIP Account, including P2,000 conversion cost...................10,000
Begging Balance of finished goods account including P12,000 conversion cost.........20,000
Raw materials received on credit............................800,000
Direct labor cost...............600,000
Factory overhead applied............1,000,000
Ending RIP inventory per physical count, including P14,000 conversion cost............40,000
Ending finished goods inventory per physical count, including P8,000 conversion cost.............12,000

Problem 1: What is the amount of direct materials backflused from RIP to finished goods?