Reference no: EM132532006
Question - An entity employs normal costing for its production. The following data are provided during the year:
Net purchases of raw materials during the year P500,000
Total labor costs during the year 800,000
Depreciation of factory assets during the year 100,000
Utilities on the factory during the year 300,000
Beginning Ending
Raw materials inventory P200,000 P300,000
Work in process inventory 500,000 200,000
Finished goods inventory 600,000 300,000
Additional notes are provided:
The entity uses a single account for its direct material and indirect materials. Direct material used is three times the indirect material used.
The indirect labor cost is 1/8 of the total labor costs.
The overhead application rate is 80% of direct labor costs.
Any over or under application of overhead is considered material.
Required -
1. What is the cost of goods manufactured during the year?
2. What is the cost of goods manufactured during the year?