5. On May 31, 2019, a fire completely destroyed the work-in-process inventory of Adler Paints. Physical inventory figures were published as follows: As of January 1, 2019AS of May 31, 2019 P15,000 P50,000 Raw Materials P 30,000 Work-in-process Finished Goods P70,000 P 60,000 Sales for the first five months of 2019 were P150,000. Raw materials purchased were P50,000. Freight on purchases was P5,000. Direct labor for the five months was P40,000. To determine the value of the lost inventory, the insurance adjusters have agreed to use an average gross profit rate of 32.5%. Assume that manufacturing overhead was 45% of direct labor cost. A. Compute the value of the destroyed work-in-process inventory as determined by the insurance adjusters.

FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
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5. On May 31, 2019, a fire completely destroyed the work-in-process inventory of Adler
Paints. Physical inventory figures were published as follows:
As of January 1, 2019AS of May 31, 2019
P15,000
P50,000
Raw Materials
P 30,000
Work-in-process
Finished Goods
P70,000
P 60,000
Sales for the first five months of 2019 were P150,000. Raw materials purchased were
P50,000. Freight on purchases was P5,000. Direct labor for the five months was P40,000. To
determine the value of the lost inventory, the insurance adjusters have agreed to use an average
gross profit rate of 32.5%. Assume that manufacturing overhead was 45% of direct labor cost.
A. Compute the value of the destroyed work-in-process inventory as determined by the
insurance adjusters.
Transcribed Image Text:5. On May 31, 2019, a fire completely destroyed the work-in-process inventory of Adler Paints. Physical inventory figures were published as follows: As of January 1, 2019AS of May 31, 2019 P15,000 P50,000 Raw Materials P 30,000 Work-in-process Finished Goods P70,000 P 60,000 Sales for the first five months of 2019 were P150,000. Raw materials purchased were P50,000. Freight on purchases was P5,000. Direct labor for the five months was P40,000. To determine the value of the lost inventory, the insurance adjusters have agreed to use an average gross profit rate of 32.5%. Assume that manufacturing overhead was 45% of direct labor cost. A. Compute the value of the destroyed work-in-process inventory as determined by the insurance adjusters.
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