Marawi Company employs normal costing for its production, meaning factory overhead is applied toproduction instead of actual costs. The following data are provided during the current year:Net purchases of raw materials during the year P500.000Total labor costs during the yearDepreciation of factory assets during the yearUtilities on the factory during the year800.000100,000300,000Beginning EndingP200,000 300,000Raw materials inventoryWork in process inventoryFinished goods inventory500,000 200,000600,000 300,000The entity uses a single account for its direct materials and indirect materials. Indirect materialsused is one fourth of the total 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.A) What is the total manufacturing cost during the currentyear?B) What is the cost of goods manufactured during thecurrent year?

Cost of goods manufactured means total costs incurred on manufacturing of goods. It includes direct…

Answered: Marawi Company employs normal costing…

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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