On June 6, 2020, a fire destroyed totally the raw materials bodega of GEE Manufacturing Corporation. There were no purchases of raw materials from the time of the fire until June 30, 2020. The accounting records show the following data: Sales - P2,400,000; Purchases of raw materials - P800,000, Freight-in for raw materials - P30,000; Direct labor - P440,000; Manufacturing overhead – 75% of direct labor; Gross profit rate - 35% on sales. Additional information is as follows: INVENTORIES July 1, 2019 June 30, 2020 Raw materials 180,000 Goods in process Finished goods 370,000 420,000 440,000 450,000

On June 6, 2020, a fire destroyed totally the raw materials bodega of GEE Manufacturing Corporation. There were no purchases of raw materials from the time of the fire until June 30, 2020. The accounting records show the following data: Sales - P2,400,000; Purchases of raw materials - P800,000, Freight-in for raw materials - P30,000; Direct labor - P440,000; Manufacturing overhead – 75% of direct labor; Gross profit rate - 35% on sales. Additional information is as follows: INVENTORIES July 1, 2019 June 30, 2020 Raw materials 180,000 Goods in process Finished goods 370,000 420,000 440,000 450,000

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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Concept explainers

Manufacturing Costs

Manufacturing cost is the total cost of procuring or producing a product. In other words, the manufacturing cost is the cost that an individual or business owner undertakes for the manufacturing of goods.

Question

1. How much is the cost of goods manufactured?

2.How much is the total manufacturing cost?

3. What is the cost of the raw materials destroyed by fire?

Show the solution in good accounting form

On June 6, 2020, a fire destroyed totally the raw materials bodega of GEE Manufacturing
Corporation. There were no purchases of raw materials from the time of the fire until June 30,
2020. The accounting records show the following data: Sales - P2,400,000; Purchases of raw
materials - P800,000, Freight-in for raw materials - P30,000; Direct labor - P440,000;
Manufacturing overhead – 75% of direct labor; Gross profit rate - 35% on sales. Additional
information is as follows:
INVENTORIES
July 1, 2019
June 30, 2020
Raw materials
180,000
Goods in process
Finished goods
370,000
420,000
440,000
450,000

Definition Definition Total cost of procuring or producing a product or the cost that an individual or business owner undertakes for the manufacturing of goods.

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