P1-8 During the year 2015, Lowell Manufacturing Corporation purchased raw materials of P126,000 and incurred manufacturing overhead (including indirect materials of P10,000) totaling P210,000 which is equal to 150% of direct labor cost. During the year, Lowell generated total sales of P617,000 with 40% gross margin. Selling expenses were 10% of sales while general and administrative expenses amounted to P40,000. Inventories are summarized below: Finished goods Work in process January 1 P 80,000 150,000 December 31 P 132,000 275,000 150,000 Raw materials ? Assume 30% effective income tax rate. Required: а. Calculate the amount of raw materials inventory at January 1, 2015 b. Calculate the net income for the year 2015.

P1-8 During the year 2015, Lowell Manufacturing Corporation purchased raw materials of P126,000 and incurred manufacturing overhead (including indirect materials of P10,000) totaling P210,000 which is equal to 150% of direct labor cost. During the year, Lowell generated total sales of P617,000 with 40% gross margin. Selling expenses were 10% of sales while general and administrative expenses amounted to P40,000. Inventories are summarized below: Finished goods Work in process January 1 P 80,000 150,000 December 31 P 132,000 275,000 150,000 Raw materials ? Assume 30% effective income tax rate. Required: а. Calculate the amount of raw materials inventory at January 1, 2015 b. Calculate the net income for the year 2015.

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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