Red Company uses normal costing. During the year ended December 31, 2019, the following informationwere made available:- Total manufacturing costs incurred during the year, P2,200,000;Cost of goods manufactured amounted to P1,940,000;Factory Overhead is applied to production at 80% of direct labor cost;Applied Factory Overhead during the year amounted to 30% of total manufacturing cost;Beginning work-in-process inventory was 75% of the work-in-process at the end.Compute for the cost of direct materials used for the year ended December 31, 2019. Plato Company is to submit a bid on the production of 22,500 ceramic plates. It is estimated that the costof materials will be P26,000 and the cost of direct labor will be P30,000. Factory overhead is applied atP2.70 per direct labor hour in the Molding Department and at 35% of the direct labor cost in the DecoratingDepartment. It is estimated that 2,000 direct labor hours, at a cost of P18,000 will be required in theMolding Department. The company wants a markup of 45% of its total production cost.How much will the company bid for the ceramic plates?

Name: Red Company uses normal costing. During the year ended December 31, 2
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Description: Red Company uses normal costing. During the year ended December 31, 2019, the following informationwere made available:- Total manufacturing costs incurred during the year, P2,200,000;Cost of goods manufactured amounted to P1,940,000;Factory Overhea

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Red Company uses normal costing. During the year ended December 31, 2019, the following information were made available: Total manufacturing costs incurred during the year, P2,200,000; Cost of goods manufactured amounted to P1,940,000; - Factory Overhead is applied to production at 80% of direct labor cost; Applied Factory Overhead during the year amounted to 30% of total manufacturing cost; Beginning work-in-process inventory was 75% of the work-in-process at the end. Compute for the cost of direct materials used for the year ended December 31, 2019.

Red Company uses normal costing. During the year ended December 31, 2019, the following information were made available: Total manufacturing costs incurred during the year, P2,200,000; Cost of goods manufactured amounted to P1,940,000; - Factory Overhead is applied to production at 80% of direct labor cost; Applied Factory Overhead during the year amounted to 30% of total manufacturing cost; Beginning work-in-process inventory was 75% of the work-in-process at the end. Compute for the cost of direct materials used for the year ended December 31, 2019.

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Concept explainers

Variance Analysis

In layman's terms, variance analysis is an analysis of a difference between planned and actual behavior. Variance analysis is mainly used by the companies to maintain a control over a business. After analyzing differences, companies find the reasons for the variance so that the necessary steps should be taken to correct that variance.

Standard Costing

The standard cost system is the expected cost per unit product manufactured and it helps in estimating the deviations and controlling them as well as fixing the selling price of the product. For example, it helps to plan the cost for the coming year on the various expenses.

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Question

Red Company uses normal costing. During the year ended December 31, 2019, the following information
were made available:
- Total manufacturing costs incurred during the year, P2,200,000;
Cost of goods manufactured amounted to P1,940,000;
Factory Overhead is applied to production at 80% of direct labor cost;
Applied Factory Overhead during the year amounted to 30% of total manufacturing cost;
Beginning work-in-process inventory was 75% of the work-in-process at the end.
Compute for the cost of direct materials used for the year ended December 31, 2019.

Plato Company is to submit a bid on the production of 22,500 ceramic plates. It is estimated that the cost
of materials will be P26,000 and the cost of direct labor will be P30,000. Factory overhead is applied at
P2.70 per direct labor hour in the Molding Department and at 35% of the direct labor cost in the Decorating
Department. It is estimated that 2,000 direct labor hours, at a cost of P18,000 will be required in the
Molding Department. The company wants a markup of 45% of its total production cost.
How much will the company bid for the ceramic plates?

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