Velasquez Company has a cycle time of 4 days, uses Raw and In Process account (RIP) and expenses all conversion costs to Cost of Goods Sold. At the end of each month, all inventories are counted; their conversion components are estimated and inventory account balances are adjusted accordingly. Raw materials is backflushed from RIP to Finished Goods. The following information is for the month of October: RIP beginning, including P10,000 of conversion cost, P35,000; FG beginning, including P6,800 of conversion cost; P30,000; Raw materials purchased on account, P225,000; RIP end, including P13,700 of conversion cost, P23,500; FG end, including P11,100 of conversion cost, P14,800. Direct labor P175,000; Factory overhead P220,000.
Velasquez Company has a cycle time of 4 days, uses Raw and In Process account (RIP) and expenses all conversion costs to Cost of Goods Sold. At the end of each month, all inventories are counted; their conversion components are estimated and inventory account balances are adjusted accordingly. Raw materials is backflushed from RIP to Finished Goods. The following information is for the month of October: RIP beginning, including P10,000 of conversion cost, P35,000; FG beginning, including P6,800 of conversion cost; P30,000; Raw materials purchased on account, P225,000; RIP end, including P13,700 of conversion cost, P23,500; FG end, including P11,100 of conversion cost, P14,800. Direct labor P175,000; Factory overhead P220,000.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Velasquez Company has a cycle time of 4 days, uses Raw and In Process account (RIP) and expenses all conversion costs to Cost of Goods Sold. At the end of each month, all inventories are counted; their conversion components are estimated and inventory account balances are adjusted accordingly. Raw materials is backflushed from RIP to Finished Goods. The following information is for the month of October: RIP beginning, including P10,000 of conversion cost, P35,000; FG beginning, including P6,800 of conversion cost; P30,000; Raw materials purchased on account, P225,000; RIP end, including P13,700 of conversion cost, P23,500; FG end, including P11,100 of conversion cost, P14,800. Direct labor P175,000; Factory overhead P220,000. What is the amount of conversion costs in the cost of goods sold account?
a.P646,700
b.P395,000
c.P387,000
d.P259,700
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