NBA Inc. is engaged in the business of manufacturing basket balls. The company employs actual costing
system. The company uses a single account for direct and indirect materials. The company provided the
following data for the year ended December 31, 2016:
Gross sales 9,500,000
Sales return 500,000
Gross purchase 1,000,000
Purchase returns, allowance and discount. 200,000
Freight in. 400,000
Total costs of factory labor 1,000,000
Depreciation of factory assets 300,000
Expired insurance of factory assets 100,000
Utilities expense on factory 500,000
Total administrative expenses 2,000,000
Total marketing expenses 3,000,000
Inventories are as follows:
January 1 December 31
Raw materials 100,000 300,000
Work in process. ? 200,000
Finished goods. 500,000 600,000
The following additional data are provided:
1. The net profit ratio of the company before income tax for the year ended December 31, 2016
was 10% of net sales.
2. The direct labor costs for the year was four times the cost of indirect labor
3. The cost of indirect materials used was P100,000
1. What is the total prime cost?
A. 1,700,000
B. 2,000,000
C. 1,800,000
D. 1,900,000
2. What is the total conversion cost?
A. 2,000,000
B. 1,900,000
C. 2,100,000
D. 2,200,000
3. What is the cost of goods manufactured?
A. 3,200,000
B. 3,100,000
C. 3,300,000
D. 3,000,000
4. What are the cost of goods sold and the cost of work in process on January 1, 2016, respectively?
A. 3,100,000 and 500,000
B. 3,200,000 and 300,000
C. 3,000,000 and 400,000
D. 2,900,000 and 600,000