Century Tuna Company incurred the following costs and expenses during the current year:

Raw materials purchase P 4,000,000

Direct labor 1,500,000
Indirect labor – factory 800,000
Factory repairs and maintenance 200,000
Taxes on factory building 100,000
Depreciation – factory building 300,000
Taxes on salesroom and general office 150,000
Depreciation – sales equipment 50,000
Advertising 400,000
Sales salaries 500,000
Office salaries 700,000
Utilities – 60% applicable to factory overhead 500,000

Beginning Ending
Raw materials 300,000 450,000
Work in process 400,000 350,000
Finished goods 500,000 700,000

3.1. What is the cost of raw materials used?

a. P 3,850,000 c. P 4,150,000
b. P 4,000,000 d. P 4,750,000

3.2. What is the cost of goods manufactured for the current year?
a. P 7,450,000 c. P 7,100,000
b. P 7,200,000 d. P 7,300,000

3.3. What is the cost of goods sold for the current year?
a. P 7,300,000 c. P 7,600,000
b. P 6,900,000 d. P 8,300,000
Solution:

Beginning raw materials 300,000

Raw material purchases 4,000,000
Raw materials available for use 4,300,000
Ending raw materials (450,000)
Raw materials used 3,850,000
Direct labor 1,500,000
Factory overhead:
Indirect labor 800,000
Factory repairs and maintenance 200,000
Taxes on factory building 100,000
Depreciation — factory building 300,000
Utilities (60% x 500,000) 300,000 1,700,000
Total manufacturing cost 7,050,000
Beginning work in process 400,000
Ending work in process (350,000)
Cost of goods manufactured 7,100,000
Beginning finished goods 500,000
Goods available for sale 7,600,000
Ending finished goods (700,000)
Cost of goods sold 6,900,000