During the month of September, FX Corporation incurred P30, 00 of factory overhead, P40, 000 of direct labor, and purchased P25, 000 of raw materials. Between the beginning and end of the month, the raw materials and work in process inventories decrease by P4, 000 and P3, 000 respectively. How much are the total manufacturing cost used?

INTRODUCTION TO COST ACCOUNTING

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Question [CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]

A	P91, 000
B	P99, 000
C	P88, 000
D	P102, 000

Explanation:

Detailed explanation-1: -Correct Answer: D. Finished goods inventory has decreased during the period. Based on the formula above, if cost of goods sold is more than the cost of goods manufactured, finished goods inventory will be decreased for an amount that is more than its increase.

Detailed explanation-2: -The formula for computation of the purchase is: Purchase in units = Usage + Desired ending material inventory units − Beginning inventory units. The direct material budget is usually accompanied by a computation of expected cash payments for materials. Given.

Detailed explanation-3: -Example of Product Costs Direct material: The cost of wood used to create the tables. Direct labor: The cost of wages and benefits for the carpenters to create the tables. Manufacturing overhead (indirect material): The cost of nails used to hold the tables together.

Detailed explanation-4: -If the finished goods inventory increases between the beginning and the end of a period, then the cost of goods manufactured is smaller than the cost of goods sold.

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