Kardo Company has material cost in June 1 Materials and in process Inventory account of P10, 000. Materials received during June amounts to P205, 000 and material cost in June 30 Materials and in Process account amounts to P12, 500. The amount to be backflushed from Materials and In Process account to Finished Goods Inventory Account at the end of June would be:

INTRODUCTION TO COST ACCOUNTING

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

A	P215, 000
B	P202, 500
C	P207, 500
D	P217, 500

Explanation:

Detailed explanation-1: -A costing schedule is used to quantify all the costs which are expected to be incurred in the production process. In other words, it is a production budget for which actual production is measured against.

Detailed explanation-2: -Add the total cost of materials purchases in the period to the cost of beginning inventory, and subtract the cost of ending inventory. The result is the cost of direct materials incurred during the period.

Detailed explanation-3: -As direct materials, direct labor, and overhead are introduced into the production process, they become part of the work in process inventory value.

Detailed explanation-4: -Probtype Incorporated requires an average lead time of 45 days on customer orders that require parts not kept in stock. When such a customer order is received, the parts order is placed with a vendor immediately by telephone, and the parts are received in an average of 21 days.

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