WALANG FOREVER just started operations on January 1, 2017. During its first year, 80,000 units were put into production and the following costs were incurred:
Raw materials purchased P 130,000
Salaries of workers in production 201,000
Salaries of factory supervisor and security personnel 38,000
Utilities (water and electricity incurred) 20,000
Only 80% of the raw materials purchased were put into production and 20% of those used were indirectly traceable to the product. As per physical count at December 31, 2017, there are only 5,255 units in the production are where they are 59% complete, and 60,000 are in the warehouse ready to be sold. The company usually expects that 10% of those started will be spoiled after the production period.
Direct materials are added 3/5 when unit is 2% complete, 25% when it is 98% complete and excess is added at the end. Direct labor and overhead is incurred evenly.
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