In connection with your audit of the ABC Mall Corporation for the year ended December 31, 20X1, you noted that the company purchased P16,640,000 mining property estimated to contain 12,800,000 tons of ore. The residual value of the property is P1,280,000. The building used in mine operations costs P1,280,000 has an estimated life of fifteen years with no residual value. Mine machinery costs P2,560,000 with an estimated residual value of P512,000 after its physical life of 4 years. Following is the summary of the company’s operations for the first year of operations. Tons mined - 1,280,000 tons Tons sold - 1,024,000 tons Unit selling price per ton - P4.40 Direct labor - 1,024,000 Miscellaneous mining overhead - 204,800 Operating expenses (excluding depreciation) - 921,600 Inventories are valued on a first-in, first-out basis. Depreciation on the building is to be allocated as follows: 20% to operating expenses, 80% to production. Depreciation on machinery is chargeable to production. How much is the cost of sales for the year ended December 31, 20X1?
8. In connection with your audit of the ABC Mall Corporation for the year ended December 31, 20X1, you noted that the company purchased P16,640,000 mining property estimated to contain 12,800,000 tons of ore. The residual value of the property is P1,280,000. The building used in mine operations costs P1,280,000 has an estimated life of fifteen years with no residual value. Mine machinery costs P2,560,000 with an estimated residual value of P512,000 after its physical life of 4 years. Following is the summary of the company’s operations for the first year of operations.
Tons mined - 1,280,000 tons
Tons sold - 1,024,000 tons
Unit selling price per ton - P4.40
Direct labor - 1,024,000
Miscellaneous mining
Operating expenses (excluding
Inventories are valued on a first-in, first-out basis. Depreciation on the building is to be allocated as follows: 20% to operating expenses, 80% to production. Depreciation on machinery is chargeable to production. How much is the cost of sales for the year ended December 31, 20X1?
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