Please show the solution in good accounting form. Thank you!NBA Inc. is engaged in the business of manufacturing basketballs. The company employs an actual costing system. The company uses a single account for direct and indirect materials. The company provided thefollowing data for the year ended December 31, 2016:Gross sales9,500,000Sales return 500,000Gross purchase1,000,000Purchase returns, allowance and discount200,000Freight in. 400,000Total costs of factory labor 1,000,000Depreciation of factory assets 300,000Expired insurance of factory assets 100,000Utilities expense on factory 500,000Total administrative expenses 2,000,000Total marketing expenses 3,000,000Inventories are as follows: January 1December 31Raw materials100,000300,000Work in process.?200,000Finished goods.500,000600,000The following additional data are provided:1. The net profit ratio of the company before income tax for the year ended December 31, 2016, was 10% of net sales.2. The direct labor costs for the year was four times the cost of indirect labor3. The cost of indirect materials used was P100,0001. What is the total prime cost?A. 1,700,000B. 2,000,000C. 1,800,000D. 1,900,000

Formula: Total Prime cost=Direct labor cost+Direct material used

Answered: NBA Inc. is engaged in the business of…

Cornerstones of Cost Management (Cornerstones Series)

4th Edition

ISBN:9781305970663

Author:Don R. Hansen, Maryanne M. Mowen

Publisher:Don R. Hansen, Maryanne M. Mowen

Chapter2: Basic Cost Management Concepts

Section: Chapter Questions

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Please show the solution in good accounting form. Thank you!

NBA Inc. is engaged in the business of manufacturing basketballs. The company employs an actual costing system. The company uses a single account for direct and indirect materials. The company provided the
following data for the year ended December 31, 2016:

Gross sales	9,500,000
Sales return	500,000
Gross purchase	1,000,000
Purchase returns, allowance and discount	200,000
Freight in.	400,000
Total costs of factory labor	1,000,000
Depreciation of factory assets	300,000
Expired insurance of factory assets	100,000
Utilities expense on factory	500,000
Total administrative expenses	2,000,000
Total marketing expenses	3,000,000

Inventories are as follows:

	January 1	December 31
Raw materials	100,000	300,000
Work in process.	?	200,000
Finished goods.	500,000	600,000

The following additional data are provided:
1. The net profit ratio of the company before income tax for the year ended December 31, 2016, was 10% of net sales.
2. The direct labor costs for the year was four times the cost of indirect labor
3. The cost of indirect materials used was P100,000

1. What is the total prime cost?
A. 1,700,000
B. 2,000,000
C. 1,800,000
D. 1,900,000

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