.You have been sent to Panama City, Panama, to audit the December 31, 1998, financial statements of Canal Fash- ions, a manufacturer of sandals. You are attempting to verify the costing of the ending inventories of work in process and of finished goods, which were re- corded on Canal Fashions' books (in Panamanian balboas) as follows:

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Work in process (50% complete as to conversion cost). Finished goods Units 300,000 Cost B 660,960 200,000 1,009,800 Materials are added to production at the beginning of the manufacturing process, and overhead is applied to each product at the rate of 60 percent of direct labor costs. There was no finished goods inventory on January 1, 1998. A review of Canal Fashions inventory cost records disclosed the following information: Costs Units Materials Labor Work in process, January 1, 1998 (80% complete as to conversion cost)... 200,000 B 200,000 B 315,000 Units started: 1,000,000 Materials cost 1,300,000 Labor cost 1,995,000 Units completed. 900,000