On 11 December after the close of business, a devastating fire at Biopharm Pte Ltd destroyed the firm's work in process and finished goods inventories. The following information is available:

$

Sales revenue, 1 January to 11 December

1,980,000

Purchases, 1 January to 11 December

300,000

Income before taxes, 1 January to 11 December

408,000

Direct labour cost, 1 January to 11 December

720,000

Cost of goods available for sale, 1 January to 11 December

1,650,000

Raw material inventory, 1 January

60,000

Work in process inventory, 1 January

126,000

Finished goods inventory, 1 January

222,000

Gross profit margin

30%

The firm's accountant determines that the cost of direct materials used normally averages 25% of prime costs. In addition, manufacturing overhead is 50% of the firm's total manufacturing costs.

Required:

Biopharm Pte Ltd is in the process of negotiating a settlement with its insurance company. Compute and determine an estimate of the cost of work in process and finished goods inventories that were destroyed by the fire. Show all workings.

(30 marks)