Question 2 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 Purchases, 1 January to 11 December Income before taxes, 1 January to 11 December Direct labour cost, 1 January to 11 December Cost of goods available for sale, 1 January to 11 December Raw material inventory, 1 January Work in process inventory, 1 January Finished goods inventory, 1 January Gross profit margin $ 1,980,000 300,000 408,000 720,000 1,650,000 60,000 126,000 222,000 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)