Cost Accounting
Chapter 2 - Costs – Concepts and classification
Problem 1
1. Direct
2. Indirect
3. Direct
4. Direct
5. Direct
6. Direct
7. Direct
8. Indirect
9. Direct
10.Direct
Problem 2
1. Manufacturing
2. Selling
3. Manufacturing
4. Selling
5. Administrative
Problem 3
1. Variable
2. Variable
3. Fixed
4. Variable
5. Fixed
6. Fixed
7. Fixed
8. Variable
9. Fixed
10.Fixed
Product
Product
Product
Product
Product
Period
Period
Period
Product
Period
Direct
Direct
Indirect
Direct
Indirect
Indirect
Indirect
Direct
Indirect
Indirect
Problem 4 – Bug Company
1. Fixed
Period
2. Fixed
Inventoriable
3. Variable
Inventoriable
4. Variable
Inventoriable
5. Fixed
Inventoriable
6. Variable
7. Variable
8. Fixed
9. Fixed
10. Fixed
Period
Inventoriable
Inventoriable
Period
Inventoriable
Problem 5 – Rounin Manufacturing Company
1.
Direct materials
Direct labor
Prime cost
2.
Direct labor
FO (10,000 + 9,000 +25000)
Conversion costs
3.
Direct materials
Direct labor
Factory overhead
Product costs
Problem 6 – Mother Goose Company
1. Prime costs
2. Conversion cost
6. Manufacturing
7. Administrative
8. Selling
9. Administrative
10.Selling
50,000
60,000
110,000
60,000
44,000
104,000
50,000
60,000
44,000
154,000
-
430,000
525,000
3 Inventoriable cost
4. Total period costs
Problem 7 – Blanche Corporation
`
1. Direct materials used
Direct labor
Variable manufacturing overhead
Variable marketing
Total variable cost per unit
X No. of units produced and sold
Total variable costs per month
-
710,000
305,000
P 30.00
20.00
15.00
3.00
68.00
20,000
P 1,360,000
2. Fixed manufacturing overhead
Fixed marketing costs
Total fixed cost per unit
X No. of units produced and sold
Total fixed costs per month
Page 2 – Chapter 2
Prblem 8
1. Direct materials
Direct labor
Variable manufacturing overhead
Total variable manufacturing cost per unit
`
2. Total variable manufacturing cost per unit
Variable marketing and administrative
Total variable costs per unit
P 10.00
4.00
14.00
20,000
P 280,000
P 60.00
30.00
9.00
P 99.00
P 99.00
6.00
105.00
3. Total variable manufacturing cost per unit P 99,00
Fixed manufacturing overhead (30,000/1,200)
25.00
Full manufacturing cost per unit
124.00
4. Full manufacturing cost per unit
Variable marketing and administrative
Fixed marketing and administrative
Full cost to make and sell per unit
Problem 9 - Chiz Manufacturing Company
1. Materials put into production
Direct labor
Prime costs
124.00
6.00
20.00
150.00
P 90,000
95,000
P 185,000
2. Direct labor
Factory overhead
Indirect materials
Indirect labor
Other overhead cost
Total conversion costs
95.000
60,000
25,000
60,000
3. Direct materials
Direct labor
Factory overhead
Total product costs
145,000
240,000
90,000
95,000
145,000
330,000
4. none
Problem 10 – Johnson Corporation
1. Variable cost per machine hour = 35,600 – 20,000
4,000 - 2,000
= 7.50 per machine hour
2.
Total electricity expense
Less: Variable costs
( 4,000 x 7.50)
( 2000 x 7.50)
Fixed cost
3.
4,000 hours
35,000
2000 hours
20,000
30,000
______
5,000
Fixed cost
Variable cost ( 6,000 x 7.50)
Totl manufacturing costs
15,000
5,000
5,000
45,000
50,000
Problem 11 – Valdez Motors Co.
1. Variable cost per machine hour = 5,475 – 3,975
210 - 145
= 23.08 per machine hour
2.
Total overhead costs
Less: Variable costs
( 210 x 23.08)
( 145 x 23.08)
Fixed cost
Page 3
Problem 12 – Justine Company
210 hours
5,475
4,847
_____
628
145 hours
3,975
3,347
628
1
Variable cost per hour = 4,470 – 2,820
520 - 300
= 7.50 per hour
2.
520 hours
Total
Less: Variable cost
520 x 7.50
300 x 7.50
Fixed cost
3.
Total cost = P 570 + P7,50 X
4.
Fixed cost
Variable ( 420 hrs. x P 7.50)
Total maintenance cost
4,470
3,900
_____
570
P
300 hours
2,820
2,250
570
570
3,150
P 3,720
True/False Questions
1. False
6. True
2. False
7. False
3. True
8. True
4. False
9. False
5. False
10. True
11. False
12. False
13. True
14. False
15. False
16. True
17. False
18. True
19. False
20. True
Multiple choice – Theory
1. B
6. A
2. C
7. D
3. B
8. D
4. C
9. B
5. D
10. C
11. C
12. A
13. C
14. B
15. B
16. B
17. B
18. A
19. D
20. B
Multiple choice – Problems
1. A
6. A
2. B
7. C
3. C
8. C
4. C
9. A
5. B
10. C
11. A
12. B
13. B
14. C
15. B
16. A
17. B
18. D
19. A
20. A
CHAPTER 3 - COST ACCOUNTING CYCLE
Problem 1 - Ram Manufacturing Company
Direct materials used
(75,000 x 90%)
67,500.00
Direct labor (97,000 x 93% )
90,210.00
Factory overhead (90,210 x 12%)
Total manufacturing costs
Work in process, January 1
Cost of goods put into process
295,972.50
Less: Work in process, January 31
Cost of goods manufactured
268,972.50
Problem 2 - Donna Company
Direct materials used
Materials, May 1
Purchases
Total available
Less> Mat.- May 31
97,000
Direct labor
Factory overhead
Total manufacturing costs
Work in process, May 1
Cost of goods put into process
322,800
Less: Work in process, May 31
Cost of goods manufactured
304,800
Finished goods – May 1
Total goods available for sale
349,800
Less: Finished goods – May 31
Cost of goods sold
112,762.50
270,472.50
25,500.00
27,000.00
22,000
100,000
122,000
25,000
80,000
120,000
297,000
25,800
18,000
45,000
24,000
325,800
Problem 3 – Blanche Corporation
1, Income Statement
Sales
1,200,000
Less: Cost of goods sold
751,000
Gross profit
449,000
Less: Operating expenses
Marketing
60,000
Administrative
12,000
72,000
Net income
Blanche Corporation
2.
Direct materials used
Materials, March 1
Purchases
Total available
Less> Mat.- March 31
408,000
Direct labor
Factory overhead
Total manufacturing costs
Work in process, March 1
Cost of goods put into process
858,000
Less: Work in process, March 31
Cost of goods manufactured
763,000
Finished goods – March 1
Total goods available for sale
853,000
Less: Finished goods – March 31
Cost of goods sold
Problem 4 - Roy Company
1, Entries
a. Materials
Accounts payable
b. Payroll
Withholding taxes payable
SSS Premiums payable
Phil Health contributions payable
Pag-ibig funds contributions payable
1,620
Accrued payroll
Work in process
377,000
50,000
400,000
450,000
42,000
210,000
140,000
758,000
100,000
95,000
90,000
102,000
751,000
120,000
120,000
54,000
11,200
2,400
375
38,405
45,000
Factory overhead control
Payroll
9,000
54,000
c. Materials
Accounts payable
25,000
25,000
d. Factory overhead control
SSS premiums payable
Phil Health contributions payable
Pag-ibig funds contributions payable
5,595
3,600
375
1.620
e. Work in process
Factory overhead control
Materials
75,000
f. Accounts payable
Materials
1,000
Page 2 – Chapter 3
g. Accounts payable
Accrued payroll
Cash
14,000
89,000
1,000
136,500
38,405
174,905
h. Factory overhead control
Miscellaneous accounts
i. Work in process
Factory OH Applied (45,000 x 120%)
16,900
16,900
54,000
54,000
j. Finished goods
Work in process
116.000
116,000
k. Accounts receivable
Sales
150,000
150,000
Cost of goods sold
Finished goods
2. Statement of cost of goods sold
.
Direct materials used
Purchases
Less: Purchase returns
Total available for use
Less> Mat.- October 31
89,000
90,000
90,000
145,000
1,000
144,000
55,000
Direct labor
Factory overhead
Total manufacturing costs
Less: Work in process, October 31
Cost of goods manufactured
116,000
Less: Finished goods – March 31
Cost of goods sold, normal
Less: OA-FO
Cost of goods sold, actual
Problem 5 – Darvin Company
1. Entries
a. Materials
Accounts payable
45,000
54,000
188,000
72,000
26,000
90,000
8,505
81,495
200,000
200,000
b. FOControl
Accounts payable
c. Payroll
W/Taxes payable
SSS Premium payable
35,000
35,000
210,000
18,520
8,400
Phil Health contributions payable
PFC payable
Accrued payroll
1,125
6,300
175,655
Page 4
Work in process
Factory Overhead control
Selling expense control
Adm. expense control
Payroll
210,000
140,000
d. Accrued payroll
Cash
175,000
175,000
e. FO Control
Selling expense control
Adm. Expense control
SSS prem. Payable
MC payable
PFC payable
30,000
25,000
15,000
14,200
2,375
1,350
10,500
1,125
6,300
f. Work in process
FO Control
Materials
185,000
35,000
g. Work in process
FO Control
114,200
h. Finished goods
Work in process
410,000
220,000
114,200
410,000
i. Accounts receivable
Sales
539,000
539,000
Costs of goods sold
Finished goods
385,000
385,000
j. Cash
Accounts receivable
405,000
405,000
k. Accounts payable
Cash
Page 5
2. Cost of goods sold statement
Direct materials used
Materials, January 1
Purchases
Total available
Less> Mat.- Jan. 31
Ind. Materials
185,000
Direct labor
Factory overhead
Total manufacturing costs
220,000
220,000
50,000
200,000
250,000
30,000
35,000 65,000
140,000
114,200
439,200
Work in process, January 1
Cost of goods put into process
457,200
Less: Work in process, January 31
Cost of goods manufactured
410,000
Finished goods – January 1
Total goods available for sale
445,000
Less: Finished goods – January 31
Cost of goods sold
3. Income Statement
Sales
Less: Cost of goods sold
Gross profit
Less: Operating expenses
Selling
Administrative
43,725
Net income
4 Balance sheet
Cash
25,000
Accounts receivable
8,655
Finished goods
18,520
Work in process
18,900
Materials
2,250
18,000
47,200
35,000
60,000
385,000
539,000
385,000
154,000
27,375
16,350
110,275
110,000
Accounts payable
194,000
Accrued payroll
60,000
W/tax payable
47,200
SSS Prem. payable
30,000
Medicare Cont. payable
PFC payable
Common stock
12,600
200,000
_______
441,200
Total
Retained earnings
155,275
441,200
Problem 6
1.
Cost of goods manufactured
Work in process, December 31
Cost of goods put into process
Total manufacturing costs
Work in process, January 1
800,000
87,000
887,000
( 790,000)
97,000
Page 6
2.
Cost of goods manufactured
Finished goods, January 1
Total goods available for sale
Cost of goods sold
Finished goods, December 31
4.
Direct materials used
Materials, December 31
Total available for sale
Materials, January 1
Materials purchased
800,000
80,000
880,000
(750,000)
130,000
590,000
150,000
740,000
(100,000)
640,000
Problem 7 – Kyle Manufacturing Company
1.
Direct materials used ( 300.000 x 75%)
225,000
Direct labor (350,000 x 60%)
210.000
Factory overhead – actual
Indirect materials (300,000 x 25%) 75,000
Indirect labor (350,000 x 40%)
140,000
Heat, light, and water
120,000
Depreciation
75,000
Property taxes
65,000
Repairs and maintenance
40,000
515,000
Total manufacturing costs/cost of goods manufactured 950,000
2,
3.
4.
5
Unit cost = 950,000/125,000 = P7.60 per unit
Prime cost = 225000 + 210,000 = P 435,000
Conversion cost = 210,000 + 515,000 = P 725,000
Period cost = 80,000 + 50,000 = P 130,000
Problem 8 - Norman Company
1,
Materials, October 1
Purchases
Materials, October 31
Direct materials used
Direct labor
Factory overhead (80,000 = 12,500 x 8.00)
6,40
Total manufacturing costs
2.
Total manufacturing costs
Work in process, Oct. 1
48,000
112,000
(40,000)
120,000
80,000
100,000
300,000
300,000
24,000
3.
Work in process, Oct. 31
Cost of goods manufactured
( 16,000)
308,000
Cost of goods manufactured
Finished goods, Oct. 1
Finished goods, Oct. 31
Cost of goods sold
308,000
72,000
( 80,000)
300,000
Page 7
4.
Sales
Cost of goods sold
Marketing and administrative expenses
Net income
400,000
( 300,000)
( 40,000)
60,000
Problem 9 – Janice Company
1,
Sales (50,000/10%)
Selling & administrative expenses
Net income
Cost of goods sold
500,000
( 50,000)
( 50,000)
400,000
2.
Cost of goods sold
Finished goods, March 31
Finished goods, March 1
Cost of goods manufactured
400,000
180,000
( 120,000)
460,000
3.
Cost of goods manufactured
Work in process, March 31
Work in process, March 1
Total manufacturing costs
Factory overhead
Direct labor (126,000/75%)
Direct materials used
176,000
Materials, March 31
Purchases
Materials, March 1
460.000
100,000
( 90,000)
470,000
(126,000)
(168,000)
20,000
(100,000)
96,000
Problem 10 - Selina Corporation
1.
Cost of goods manufactured
Work in process, December 31
Cost of goods put into process
Cost of goods manufactured + WP, end = TMC + WP, beg
1700,000 + X
= 1,800,000 + .80X
X - .80X
= 1,800,000 – 1,700,000
1,700,000
500,000
2,200,000
X
=
=
2.
WP, Dec. 31 = 500,000
3.
Total manufacturing cost
Factory overhead ( (1,800,000 x 25% )
Direct labor (450,000/72%)
Direct materials used
100,00/.20
500,000
1,800,000
( 450,000)
( 625,000)
725,000
Problem 11 - Kyra Alexis Corporation
1.
Materials put into process
Materials, Aug. 31
Materials, Aug. 1
Materials purchased
Page 8
2.
Materials put into process
Direct labor ( 70,000 + 80,000)
Factory overhead - A (70,000 x 120%)
B ( 80,000 x 80%)
Total manufacturing cost
120,000
75,000
( 60,000)
135,000
120,000
150,000
84,000
64,000
148,000
418,000
3.
Total manufacturing cost
Work in process, Aug. 1
Work in process, Aug. 31
Cost of goods manufactured
418,000
80,000
( 64,000)
434,000
4.
Cost of goods manufactured
Finished goods, Aug. 1
Finished goods, Aug. 31
Cost of goods sold
434,000
54,000
( 60,000)
428,000
Multiple choice
1.
2.
3.
4.
5.
6.
A
C
B
A
D
B
11.
12.
13.
14.
15.
16.
B
C
B
C
C
D
7. D
8 C
9. B
10.B
17.
18.
19
20.
B
B
B
B
21. B
22. D
23. A
24. B
25. 116,000
26. A (No. 5 should be
73%
27. D
28. A
29. A
30. B
Chapter 4 True or False
1. False
2. True
3. True
4. False
5. True
6. True
7. False
8. False
9. True
10.False
11. False
12. False
13. False
14. False
15. False
Matching
1.
a
2.
h
3.
p
4.
d
5.
k
6.
7.
8.
9.
10.
Multiple choice – Theory
1, d
6. d
2. b
7. a
3. b
8. c
4. d
9. b
5. d
10. c
11.
12.
13.
14.
15.
16.True
17. False
18. False
19. True
20. True
21. True
22. False
23. False
24. False
25. True
16.
17.
18
19.
20.
21.
22.
23.
24.
25.
b
g
k, l, m
i
n
d
d
c
b
c
a
c
b
b
b
c
b
a
c
b
Problem 1 – Garcia Company
1 Journal entries
1.
Materials
Accounts payable
2.
3.
4.
5.
Work in process
Factory overhead control
Materials
Materials
Work in process
FO Control
Accounts payable
Materials
28,000
28,000
22,000
3.000
25,000
800
500
300
1,000
1,000
Payroll
39,000
Withholding taxes payable
3,025
SSS Premiums payable
1,600
Phil Health contributions payable
375
Pag-ibig funds contributions payable
1,200
Accrued payroll
32,800
Page 2
Accrued payroll
Cash
32,800
Work in process
Factory overhead control
Payroll
33,400
5,600
Factory Overhead Control
SSS Premiums payable
Phil Health cont. payable
Pag-ibig cont. payable
3,575
FO Control
Accum Depr.
Prepaid ins.
Accounts payable
15,000
9.
Work in process
FO Applied
26,720
26,720
10.
Finished goods
WP
Job 401
Job 402
72,220
72,220
6.
7.
8
11.
12.
32,800
39,000
2,000
375
1,200
3,000
950
11,050
31,720
40,500
Accounts receivable
Sales (31,720 x 140%)
44,408
44,408
Cost of goods sold
FG
31,720
31,720
Cash
35,000
35,000
Accounts receivable
Direct materials
3,000
5,500
8,500
Direct materials
5,600
7,000
Job 401
Direct labor
2,500
10,400
12,900
Factory overhead
2,000
8,320
10,320
Job 402
Direct labor
3,000
12,500
Factory overhead
2,400
10,000
12,600
15,500
12,400
Page 3
Direct materials
9,500
( 500)
3.
Job 403
Direct labor
10,500
Factory overhead
8,400
Cost of goods sold statement
Direct materials used
Materials, August 1
Purchases
Less. Purchase returns
Total available for use
Less: Materials, Aug. 31
Ind. Materials
Direct labor
Factory overhead
Total manufacturing costs
Work in process, Aug. 1
Cost of goods put into process
Less: Work in process, Aug. 31
22,000
28,000
1,000
24,800
2,700
27,000
49,000
27,500
Cost of goods manufactured
Finished goods, Aug. 1
Total goods available for sale
Less: Finished goods, Aug. 31
Cost of goods sold - normal
Add. Under applied factory overhead
Cost of goods sold
Problem 2 - Golden Shower Company
2. Journal entries
a. Materials
Accounts payable`````
X 20,000 x 5.20
= 104,000
Y 24,000 x 3.75
= 90,000
Ind. Materials
35,040
b. Payroll
Withholding taxes payable
SSS premiums payable
Phil Health cont. payable
Pag-ibig funds cont. payable
Accrued payroll
21,500
33,400
26.720
81,620
18,500
100.120
27,900
72,220
25,000
97,220
65,500
31,720
155
31,875
229,040
229,040
220,000
31,000
7,000
440
6,600
174,960
Accrued payroll
Cash
Page 4otal
174,960
174,960
c. Work in process
Factory overhead control
Marketing & Adm. Exp. Control
Payroll
156,000
24,000
40,000
220,000
Factory overhead control
Marketing & adm. Exp. Control
SSS Premiums payable
Phil Health contr. Payable
Pag-ibig funds contribution payable
SSS
(5%)
FOC (180,000)
9,000
M & A Exp.control 2,000
11,000
Phil Health
(0,.25%)
360
80
440
14,760
3,280
11,000
440
6,600
Pag-ibig
( 3% )
5,400
1,200
6,600
d. Work in process
Factory overhead control
Materials
Job 101
(x) 4,000 x 5.00
(x) 16,000 x 5.20
Job 103
( x) 2,000 x 5.20
(Y) 5,000 x 3.75
20,000
83,200
103,200
Cost of goods sold
14,760
3,280
18.040
216,350
15,040
231,390
Job 102
(Y) 8,000 x 3.00
(Y) 16,000 x 3.75
24,000
60,000
84,000
10,400
18,750
29,150
e. Work in process
FO Applied
Job 101 = 10,000 x 2.25
102 = 16,000 x 2.25
103 = 12,000 x 2.25
f. Accounts receivable
Sales
Total
85,500
85,500
22,500
36,000
27,000
510,000
510,000
380,700
Work in process
380,700
Page 5
g. Cash
Sales discount
Accounts receivable
494,000
26,000
520,000
h. Marketing & Adm. Exp. Control
Factory overhead control
Cash
Accum. Depreciation
30,000
25,600
51,600
4,000
i. Accounts payable
Cash
j.
170,000
170,000
Factory overhead applied
Cost of goods sold
FO Control
85,500
6,100
79,400
DIRECT MATERIALS
5,000
103,200
108,200
JOB 101
DIRECT LABOR
4,000
44,000
44,000
FACTORY OVERHEAD
2,000
22,500
24,500
DIRECT MATERIALS
1,200
84,000
85,200
JOB 102
DIRECT LABOR
2,000
80,000
82,000
FACTORY OVERHEAD
800
36,000
36,800
DIRECT MATERIALS
21,.950
JOB 103
DIRECT LABOR
36,000
FACTORY OVERHEAD
27,000
STOCKCARDS
MATERIAL X
ISSUED
RECEIVED
20,000 @ 5.20
BALANCE
4,000 @ 5.00
20,000
4,000 @ 5.00
20,000
20,000 @ 5/20
104,000
104,000
4,000 @ 5.00
18,000 @ 5.20
20,000
93,000
2,000 @ 5.20
10,400
MATERIAL Y
ISSUED
RECEIVED
24,000 @ 3.75
BALANCE
8,000 @ 3.00
24,000
8,000 @ 3.00
24,000
24,000 @ 3.75
90,000
90,000
8,000 @ 3.00
21,000 @ 3.75
24,000
78,750
3,000 @ 3.75
Problem 3 - J.A.N., Inc.
1. Direct material
Direct labor (300 x 8)
Factory OH (200 x 15)
Total mfg. cost
4,300
2,400
3,000
9,700
2. Direct material
Direct labor
Prime cost
4,300
2,400
6,700
3. Direct material
Factory overhead applied
Conversion cost
2,400
3,000
5,400
Problem 4 –
1. Materials – Dept. 1
Dept. 2
2.400
1,300
3,700
3. Dept. 1 (500 x 4.00)
Dept. 2 (320 x 1.00)
4,100
1,760
5,860
4. Contract price
Less: Cost to manufacture
DM.
3,700
DL
5,860
FO
2.320
Gross profit
2. Dept. 1 (500 x 8.20)
Dept. 2 (220 x 8.00)
5. Gross profit
Less: M & A
Net income
13,120
2,970
10,150
Problem 5 - Star Wars Corporation
Requirement No. 1
1.
Work in process
Materials
2.
Work in process
50,000
50,000
150,000
11,250
2,000
320
2,320
P 25,000
11,880
13,120
Payroll
150,000
Page 7
3.
Work in process
FO Applied
90.000
90,000
4.
Finished goods
Work in process
290,000
290,000
5.
Accounts receivable
Sales
427,917
427,917
Cost of goods sold
Finished goods
290,000
290,000
Selling price
Direct materials
Direct labor
Factory OH
Total cost
Gross profit
Job 110
126,667
15,000
50,000
30,000
95,000
31,667
Job 220
170,000
10,000
50,000
30,000
90,000
80,000
Job 330
131,250
25,000
50,000
30,000
105,000
26,250
Total
427,917
50,000
150,000
90,000
290,000
137,917
Problem 6 – Ellen Corporation
MATERIALS__________
WORK IN PROCESS_______
Beg.
60,000 5)
125,000
Bal. beg. 85,000
2)
820,000
6)
145,000 Bal. end 80,000
5) DM 125,000
205,000
205,000
4) DL 400,000
3) OH 320,000
Bal.end 110,000
930,000
930,000
FINISHED GOODS______
Bal. beg. 120,000 1)
850,000
2)
820,000 Bal. end 90,000
940,000
940,000
7)
FACTORY OH CONROL____
330,000
Entries
1.
Materials
Accounts payable
1)
COST OF GOODS SOLD_____
850,000
FACTORY OH APPLIED _____
3)
320,000
145000
145,000
2.
Work in process
Materials
125,000
125,000
Page 8
3.
Work in process
Payroll
400,000
400,000
4.
Work in process
FO Applied
320,000
320,000
5.
Finished goods
Work in process
820,000
820,000
6.
Cost of goods sold
Finished goods
850,000
850,000
FO Control
Various accounts
Problem 7 - Ellen Joyce Company
1.
Work in process
Materials
330,000
330,000
2.
Work in process
Payroll
156,000
156,000
3.
Work in process
FO Applied
118,500
118,500
4.
Finished goods
Work in process
Job 201
Job 202
Job 203
Total
Accounts receivable
Sales
343,000
343,000
7.
5.
Cost of goods sold
Finished goods
Cost of goods sold statement
Direct materials
Direct labor
Factory overhead
Total manufacturing costs
Less: Work in process, end
-
98,500
98,500
190,000
94,000
59,000
343,000
350,000
350.000
284,000
284,000
98,500
156,000
118,500
373,000
30,000
Cost of goods manufactured
Less: Finished goods, end
Cost of goods sold
Page 8 = Abner Corporation
1.
Direct materials used
Materials – end
Materials – beg.
Direct materials purchased
343,000
59,000
284,000
205,000
90,000
( 95,000)
200,000
2.
Total manufacturing costs
Factory overhead
Materials used
Direct labor costs
675,000
( 175,000)
( 205,000)
295,000
3.
Cost of goods available for sale
Finished goods, end
Cost of goods sold
775,000
(110,000)
665,000
4.
Sales
Cost of goods sold
Gross profit
Problem 9 - Pacific Production Company
1.
Materials - April 1
Purchases
Materials – April 30
Direct materials used
Indirect materials used
900,000
(665,000)
235,000
2.
Accrued payroll – April 30
Payroll paid
Direct labor cost
Indirect labor
6,000
44,000
( 32,000)
18,000
3.
Direct labor cost
Factory overhead rate
Factory overhead applied
32,000
125%40,000
4.
Direct materials
Direct labor
Factory overhead
Total manufacturing costs
Work in process, beg.
Work in process, end
Cost of goods manufactured
78,000
32,000
40,000
150,000
82,000
( 94,000)
138,000
5.
Cost of goods manufactured
138,000
64,000
84,000
( 60,000)
( 78,000)
10,000
Finished goods, April 1
Finished goods, April 30
Cost of goods sold
Page 10
Problem 11 – Table and Chair Manufacturing Company
1)
Materials
Accounts payable
296,000
(304,000)
130,000
2)
Work in process
FOC
Materials
11,480
40
Payroll
Accrued payroll
5,445
Work in process
FOC
Payroll
4,645
800
FOC
2,875
3)
4)
15,000
15,000
11,520
5,445
5,445
Rent Expense Payable
Accum. Depreciation – Machines
Accum. Depreciation – Factory Building
Utilities Expense Payable
Payroll Taxes Payable
5)
Work in process
FO Applied
6)
Finished goods
Work in process
Direct materials
Direct labor
Factory overhead
Total
7)
Cash
1,500
160
490
225
300
5,261.25
5,261.25
Job 101
10,500
3,175
3,618.75
17,293.75
Job 102
980
1,470
1,642.50
4,092.50
21,386.25
21,385.25
Total
11,480
4,645
5,261.25
21,386.25
25,000
Sales
Cost of Goods Sold
Finished goods
25,000
17,293.75
17,293.75
Accounts receivable
Sales
4,000
Cost of goods sold
4,092.50
4,000
Finished goods
4,092.50
Page 11
Problem 11 – Candy Corporation
1)
Job 101
Job 102
WP, July 1
2)
Job 101
Job 102
Job 103
Total
3)
P 175,000
120,000
P 295,000
80,000 x 125%
95,000 x 125%
115,000 x 125%
= P 100,000
=
118,750
=
143,750
362,500
Job 101
175,000
Job 102
120,000
Total
295,000
55,000
80,000
100,000
410,000`
80,000
95,000
118,750
413,750
135,000
175,000
218,750
823,750
Job 101
Add: Underapplied factory overhead
Actual FO
375,000
Less: Applied FO
362,500
Cost of goods sold – actual
410,000
5)
FG, Inventory July 31 (Job 102)
413,750
6)
WP, Inventory, July 31 ( Job 103)
Materials
Labor
Factory overhead
Total WP Inventory, July 31
92,000
115,000
143,750
350,750
WP, beg.
Cost added
Materials
Labor
Overhead
Total
4)
Problem 12 – MLT Company
1)
Materials, June 1
Purchases
Materials, June 30
Indirect materials
Direct materials used
2)
Cost of goods manufactured
Work in process, June 30
12,500
422,500`
15,000
33,000
( 19,000)
( 1,000)
28,000
120,000
30,000
3)
Work in process, June 1
Total manufacturing cost
( 40,000)
110,000
Cost of goods available for sale
Total manufacturing costs
Finished goods, June 1
190,000
(110,000)
80,000
Problem 13 – Miracle Company (start with No.. 3 then No. 2)
1)
Cost of goods manufactured
168,000
WP, January 31
95,000
WP, January 1
( 80,000)
Total manufacturing cost
183,000
Direct labor
(63,000 / 75%)
( 84,000)
Factory overhead
( 63,000)
Direct materials used
36,000
Materials January 31
50,000
Indirect materials used
1,000
Purchases
( 46,000)
Materials, January 1
41,000
2)
Cost of goods sold – normal
Finished goods, January 31
Finished goods, January 1
Cost of goods manufactured
150,000
78,000
( 60,000)
168,000
3)
Sales ( 25,000 / 12.5%)
Selling and administrative expenses
Net income
Cost of goods sold, actual
Overapplied FO
Actual
62,800
Less: Applied
63,000
Cost of goods sold, normal
200,000
( 25,000)
(25,200)
149,800
200
150,000
Problem 14 – Nona Company
1)
Units sold
Finished goods, end
Finished goods, beg
Units completed/manufactured
2)
Direct materials used
Direct labor
Factory overhead
Total mfg. cost/cost of goods manufactured
Divide by units completed
12,300
300
( 100)
12,500
1,847,700
2,125,800
1,026,500
5,000,000
12,500
Cost of goods manufactured per unit
400/unit
Page 13
3)
From Finished goods, beg. (100 units x P 430
)
From units completed during the period ( 12,200 x P 400)
Cost of goods sold
Or
Finished goods, beg.
Cost of goods manufactured
Finished goods, end ( 300 x P400)
Cost of goods sold
43,000
4,880,000
4,923,000
43,000
5,000,000
( 120,000)
4,923,000
MULTIPLE CHOICE – PROBLEMS
1. A
11. OH IS APPLIED AT 125% OF DLCOST - B
2. A
12, A
21. C
3. C
13. C
22. C
4. D
14. D
23. C
5. A
15. A
24. B
6. B
16. D
25. 46,000
7. B
17. C
26. D
8. A
18. C
27. B
9. A
19. D
28. B
10. B
20. C
29. D
30. B
CHAPTER 5 - JUST IN TIME AND BACKFLUSH ACCOUNTING
TRUE/FALSE
1. True
2. True
3. False
4. True
5. True
6. True
7. True
8. True
9. True
10. False
Problem 1 - AJE Corporation
1)
Raw and In Process
Accounts Payable
16,000
2)
Cost of goods sold
Accrued payroll
FO Applied
32,000
Finished goods
Raw and In Process
13,500
3)
16,000
15,000
17,000
13,500
Raw and In Process
Cost of goods sold
4)
1,000
1,000
Cost of goods sold
Finished goods
12,700
12700
Finished goods
Cost of goods sold
1,700
1,700
Problem 2 – Magnolia Corporation
CORRECTION: Direct labor cost P 350,000; Factor overhead – P380,000
1)
Raw and In Process
444,000
Accounts payable
444,000
2)
Finished goods
Raw and In process
Purchases
Mat. In RIP beg (23,400-2,400)
Mat. In RIP end (25,600-3,600)
Mat. Content of FG
443,000
443,000
444,000
21,000
( 22,000)
443,000
Cost of goods sold
Accrued payroll
FO Applied
Page 2
3)
Cost of goods sold
Finished goods
Mat. Content of FG
Mat. In FG beg. (24,000-8,000)
Mat. In FG end (19,000-7,000)
Mat. Content of units sold
4)
447,000
447,000
443,000
16,000
( 12,000)
447,000
Raw and In Process
Cost of goods sold
Conversion cost in RIP end
Conversion cost in RIP beg
Adjustment
5)
730,000
350,000
380,000
Cost of goods sold
Finished goods
1,200
1,200
3,600
( 2,400)
1,200
1,000
1,000
Conversion cost in FG end
Conversion cost in FG beg
Adjustment
7,000
(8,000)
(1,000)
Problem 3 – Pocahontas Manufacturing Company
1.
Materials purchased
Materials in RIP beg (11,000 – 1,200)
Materials in RIP end (12,400 – 1,700)
Materials backflushed from RIP to FG
346,000
9,800
( 10,700)
345,100
2.
Materials backflushed from RIP to FG
Materials in FG beg ( 12,000 – 4,000)
Materials in FG end ( 9,800 - 3,100)
Materials backflushed from FG to CofGS
345,100
8,000
( 6,700)
346,400
3)
a) Raw and In process
Accounts payable
346,000
346,000
b) Cost of goods sold
Accrued payroll
FO Applied
250,000
100,000
150,000
c) Finished goods
Raw and In Process
345,100
345,100
d) Cost of goods sold
Finished goods
346,400
346,400
Page 3
e) Raw and In Process
Cost of goods sold
Finished goods
End
Beginning
Increase (decrease(
500
400
900
RIP
1,700
(1,200)
500
FG
3,100
(4,000)
( 900)
Problem 4 – Barbie Mfg. Company
Additional information – Direct labor 80,000; factory overhead – 60,000
1)
Raw and In Process
100,000
Accounts payable
100,000
2)
Finished goods
Raw and In Process
99,850
99,850
Materials purchased
Materials in RIP beg. (5,000-500)
Materials in RIP end (5,250-650)
Materials backflushed from RIP
3)
Cost of goods sold
Finished goods
102,850
102,850
Materials backflushed from RIP
Materials in FG beg. (11,250-3.250)
Materials in FG end ( 7,500-2,500)
Materials backflushed from CofGS
4)
5)
100,000
4,500
( 4,650)
99,850
99,850
8,000
( 5,000)
102,850
Cost of goods sold
Accrued payroll
FO Applied
140,000
80,000
60,000
Raw and in process
Cost of goods sold
Finished goods
End
Beginning
Increase (decrease)
150
600
750
RIP
650
(500)
150
FG
2,500
(3,250)
750
Page 3
Problem 5 – Chiz Manufacturing Company
1)
Materials purchased
Materials in RIP beg. ( 14,500-7,200)
Materials in RIP end ( 22,400-15,700)
Materials backflushed from RIP to FG
246.000
7,300
( 6,700)
246,600
2)
Materials backflushed from RIP to FG
Materials in FG beg. (16,000-8,800)
Materials in FG end (19,800-13,100)
Materials backflushed from FG to CofGS
246,600
7,200
( 6,700)
247,100
3)
Materials purchased
RIP beg.
FG beg.
Direct labor
Factory overhead
246,000
14,500
16,000
98,000
125,000
4)
RIP end
FG end
Cost of goods sold
( 22,400)
( 19,800)
457,300
a)
Raw and in process
Accounts payable
246,000
246,000
b)
Finished goods
Raw and in process
246,600
246,600
c)
Cost of goods sold
Finished goods
247,100
247,100
d)
Cost of goods sold
Accrued payroll
FO Applied
223,000
e)
98,000
125,000
Raw and in process
Finished goods
Cost of goods
8,500
4,300
12,800
END
BEGINNING
Increase (Decrease)
RIP
15,700
( 7,200)
8,500
CHAPTER 6 – ACCOUNTING FOR MATERIALS
Problem 1 - Norman Company
_____________
a)
EOQ = \/ 2 x 8,000 x 40
25
= 160 units
Ordering cost
=
=
=
Carrying cost
=
=
No of orders x ordering cost
8,000 x 40
160
2,000
Average inventory x 25
160 x 25
2
FG
13,100
( 8,800)
4,300
=
2000
Problem 2 –Heavyweight Co.
1. Allocation based on cost
Product Invoice Percentage
X
11,250
49%
Y
13,500
49%
Z
15,750
49%
Share of Freight
450
540
630
2. Allocation based on shipping weight
Product Weight
Freight/pound
X
4,500
.09
Y
6,000
.09
Z
7,500
.09
Total cost Cost/pound
11,700
2.60
14,040
2.34
16,380
2.184
Share of Freight Total Cost Cost/pound
405
11,655
2.59
540
14,040
2.34
675
16,425
2.19
Problem 3 - Dovin Company
1. Amount debited to Materials = 100,000 x 80% x 90% x 90% = 64,800
2. Amount debited to Materials = 100000 x 80% x 90% x 90% x 98% = 63,504
Page 2
Problem 4 –
1. FIRST-IN, FIRST-OUT
Received
5
400 x 7.00
2,800
9
400 x 8.00
3,200
16
24
Issued
800 x 6.00
600 x 9.00
5,400
4,800
Balance
1,600 x 6.00
1,600 x 6.00
400 x 7.00
1,600 x 6.00
400 x 7.00
400 x 8.00
800 x 6.00
400 x 7.00
400 x 8.00
800 x 6.00
400 x 7.00
400 x 8.00
9,600`
9,600
2.800
9,600
2,800
3,200
4,800
2,800
3,200
4,800
2,800
3,200
27
800 x 6.00
200 x 7.00
4,800
1,400
600 x 9.00
200 x 7.00
400 x 8.00
600 x 9.00
5,400
1.400
3,200
5,400
Cost of materials issued = 4,800 + 4,800 + 1,400 = 11,000
Cost of ending inventory = 1,400 + 3,200 + 5,400 = 10,000
2, AVERAGE
Received
1
5 400 x 7.00
2,800
9 400 x 8.00
3,200
16
24 600 x 9.00
5,400
27
Issued
800 x 6.50
5,200
1,000 x 7.18
7,180
Balance
1,600 x 6.00
2,000 x 6.20
2,400 x 6.50
1,600 x 6.50
2,200 x 7.18
1,200 x 7.18
9,600
12.400
15,600
10,400
15,800
8,620
Balance
1,000 x 4.00
750 x 4.00
1,250 x 4.20
1,100 x 4.20
990 x 4.20
1,000 x 4.20
1,500 x 4.47
1,200 x 4.33
1,100 x 4.33
4,000
3,000
5,250
4,620
4,158
4,200
6,700
5,200
4,767
Cost of materials issued = 5,200 + 7,180 = 12,380
Cost of ending inventory = 8,620
Problem 5 – Heaven & Earth
1. FIFO
Issued = 600 x 4.00 = 2,400
Cost of inventory - 200 x 5.00 =- 1,000
500 x 4.50 = 2,250
400 x 4.00 = 1,000
Page 3
2. WEIGHTED AVERAGE
Received
1
3
5 500 x 4.50
2,250
6
10
11
15 500 x 5.00
2,500
20 (300) x 5.00 ( 1,500)
26
Issued
250 x 4.00
1,000
150 x 4.20
110 x 4.20
( 10)x 4.20
630
462
( 42)
100 x 4.33
433
Problem 6 – Sterling Company
A. PERPETUAL
1. FIFO
Received
1
8
10
900 x 18.00 16,200
18
20 1,200 x 18,25
Issued
200 x 1750
3,500
100 x 17.50
500 x 18.00
1,750
9,000
21,900
25
400 x 18.00
600 x 18.25
2. AVERAGE
Received
1
8
10 900 x 18.00
18
20 1,200 x 18.25
25
Balance
300 x 17.50
100 x 17.50
100 x 17.50
900 x 18.00
400 x 18.00
7,200
10,950
Issued
200 x 17.50
3,500
600 x 17.95
10,770
1000 x 18.175
18,175
16,200
21,900
Problem 7 – Bedrock Company
a. Loss due to spoiled work is spread over all jobs
1. Work in process
Materials
Payroll
FO Applied
Page 4
2. Spoiled Goods
FO Control
Work in process (100 x 165)
3. Finished goods
Work in process
Unit cost = 1,303,500/7,900 = 165
400 x 18.00
1,200 x 18.25
7,200
21,900
600 x 18.25
10,950
Balance
300 x 17.50
100 x 17.50
1,000 x 17.95
400 x 17.95
1,600 x 18.175
600 x 18.175
5,250
1,750
17,950
7,180
29,080
10,906
1,320,000
360,000
480,000
480,000
8,000
8,500
16,500
1,303,500
1,303,500
B, Loss due to spoiled work is charged to the specific job
1. Work in process
Materials
Payroll
FO Applied
2. Spoiled Goods
5,250
1,750
1,750
16,200
7,200
1,320,000
360,000
480,000
480,000
8,000
Work in process
8,000
3. Finished goods
Work in process
1,312000
1,312,000
Problem 8 – Kyralei Co.
1.
RAGC is charged with the cost of defective units
a.
Work in process
176,000
Materials
Payroll
FO Applied (40,000 x 140%)
b.
c.
2.
Work in process
Materials
Payroll
FO Applied
80,000
40,000
56,000
23,200
4,000
8,000
11,200
Finished goods
Work in process
199,200
199,200
Cost of correcting defective work in not charged to RAGC
a.
Work in process
180,000
Materials
80,000
Payroll
40,000
FO Applied (40,000 x 150%)
60,000
b.
FO Control
Materials
Payroll
24,000
4,000
8,000
Page 5
c.
Finished goods
Work in process
Problem 9 – Little Mermaid
1.
Charged to specific job
a.
Work in process
Materials
Payroll
FO Applied
b.
c.
Work in process
Materials
Payroll
FO Applied
Finished goods
180,000
180,000
75,000
25,000
20,000
30,000
(20,000 x 150%)
1,250
500
300
450
76,250
Work in process
2.
76,250
Charged to all production (FO rate should be 160% of direct labor cost)
a.
Work in process
77,000
Materials
25,000
Payroll
20,000
FO Applied (20,000 x 160^)
32,000
b.
c.
FO Control
Materials
Payroll
FO Applied
1,280
500
300
480
(300 x 160%)
Finished goods
Work in process
77,000
77,000
Problem 10 - Nicole Company
1.
Cost to correct defective units charged to specific job
a.
Work in process
9,000
Materials
Payroll
FO Applied (20,000 x 150%)
b.
Work in process
Materials
Payroll
FO Applied
5,000
2,000
2,000
100
60
20
20
Page 6
c.
2.
Finished goods
Work in process
Charged to all production
a.
Work in process
Materials
Payroll
FO Applied (20,000 x 160^)
b.
c.
FO Control
Materials
Payroll
FO Applied
9,100
9,100
9,000
5,000
2,000
2,000
100
60
20
20
(300 x 160%)
Finished goods
Work in process
9,000
9,000
Problem 11 – Marvin Corporation1.
Work in process
Materials
Payroll
FO Applied
2.
3.
4.
Work in process
Materials
Payroll
FO Applied
117,000
100,000
83,000
4,350
1,650
1,500
1,200
Spoiled goods
Work in process
825
Finished goods
Work in process
303,525
Problem 12 – Alexis Company
1.
Charged to specific job
a.
Work in process
Materials
Payroll
FO Applied
b.
300,000
Spoiled goods ( 600 x 50)
Work in process
825
303,525
700,000
350,000
150,000
200,000
30,000
30,000
Page 7
c.
2.
Finished goods
Work in process
670,000
670,000
Charged to all production
a.
Work in process (10,000 x 70)
Materials
Payroll
FO Applied
700,000
350,000
150,000
200,000
b.
c.
Spoiled goods
FO Control
Work in process (600 x 70)
Finished goods
Work in process (9,400 x 70)
30,000
12,000
42,000
658,000
658,000
Problem 13 – Raindrops Company
_____________________
EOQ = \/ 2 x 60,000 x 800
1,200
Problem 14 ____________________
EOQ = \/ 2 z 100,000 x 413
25.30
a. Investment costs
Invoice price
Excise tax ( 125.00 x 4%)
Insurance on shipment
Total
P 125.00
5.00
2.00
P 132.00
b. Carrying costs
Cost of capital ( 132.00 x 15%)
Inventory insurance
Inventory tax ( 125.00 x 2%)
Total
P 19.80
3.00
2.50
P 25.30
c. Ordering costs
Shipping permit
Processing costs
Unloading
Total
P 300.00
23.00
90,00
P 413.00
Page 8
Problem 15 - Candice Foundry Inc.
1.
Spoiled units are due to internal failure
a.
Work in process
Materials
Payroll
FO Applied
b.
c.
2.
Spoiled goods ( 200 x 15.00)
Factory overhead control
Work in process ( 200 x 18.00)
Finished goods
Work in process
90,000
46,000
14,000
30,000
3,000
600
3,600
86,400
Spoiled units are due to customer’s specification
a.
Work in process
90,000
86,400
Materials
Payroll
FO Applied
b.
c.
46,000
14,000
30,000
Spoiled goods
Work in process
3,000
Finished goods
Work in process
87,000
TRUE/FALSE
1.
True
2.
False
3.
False
4.
True
5.
True
Multiple choice
1,
a
2,
b
3,
d
4,
a
5,
c
6.
7.
8.
9.
10.
3,000
87,000
False
False
False
False
True
6.
b
7.
b
8.
a
9. 700 at 5,400
10.
b
11.
12.
13.
14.
15.
11.
12.
13.
14.
15.
a
a
c
c
d
True
False
False
False
False
16.
17.
18.
19.
20.
d
b
b
a
b
CHAPTER 7 - ACCOUNTING FOR FACTORY OVERHEAD
Problem 1 – Denmark Company
FO rate = 216,000
216,000
90,000
72,000 units
240%of DMC P3.00/unit
Problem 2 - Colossal Corporation
FO rate = 207,000
207,000
500,000
52,100 units
41,40%of DMC
P3,97/unit
216,000
1,600 MHrs.
P135/MHr.
P3.00/MHr
= 16,000 Hrs. x P4.50
3. Actual FO
Less: Applied
216,000
48,000 DLHrs/
90% of DLC P4.50/DLHr.
207,000
207,000
69,000 MHrs. 85,000 DLHrs.
Problem 3 – Manila Company
1. FO rate = P67,500/15,000 DLHrs.
2. Applied FO
216,000
240,000
207,000
765,000
P2.44/DLHr. 27.06%ofDLC
=
P 4.50/DLHr.
=
P 72,000
P 69,000
72,000
Overapplied FO
( P 3,000)
Problem 4 - Ellery Corporation
1.
Job 123
Direct labor cost
600
FO rate
180%
Applied FO
1,080
2.
Job 123
DM
300
DL
600
FO
1,080
TOTAL 1,980
Job 124
1,080
940
1,692
3,712
Job 124
940
180%
1,692
Job 125
1,400
180%
2,520
Job 126
5,120
180%
9,216
Job 125
Job 126
TOTAL
720
4,200
6,300
1,400
5,120
8,060
2,520
9,216
14,508
4,640 18,536
28,868
Problem 5 – Rubi Company
1. FO rate
P 60,000
P 60,000
P 60,000
40,000 DLHrs.
100%of DLC
P 1.50/DLHr.
P60,000
25,000 MHrs.
``
P2.40/MHr.
Page 2
2.
a) Factory overhead was based on direct labor cost
JOB 101 JOB 102
JOB 103
JOB 104
DM
5,000
7,000
8,000
9,000
DL
7,200
10,000
11,000
9,000
FO APP/.
7,200
10,000
11,000
9,000
TOTAL
19,400
27,000
30,000
27,000
JOB 105
10,000
15,000
15,000
40,000
JOB 106
11,000
4,200
4,200
19,400
b). Factory overhead was based on direct labor hours
JOB 101 JOB 102
JOB 103
JOB 104
DM
5,000
7,000
8,000
9,000
DL
7,200
10,000
11,000
9,000
FO APP.
7,500
9,000
9,750
8,400
TOTAL
19,700
26,000
28,750
26,400
JOB 105
10,000
15,000
15,750
40,750
JOB 106
11,000
4,200
4,500
19,700
c( Factory overhead was based o machine hours
JOB 101 JOB 102
JOB 103
JOB 104
DM
5.000
7,000
8,000
9,000
DL
7,200
10,000
11,000
9,000
FO APP.
7,200
7,680
9,600
8,160
TOTAL
19,400
24,680
28,600
26,160
JOB 105
10,000
15,000
15,000
40,000
JOB 106
11,000
4,200
3.600
18,800
Problem 6 – Thermal Corporation
1. Direct method
Direct cost
Allocated cost
S1
S2
Total
Base
FO rate
P1___
P 90,000
P2___
P 60,000
S1___
P 20,000
10,000
20,000
P120,000
50,000 MHrs.
P 2.40/MHr.
10,000
12,000
P 82,000
20,000 DLHrs
P 4.10/DLHr.
( 20,000)
S2___
P 32,000
( 32.000)
2. Step method
P1___
Direct cost
P 90,000
Allocated cost
S1
2,000
S2
30,000
Total
P122,000
Base
50,000 MHrs.
FO rate
P 2.44/MHr
3. Algebraic method
P1___
Direct cost
P 90,000
Allocated
S1
3.143
S2
28,572
Total
P121,715
Base
50,000 MHrs.
FO rate
P 2.43/MHr.
P2___
P 60,000
S1____
P 20,000
S2___
P 32,000
( 20,000)
16,000
( 48,000)
P2___
P 60,000
S1___
P 20,000
S2____
P 32,000
3,143
17,143
P80,286
20,000 DLHrs
P 4.0/DLHr.
( 31,429)
11,429
25,143
( 57,143)
2,000
18,000
P 80,000
20,000 DLHrs
P 4.00/DLHr.
S1 -= 20,000 + 20% S2
S2 = 32,000 + 80% S1
S1
S1 - .16S1
S1
S2
=
=
=
=
=
20000 + 20%( 32,000 + 80% S1)
20,000 + 6,400 + .16 S1
26.400
26,400/.84
31,429
= 32,000 + 80% 31,429
= 32,000 + 25,143
= 57,143
Problem 7 – High Density Corporation
1. Direct method
Insertion Assembly
Direct cost
685,000
795,000
Allocated
Bldg. occupancy
63,158
116,842
Accounting
100,227
144.773
Maintenance
132,955
192.045
Total
981,340
1,248,660
Occupancy Accounting Maintenance
180,000
245,000
325,000
(180,000)
( 245,000)
( 325,000)
2. Step method
Direct cost
Allocated cost
Occupancy
Accounting
Maintenance
Total
Insertion Assembly
685,000
795,000
Occupancy Accounting
180,000
245,000
55.728
94,480
147,365
982,573
( 180,000)
103,096
136,471
212,860
1,247,427
11,146
(256.146)
Maintenance
325,000
10,030
25,145
(360,175)
Problem 8 - Central Parkway Corp.
Direct cost
Allocated
S1
S2
Total
S1
S2
S1
S1 - .025 S1
S1
S2
P1___
120,000
P2____
80,000
13,333
8,333
141,666
6,667
6,667
93,334
S1___
25,000
( 26,667)
1,667
=
=
25,000 + 10% of S2
10,000 + 25% of S1
=
=
=
=
=
25,000 + 10% ( 10,000 + .25S1
25,000 + 1,000 + .025S1
26,000
26,000/.975
26,667
=
=
10,000 + .25(26,667)
16,667
Problem 9 – Megastar Company
S2___
10,000
6,667
(16,667)
Fixed
Variable
95,000 Mach. Hrs.
Per Mach.Hr.
0.36
( 34,200/95,000)
0.44
( 41,800/95,000)
0.80
Total
34,200
41,800
76,000
1.
Actual factory overhead
Less: Applied (100,000 x .80)
Overapplied factory overhead
P 78,600
80,000
( 1,400)
2.
Actual factory overhead
Less: Budget allowed on actual hours
Fixed
34,200
Variable (100,000 x .44)
44,000
Spending variance – unfavorable
P 78,600
Budged allowed on actual hours
Less: Applied factory overhead
Idge capacity variance favorable
P 78,200
80,000
( 1,800)
3.
78,200
P 400
Page 5
Problem 10 - Abner Company
Fixed
Variable
Total
TotalP 33,840
302400
P336,200
72,000 units
Per unit
P 0.47
(33,840/72,000)
4.20
(72,000 x 4.20)
P 4.67
1.
Actual FO
Less: Applied FO 5,400 units x P 4.67
Underapplied FO
P 15,910
25,218
(P 9.308)
2.
Actual FO
Less: Budget allowed on actual hours
Fixed (33,840/12 months)
Variable ( 5,400 x 4.20)
Spending variance – favorable
P 15,910
3.
Budged allowed on actual hours
Less: Applied
Idle capacity variance – unfavorable
2,820
22,680
25,500
( P 9,590)
P25,500
25,218
P 282
Problem 11 - Norman Corporation
1.
Variable rate/hour = 270,000 – 252,000
60,000 - 48,000
= P1.50/DLHr.
2.
Total
Less: Variable
(60,000 x 1.50)
(48,000 x 1.50)
Fixed
2.
High
270,000
Low
252,000
90,000
_______
180,000
72,000
180,000
Actual factor overhead
Less: Applied ( 60,000 x 90%) x 5.25
Overapplied FO
FO rate =
252,000
48,000
= 5.25/ DLHrs.
Page 6
3.
Actual factory overhead
Less: Budget allowed on actual hours
Fixed
Variable (54,000 x 1.50)
Spending variance
4.
273,000
283,500
( 10,500)
273,000
180,000
81,000
Budget allowed on actual hours
Less: Applied
Idle capacity variance
261,000
12,000
261,000
283,500
( 22,500)
Problem 12 - Blanche Corporation
1.
Variable rate/ = 356 ,250 - 348,750
47,500 - 45.000
2.
Total
Less: Variable
45,000 x 3
47,500 x 3
Fixed
=
P3.00/DLHr.
90% capacity
348,750
95% capacity
356,250
135,000
_______
213,750
142,500
213,750
3.
Actual factory overhead
Less: Applied ( 42,500 DLHrs x 7.50)
Underapplied factory overhead
445,000
318,750
126,250
Problem 13 - Bulilit Company
1)
Direct materials (50 x P120)
(100 x P120)
Direct labor
Factory overhead applied ( 100 x P25)
(400 x P25)
Total costs
Divide by number of units
Cost per unit
Product A
P 6,000
2,000
2,500
________
P 10,500
50__
P 210.00
Product B
P 12,000
8,000
10,000
P 30,000
100_
P 300.00
Factory overhead rate = Est. Factory overhead
Est. direct labor hours
= P200,750/ 8,030
= P 25.00/ per direct labor hour
Page 7
2)
Direct materials
Direct labor
Factory overhead applied
Mat. Handling ( 20 x
( 50 x
Setup
( 5x
( 8x
Design changes ( 2 x
( 5x
No. of parts
( 10 x
( 15 x
Total costs
Divide by number of units
Cost per unit
Product A
P 6,000
2,000
P 50 )
P 50)
P 200)
P 200)
P 107.50)
P 107.50)
P 100)
P 100)
Factory overhead rate
Mat. Handling P60,000/1,200
Setup
P 80,000/ 400
Design changes P 10,750/ 100
No. of parts
P 50,000/ 500
=
=
=
=
Product B
P 12,000
8,000
1,000
2,500
1,000
1,600
215
537.50
1,000
________
P 11,215
50__
P 224.30
1,500
P 26,137.50
100___
P 261.38
P 50/ times handled
P 200/setup
P 107.50/change
P 100/part
Problem 14 Job 101
Job 102
Job 103
P 100 ( 2 x P100) P 200 (4 x P100) P 400
400 ( 10 x P 20)
200 (30 x P20)
600
300 ( 10 x P 10)
100 ( 50 x P10)
500
500 ( 50 x P50)
2,500 ( 10 x P50)
500
P 1,300
P 3,000
P 2,000
Setup
( 1 x P 100)
Inspections ( 20 x P 20)
Mat. Moves ( 30 x P 10)
Eng. Hours ( 10 x P 50)
Total factory OH
Factory overhead rate
Setup
P 20,000/200
Inspections P 130,000/6,500
Mat. Moves P 80,000/8,000
Eng. Hrs.
P 50,000/1,000
Page 8
TRUE/FALSE
1. True
2. False
3. True
4. True
5. True
MULTIPLE CHOICE
1.
c
6.
2.
c
7.
3.
d
8.
4.
c
9.
5.
7,000 fav. 10.
`
6.
7.
8.
9.
10.
c
c
c
c
c
True
True
True
False
True
=
=
=
=
P 100/setup
P 20/inspection
P 10/move
P 50/hour
11.
12.
13.
14.
15.
11.
a
12.
13.
d
14. 137,500 hrs.
15.
d
False
False
True
True
True
16.
b
17.
c
18 39,000 UA
19.
a
20.
c
21.
b
22.
a
23.
CHAPTER 8 - ACCOUNTING FOR LABOR
a
TRUE/FALSE
1.
True
2.
False
3.
False
4.
False
5.
False
6.
7.
8.
9.
10.
False
True
True
True
True
Problem 1 - Evergreen Company
A) 1. CHARGED TO THE JOB
2. CHARGED TO FACTORY OVERHEAD CONTROL
Direct materials
Direct labor
Factory overhead
Overtime
Total
CHARGED
JOB 401
28,000
18,000
5,600
______
51,600
CHARGED TO FOC
Other factory costs
Overtime
Total
TO JOB
JOB 402
37,000
23,000
11,200
6,000
77,200
P 16,800
6,000
P 22,800
CHARGED
JOB 401
28,000
18,000
7,600
______
53,600
TO FOC
JOB 402
37,000
23,000
15,200
______
75,200
x 1/3
X 2/3
Problem 2
No.
Regular
OT
Employee Hrs Rate
Pay
Hours
Austria
42
36.00
1,512
2
Bautista
43
36.00
1,548
3
DeSantos 44
45.00
1,980
4
Motus
40
30.00
1,200
Reyes
40
30.00
1,200
TOTAL
7,440
b)
1.
Payroll
Accrued payroll
2.
3.
Page 2
Rate
18.00
18.00
22.50
-
Overtime
Premium
36.00
54.00
90.00
-__
180.00
Total
Pay
1,548
1,602
2,070
-___
7,620
7,620
7,620
Accrued payroll
Cash
7,620
Work in process (1,512 + 1,548 + 1,980)
FOC (1,200 + 1,200 + 180 )
Payroll
5,040
2,580
7,620
7,620
Problem 3 - Norman Company
Employee Guaranteed
Wage
Cruz
2,000
Briones
2,000
David
2,000
Mendoze
2,000
Rivera
2,000
Tolentino
2,000
TOTAL
12,000
Total pay – piece rate
(240 x 7.50)
(286 x 7.50)
(275 x 7.50)
(240 x 7.50)
(225 x 7.50)
(285 x 7.50)
Deficiency
1,800
2,145
2,062.50
1,800
1,687.50
2,137.50
11,632.50
2. Charged to Work in process
3. Charged to factory overhead account -
200
200
312,50
-___
712.50
Total
Payroll
2,000.00
2,145.00
2,062.50
2,000.00
2,000.00
2,137.50
12,345.00
11,632.50
712,50
Problem 4 - Ty-Nee Trailer Company
Deductions were computed on the assumption that previous payment of wages were
made without deductions and all deductions are made on the last payment for the
month.
Assume the following amount as previous wages (for the past 3 weeks)
Castro
5,600
Ardina
7,500
Brioes
6,500
David
6,200
Fajardo
5,900
Tomas
5,800
Villas
5,200
Employee
Castro
Ardina
Briones
David
Fajardo
Tomas
Villas
TOTAL
Continuation
Employee
REGU
HRS.
42
45
48
48
45
42
40
Total
LAR
RATE
40.00
50.00
40.00
40.00
40.00
40.00
40.00
PAY
1,680.00
2,250.00
1,920.00
1,920.00
1,800.00
1,680.00
1,600.00
12,850.00
SSS W/holding
OVER TIME
HRS. RATE
2
20.00
5
25.00
8
20.00
8
20.00
5
20.00
2
20.00
-
Phil.
PAY
40.00
125.00
160.00
160.00
100.00
40.00
-__
625.00
Pag- Total
TOTAL
PAY
1,720.00
2,375.00
2,080.00
2,080.00
1,900.00
1,720.00
1,600.00
13,475.00
Net
Castro
Ardina
Briones
David
Fajardo
Tomas
Villas
TOTAL
Pay
Prem.
1,720.00 250.00
2,375.00 333.30
2,080.00 283.30
2,080.00 283.30
1,900.00 266.70
1,720.00 250.00
1,600.00 233.30
13,475.00 1899.90
Tax
681.28
614.53
840.93
865.33
603.38
461.38
438.28
4,505.11
Health
87.50
112.50
100.00
100.00
87.50
87.50
75.00
650.00
Castro
Total pay (5,600 + 1,720) 7,320
( 4,167) - 208.33
3,153 x 15% - 472,95
681.28
Ardina
Total pay (7,500 + 2,375) 9,875
( 7,167)
208.33
2,708 x 15%
406.20
614.53
Briones
Total pay (6,500 + 2,080) 8,580
(7,917)
708.33
663 x 20%
132,60
840.93
David
Total pay (6,200 + 2,080) 8,280
( 7,500)
708.33
780 x 20%
156.00
864.33
Fajardo
Total pay (5,900 +1,900) 7,800
( 5,167)
208.33
2,633 x 15% 394.95
603.38
Tomas
Total pay (5,800 + 1,720) 7,520
( 5,833)
208.33
1,687 x 15% 253.05
461.38
Page 4
ibig
100.00
100.00
100.00
100.00
100.00
100.00
100.00
700.00
Deduct Pay
1,118.78 601.22
1,160.33 1214.67
1,324.23 755.77
1,348.63 731.37
1,057.58 842.42
898.88 821.12
846.58 753.42
7,755.01 5719.99
Villas
Total pay (5,200 + 1,600)
2.
6,800
(5,267)
208.33
1,533) x 15% 229.95
438.28
Payroll
W/holding tax payable
SSS Premiums payable
Phil Health Contributions payable
Pag-ibig funds contributions payable
Accrued payroll
13,475.00
4,505.11
1,899.90
650.00
700.00
5,719.99
Accrued payroll
Cash
5,719.99
5,719.99
Work in process (12,850 – 1,680)
Factory overhead control (1,680 + 625)
Payroll
MULTILE CHOICE
1.
b
2.
b
3.
a
4.
b.
5.
a
6.
7.
8.
9.
10.
a
d
d
a
c
Entry for No 11 should be
Work in process – Job 1010
Work in process – Job 1011
Factory overhead control (1,250 + 37)
Payroll payable
11,170.00
2,305.00
13,475
11. none of the give
12.
d
13.
d
14.
d
15.
c
9,748
1,200
1,287
12,235
CHAPTER 9 – PROCESS COSTING
Problem 1 a)
Units completed
Units IP end
Actual
8,000
2,000
10,000
b)
Units completed
Units IP end
21,000
4,000
Mat. & Conversion
WD
EP
100%
8,000
1/2
1,000
9,000
100%
3/4
21,000
3,000
25,000
24,000
c)
Units completed
Units IP end
6,000
1,000
500
7,500
100%
3/4
2/5
6,000
750
200
6,950
d)
Units completed
Units IP end
18,000
5,000
4,000
27,000
100%
½
¾
18,000
2,500
3,000
23,500
e)
Units completed
Units IP end
32,000
1,500
4,000
37,500
100%
1/5
¾
32,000
300
3,000
35,300
Problem 2 - Casper Corporation
1)
Units started
11,000
Units completed
Units in process, end
2)
Cost incurred
Equivalent prod.
Unit cost
Problem 3 Case 1
Started
Completed
In process, end
9,000
2,000
11,000
100%
¾
Materials
P 15,750
10,500
P 1.50
5,000
4,000
1,000
5,000
Labor
P 40,950
10,500
P 3,90
9,000
1,500
10,500
Overhead
P 25,200
10,500
P 2.40
Materials
WD
EP
Conversion
WD
EP
100%
100%
100%
¾
4,000
1,000
5,000
4,000
750
4,750
Case 2
Received
50,000
Completed
In process end
44,000
6,000
50,000
Started
35,000
Completed
29,000
100% 44,000
44,000
100% 44,000
¼
1,500
45,500
100% 29,000
100% 29,000
Case 3
In process, end
3,000
3,000
35,000
75%
100%
2,250
3,000
34,250
1/3
1/2
1,000
1,500
31,500
10,500
750
11,250
100%
2/5
10,500
600
11,100
Page 2
Problem 4 - Beautiful Company
Started
12,000
Completed
In process end
10,500
1,500
12,000
Unit cost
M = 72,000/11,250 = 6.40
100%
50%
L = 88,800/11,100 = 8
2. Completed & transferred ( 10,500 x 18.40)
3. In process, end
Materials
L & OH
( 750 x 6.40)
( 600 x 12)
OH = 44,400/11,100 = 4
193,200
4,800
7,200
12,000
Problem 5 - ABM Company
Started/received
Completed
IP, end
Department 1
Department 2
Materials Conversion
Materials Conversion
Actual EP
EP
Actual
EP
EP
60,000
40,000
40,000 40,000
40,000 30,000
30,000
30,009
20,000 20,000
15,000 10,000
5,000
8,000
60,000 60,000
55,000 40,000
35,000
38,000
Costs charged to the department
Cost from preceding dept.
Cost added in the dept.
Materials
480,000
Labor
330,000
Overhead
220,000
Total costs added
1,030.000
Total costs
1,030,000
720,000
8.00
6.00
4.00
18.00
18.00
Total costs accounted for as follows:
C & T (40,000 x 18)
720,000
IP end
Cost from preceding dept.
Materials ( 20,000 x 8) 160,000
Labor
(15,000 x 6) 90,000
18.00
245,000
7.00
190,000
5.00
114,000
3.00
549,000 15.00
1,269,000 33.00
(30,000 x 33)
(10,000 x 18) 180,000
( 5,000 x 7) 35,000
( 8,000 x 5) 40,000
990,000
Overhead (15,000 x 4)
Total cost as accounted for
60,000
Problem 6 - Ten Ten Corporation
Actual
1, Units started
100,000
Completed
IP end
90,000
10,000
100,000
310,000
1,030,000
( 8,000 x 3)
24,000 279,000
1,269,000
Strawberry
WD
EP
Chocolate
WD
EP
Conversion
WD
EP
100% 90,000
100% 10,000
100,000
100% 90,000 100% 90,000
_____ 70% 7,000
90,000
97,000
2. Unit cost
Strawberry = 180,000/100,000 = 1.80
Chocolate = 135,000/ 90,000 = 1.50
Conversion = 116,400/97,000 = 1,20
3. Completed & transferred (90,000 x 4.50)
4. In process, end
Strawberry ( 10,000 x 1.80)
Chocolate
Conversion ( 7,000 x 1.20)
405,000
18.000
8,400
26,400
page 3
Problem 7 – Lenlen Corporation
a) Lost units – discovered at the beginning
Units received
Units completed
80,000
60,000
100% 60,000
Units IP end
Units lost
10,000
10,000
80,000
100% 10,000
-___
70,000
Costs accounted for as follows:
Cost from preceding dept.
560,000
Cost added in the department
Materials
175,000
Labor
121,875
Overhead
243,750
Total cost added
540,625
Total costs
1,100,625
Cost accounted for as follows:
Completed and trsnsferred ( 60,000 x 16.125)
In process, end
Cost from preceding dept. ( 10,000 x 8)
80,000
Materials
( 10,000 x 2.50)
25,000
Labor ( 5,000 x 1.875)
9,375
100% 60,000
50%
5,000
-___
65,000
8.00
2.50
1.875
3.75
8,125
16.125
967,500
Overhead ( 5,000 x 3.75)
Total costs as accounted for
18,750
133,125
1.100,625.
b) Normal – discovered at the end
Units completed
60,000
100% 60.000
100% 60,000
Units IP end
10,000
100% 10,000
50% 5,000
Units lost
10,000
100% 10,000
100% 10,000
80,000
80,000
75,000
Costs charged to the department
Cost from preceding dept.
560,000
7.00
Cost added in the dept.
Materials
175,000
2.1875
Labor
121,875
1.625
Overhead
243,750
3.25__
Total costs added
540,625
7.0625
Total costs
1,100,625
14.0625
Total costs accounted for as follows:
Comp. & gransf. ( 60,000 x 14.0625) + (10,000 x 14.0625)
984,375
IP end
Cost from prec. Dept. ( 10,000 x 7)
70,000
Materials ( 10,000 x 2.1875)
21,875
Labor ( 5,000 x 1.625)
8,125
Overhead (5,000 x 3.25)
16,250
116,250
Total costs as accounted for
1,100,625
c) Abormal – discovered when 60% completed
Units completed
60,000
100% 60,000
Unitx IP ed
10,000
100% 10,000
Units lost
10,000
100% 10,000
80.000
80,000
Costs charged to the department
Cost from preceding dept.
560,000
Cost added in the dept.
Materials
175,000
Labor
121,875
Overhead
243,750
Total added
540,625
Total costs
14.33714
Page 4
Total costs as accounted for
Comp. & transf. ( 60,000 x 14.33714)
FOC (10,000 x 7.00) + (10,000 x 2.1875) + (6,000 x 5.14964)
IP, end
Cost from prec. Dept ( 10,000 x 7.00)
70,000
Materials ( 10,000 x 2.1875)
21,875
100% 60,000
50% 5,000
60% 6,000
71,000
7.00
2.1875
1.71655
3.43309
7.33714
1,100,625
860,228
122,773
Labor ( 6,000 x 1.71655)
Overhead ( 6,000 x 3.43309)
Total cost as accounted for
8,583
17,166 117,624
1,100,625
d) Lost – abnormal discovered at the end
Note - Equivalent production and unit costs the same as lost – Normal
discovered at the end. The difference is only on the allocation of the cost.
Completed & transferred ( 60,000 x 14.0625)
Spoiled goods ( 10,000 x 12.00)
FOC 10,000 ( 14.0625 – 12.00)
IP end
Cost from prec. (10,000 x 7)
Materials ( 10,000 x 2.1875)
Labor (5,000 x 1.625)
Overhead (5,000 x 3.25)
Total costs as accounted for
843,750
120,000
20,625
70,000
21.875
8,125
16,250
116,250
1,100,625
Problem 8 - Briones Company
Units received
28,000
Units completed
16,000
Units IP end
10,000
Units lost – normal
800
Units lost – abnormal 1,200
28,000
100% 16,000
______
16,000
Cost charged to the department
Cost from preceding department
Cost added in the department
Materials
Conversion
Total added
Total costs to be accounted for
Costs accounted for as follows:
Completed & transf. (16,000 x 19) + (800 x 17.50)
FOC ( 1,200 x 17.50)
IP end
Cost from preceding dept. ( 10,000 x 10)
Materials
Conversion (6,000 x 7.50)
Total costs as accounted for
Problem 9 - EDSA Corporation
100% 16,000
60%
6,000
100%
800
100%
1,200
24,000
280,000
10.00
24,000
180,000
204,000
484,000
1.50
7.50
9.00
19.00
318,000
21,000
100,000
45,000
145,000
484,000
Started/received
Increase in units
Completed
IP, end
Lost
60,000
______
60,000
36,000 36,000
9,000
9,000
15,000 _____
60,000 45,000
36,000
3,000
_____
39,000
Page 5
Cost charged to the department
Cost from prec. Dept.
Cost added in the dept.
Materials
180,000
4.00
Labor
78,000
2.00
Overhead
15,600
0.40
Total added
273,600
6.40
Total costs
273,600
6.40
Costs accounted for as follows:
Completed ( 36,000 x 6.40)
230,400
IP end
Cost from prec. Dept.
Mat. ( 9,000 x 4)
36,000
Labor (3,000 x 2)
6,000
OH ( 3,000 x 0.40)
1,200 43,200
273,600
Problem 10
Received
5,000
Completed
3,800 100% 3,800
IP end
800 40%
320
Lost
400 100%
400
5,000
4,520
Costs charged to the dept.
Cost from prec. Dept
60,000
Cost added in the dept.
Materials
22.600
Labor
17,440
Overhead
13,080
Total added
53,120
Total costs as accounted for
113,120
Costs accounted for as follows
Completed ( 3.800 x 24)
Spoiled goods ( 400 x 15)
FOC 400 x (24 – 15)
IP end
Cost from prec. Dept. ( 800 x 12)
36,000
9,000
45,000
39,000
6,000
______
45,000
39,000
6,000
_____
45,000
39,000
2,400
_____
41,400
230,400
5.12
135,000
82,800
41,400
259,200
489,600
3.00
2.00
1.00
6.00
11.12
(30,000 x 11.12)
433,680
(6,000 x 5.12) 30,720
(6,000 x 3.00) 18,000
(2,400 x 2.00) 4,800
(2,400 x 1.00) 2,400 55,920
489,600
100%
20
100%
3,800
160
400
4,360
12.00
5.00
4.00
3.00
12.00
24,00
91,200
6,000
3,600
9,600
Mat. ( 320 x 5)
1,600
Labor ( 160 x 4)
640
Overhead ( 160 x 3)
480 12,320
Total costs as accounted for
113,120
Problem 11 - Diamond Company
Units received
55,000
Increase in units
5,000
60,000
Units completed
48,000 100% 48,000 100% 48,000
Units IP end
12,000 100% 12,000
70%
8,400
60,000
60,000
56,400
Costs charged to the department
Cost from prec. Dept.
24,750
0.4125
Cost added in the dept.
Materials
7,200
0.12
Conversion cost
53,580
0,95
Total added
60,780
1.07
Total costs
85,530
1.4825
Total costs accounted for as follows:
Completed ( 48,000 x 1.4825)
71,160
IP end
Cost from prec. Dept. ( 12,000 x0.4125)
4,950
Materials (12,000 x 0.12)
1,440
Conversion cost ( 8,400 x 0.95)
7,980
14,370
85,530
Page 6
Multiple choice
1.
C
11.
D
21.
D
2.
C
12.
D
22.
B
3.
B
13.
B
23.
B cost should
4.
48,500
14.
11,000
be 2,760,00
5.
C
15.
D
24.
C
6.
B
16.
D
25.
D
7.
C
17.
A
26.
A
8.
C
18.
D
27.
B
9.
B
19.
C
28.
D
10.
D
20.
B
CHAPTER 10 - AVERAGE AND FIFO COSTING
TRUE OR FALSE
1.
TRUE
2.
TRUE
3.
TRUE
MULTIPLE CHOICE - THEORY
1.
B
11.
C
2.
A
12.
C
3.
A
13.
C
4.
5.
6.
7.
8.
9.
10.
FALSE
TRUE
TRUE
FALSE
TRUE
TRUE
TRUE
4.
5.
6.
7.
8.
9.
10.
B
A
C
A
A
D
A
14.
15.
C
D
Problem 1
1) FIFO
Units in process, beg.
Units started
6,000
42,000
48,000
Units completed & transferred (40,000)
IP beg.
6,000
80% 4,800
70% 4,200
Started & completed
34,000 100% 34,000 100% 34,000
Units in process, end
8,000
10%
800
15% 1,200
48,000
39,600
39,400
2) AVERAGE
Units in process, beg.
6,000
Units started
42,000
48,000
Units completed
Units IP end
40,000
100% 40,000
100% 40,000
8,000
10%
800
15%
1,200
48,000
40,800
41,200
Problem 2
1) FIFO
Units in process, beg.
Units started
5,000
35,000
40,000
Units completed & transferred (30,000)
IP beg.
6,000
85% 5,100
75% 4,500
Started & completed
24,000 100% 24,000 100% 24,000
Units in process, end
10,000
20% 2,000
30%
3,000
40,000
31,100
31,500
PAGE 2
2) AVERAGE
Units in process, beg.
Units started
5,000
35,000
40,000
Units completed
Units IP end
30,000
100%
10,000
20%
48,000
Problem 3
1)
Units in process beg.
Units started
30,000 100%
2,000
30%
32,000
30,000
3,000
33,000
300
2,000
2.300
Units comp. & transf. (1,700)
IP beg.
Started & completed
Units in process, end
300
1,400
600
2,300
40%
100%
40%
120
70%
1,400
100%
240
20%
1,760
210
1,400
120
1,730
2)
Unit cost -
540
Materials 3,714/1760
Conversion 2,258/1730
6,512
=
=
2.110227
1.305202
3.415429
3) Cost of units transferred out
From IP beg.
Cost last month
540
Cost added Mat. ( 120 x 2.110227)
253
Conversion ( 210 x 1.305202)
274
From units started & completed (1,400 x 3.415429)
4) Cost of ending inventory
Materials (240 x 2.110227)
Conversion ( 120 x 1.305202)
1,067
4,782
5,849
507
156
663
Problem 4 1) FIFO
Units in process, beg
Units started
8,000
14,000
22,000
Units Completed ( 17,000)
IP beg.
8,000
70% 5,600
70%
5,600
Started & completed
9,000
100% 9,000
100%
9,000
Units in process, end
5,000
80% 4,000
40%
2,000
22,000
18,600
16,600
Page 3
Unit cost
48,240
126,852/18,000
219,120/16,600
394,212
Materials
Conversion
Completed & transf.
IP beg.
Cost labor month
Cost added (5,600 x 20.02)
Started & completed ( 9,000 x 20.02)
= 6.82
= 13.20
20.02
48,240
112,112
160,352
180,180
340,532
IP end
Materials ( 4,000 x 6.82)
Conversion ( 2,000 x 13.20)
2) AVERAGE
Units completed
Units IP end
Unit cost
27,280
26,400
17,000
5,000
22,000
100% 17,000 100%
80% 4,000 40%
21,000
53,680
394,212
17,000
2,000
19,000
Materials
16,440 + 126,852 = 6.823428
21,000
Conversion = 31800 + 219,120 = 13.206316
19,000
20.029744
Completed & transferred ( 17,000 x 20.029744)
IP end
Materials ( 4,000 x 6.823428)
Conversion (2000 x 13.206316)
340,506
27,294
26,412
53,706
394,212
Problem 5 – Auto Novelties, Inc.
a. Average
1) Units in process beg.
15,000
Units started
250,000
265,000
Units completed & transf. 245,000
Units in process end
20,000
265,000
2) Unit cost
Materials
Converion
100%
100%
245,000
20,000
265,000
210,000 + 3,500,000
265,000
100%
40%
= 14.00
60,000 + 1,458,000 = 6.00
253,000
20,00
245,000
8,000
253,000
Page 4
3)
4)
Completed & transf. (245000 x 20)
IP ined
Materials ( ( 20,000 x 14)
Conversion ( 8000 x 6)
b) FIFO
1) Units completed ( 245,000)
IP beg
Started & completed
230,000
Units IP beg.
8,000
4,900,000
280,000
48,000
15,000
230,000
20,000
1/3
100% 230,000
100%
265,000
2)Unit cost:
Materials
Conversion
3,500,000/250,000
1,458000/243,000
328,000
5,228,000
5,000
100%
20,000
40%
250,000
=
=
243,000
14.00
6.00
20.00
3) Completed& transferred
From IP beg.
Cost last month
270,000
Cost added ( 5,000 x 6)
30,000
From started & completed ( 230,000 x 20)
4) IP end
Materials ( 20,000 x 14)
Conversion (8,000 x 6)
328,000
300,000
4,600,000
4,900,000
280,000
48,000
5,228,000
Problem 6 - Ellery Company
A) AVERAGE
1) Units IP beg.
Units started
Units completed
Units IP ed
2)
Unit cost
15,500
36,000
51,500
48,000
3,500
51,500
100%
100%
Materials 7,800 + 54,000
51,500
48,000
3,500
51,500
=
100%
45%
1.20
48,000
1,575
49,575
Conversion 20,150 + 79,000=
49,575
3)
Completed & transferred ( 48,000 x 3.20)
153,600
4) IP end
Materials ( 3,500 x 1.20)
Conversion ( 1,575) x 2.00)
Page 5
B) FIFO
1) Units IP beg
Units started
Unit cost
4,200
3,150
7,350
160,950
15,500
36,000
51,500
Units completed (48,000)
IP beg.
Started & completed
Units IP end
2)
2.00
3,20
15,500
32,500
100%
3,500
100%
51,500
IP beg.
27,950
Materials 54,000/36000
=
Conversion 79,000/39,500 =
160,950
3) Completed & transferred
IP beg.
Cost last month
Cost added ( 5,425 x 2)
Started & completed ( 32,500 x 3.50)
Units completed
1.50
2.00
3.50
27,950
10,850
113,750
4) IP end
Materials ( 3,500 x 1.50)
Conversion ( 1,575 x 2)
Problem 7 - GDL Company
A) AVERAGE
Units IP beg
Units received
35%
5,425
32,500
100% 32,500
3,500
45%
1,575
36,000
39,500
152,550
5,250
3,150
8,400
160,950
10,000
40,000
50,000
35,000
100%
35,000
100%
35,000
Units IP end
Units lost – normal
10,000 100%
5,000
50,000
10,000
50%
______
45,000
5,000
______
40,000
Unit cost
Cost from preceding dept. 40,000 + 140,000 = 4.00
50,000 – 5,000
Materials
20,000 + 70,000
45,000
= 2.00
Labor
39,000 + 162,500
40,000
= 5.0375
Overhead
42,000 + 130,000
40,000
= 4.30
_____
15.3375
Page 6
Problem 7 – continuation
Completed & transferred ( 35,000 x 15.3375)
536,812.50
IP end
Cost from prec. Dept ( 10,000 x 4)
Materials
( 10,000 x 2)
Labor
( 5,000 x 5.0375)
Overhead
( 5,000 x 4.30)
40,000.00
20,000.00
25,187.50
21,500.00
106,687.50
B)FIFO
Units IP beg.
Units received
10,000
40,000
50,000
Units completed ( 35,000)
IP beg.
10,000
1/4
2.500
Started & completed 25,000 100%
25,000
100% 25,000
Units IP end
10,000 100%
10,000
1/2
5,000
Units lost
5,000
______
______
50,000
35,000
32,500
Unit cost
IP beg.
From preceding dept.
Materials
Labor
141,000
140,000/40,000 – 5,000 =
70,000/35,000
=
2.00
162,500/32,500
=
4.00
5.00
Overhead
130,000/32,500
643,500
Completed & transferred *35000)
IP beg
Cost last month
Cost added ( 2.500 x 9)
Received & completed ( 25,000 x 15)
=
4.00
15.00
141,000
22,500
375,000
538,500
IP end
Cost from preceding dept. ( 10,000 x 4)
Materials
(10,000 x 2)
Labor
( 5,000 x 5)
Overhead
( 5,000 x 4)
40,000
20,000
25,000
20,000
105,000
Page 8 - Janice Manufacturing Co.
Units in process, beg.
2,000
Units received from preceding dept. 9,000
11,000
Units comp. & transf.
8,000
IP beg.
2,000
50%
Received & completed
6,000
Units in process, end
3,000
1/3
11,000
Cost – IP beg.
Cost from precedig dept.
Cost added in the dept
Materials
Labor
Overhead
Total costs to be accounted from
Costs accounted for as follows:
Cost of units completed & transf.
10,250
36,000
4,000
8,000
6,000
18,000
64,250
1,000
100% 6,000
1,000
8,000
P 4.00
.50
1.00
.75 .
2,25
6.25
IP beg.
10,250
Cost added ( 1,000 x 2.25)
2,250
Cost & transf. (6,000 x 6.25)
12,500
37,500
50,000
IP end
Cost from preceding (3,000 x 4.00)
M, L, O ( 1,000 x 2.25)
Total costs as accounted for
12,000
2,250
14,250
64,250
Problme 9 – Norman Corporation
AVERAGE METHOD
Units IP beg.
Units started
1,000
9,000
10,000
Units completed & transferred
Units IP end
750
Units lost – abnormal
100%
500
8,000 100% 8,000 100% 8,000 100% 8,000
1,500 100% 1,500
75% 1,125
50%
500 100%
10,000
500
100%
10,000
500
9,625
9,250
Cost to be accounted for
Materials
Labor
Overhead
Cost IP beg
2,520
1,540
2,800
6,860
Cost added Unit cost
72,480
7.50
21,560
2.40
43,450
5.00
137,490
14.90
Page 3
Cost accounted for as following
Completed & transferred ( 8,000 x 14.90)
119,200
Factory Overhead ( 500 x 14.90)
7,450
In process, end
Materials (1,500 x 7.50)
11,250
Labor ( 1,125 x 2.40)
2,700
Overhead ( 750 x 5.00)
3,750
17,700
Total costs as accounted for
144,350
Problem 9 - Norman Corporation
FIFO METHOD
Units completed & transferred
IP beg.
1,000
40%
400
65%
650 75%
750
Started & completed
7,000
Units IP end
750
Units lost – abnormal
100% 500
7,000
100%
7,000 100% 7,000 100%
1,500
100%
1,500
500
10,000
100%
9,400
75% 1,125
50%
500
500
100%
9,275
9,000
Cost to be accounted for
Cost IP beg.
Cost added
Materials
Labor
Overhead
6,860
72,480
21,560
43,450
137,490
144,350
7.710638
2.324528
4.827778
14,862944
14,862944
Total costs to be accounted
Costs accounted for as follows:
Completed & transferred
IP beg.
Cost – last month
6,860
Cost added
M ( 400 x 7.710638)
3,084
L ( 650 x 2.324528)
1,511
O ( 750 x 4.827778)
3,621
Started & comp.(7,000 x 14.862944) 104,041___ 119,117
Factory overhead control ( 500 x 14.862944)
7,432
In Process, end
Materuaks ( 1,500 x 7.710638)
11,566
Labor ( 1,125 x 2.324528)
2,615
Overhead ( 750 x 4.827778)
3,620
17,801
144,350
Problem 10 1)
Units IP beg
Units received
Units completed
Units IP end
5,000
20,000
25,000
21,000
4,000
100% 21,000
______
100% 21,000
30%
1,200
25,000
2)
Unit cost
Transferred in
21,000
22,200
17,750 + 104,000 =
25,000
+ 23,100
21,000
4.87
Materials
0
= 1.10
Conversion
7,250 + 38,400 = 2.056306
22,200
8.026306
3) Completed ( 21,000 x 8.026306 )
168,552
4) IP end
Prec. Dept. cost (4,000 x 4.87)
19,480
Materials
Conversion ( 1,200 x 2.056306)
2,468
21,948
Problem 11 – Nofat Company
Conversion
1) Units IP beg.
600
Units received
3,900
4,500
Units completed
4,100
4,100
Units IP end
400
120
4,500
4,220
2) Units cost
From preceding department
Material A
100%
4,100
100%
400
Material B
100%
4,500
9,090 + 67,410 =
4,500
4,000 + 21,200
4,500
=
Material B
0 + 16,400
4,100
=
1,340
190%
_____
30%
4,100
Material A
Conversion
4,100
+ 17,650 =
4,220
17,00
5.60
4.00
4.50
______
31.10
3) Completed ( 4,500 x31.10)
139,950
4) IP end
Cost from precede dept. ( 400 x 17.00)
Material A ( 4.00 x 5.60)
Conversion ( 120 x 4.50)
6,800
2,240
540
9,580
Page 10
Problem 12
Units started
10,500
Units completed
Units IP end
Buts kist - Boral
7,000
3,000
500
10,500
100%
7,000
Problem 13 - Alonzo Manufacturing
Materials
Cost – IP beg.
P 6,544
Current cost
281,656
Total costs
P288,200
Divided by equivalent prod.
262,000
Unit cost
P 1.10
1.
Completed & transferred
2.
Total costs to be accounted for
Less: Cost of units IP end
Costs of units completed
100%
7,00
Conversion
Total
P 16,803
P 23,347
344,817
626,473
P 361,620
P649,820
258,300
P
1,40
P 2.50
( 255,200 x 2.50)
P 638,000
P 649,820
11,597
P 638,223
Problem 14 - Nicole Mfg. Co.
1)
Units IP beg.
12,000
Units received
80,000
Increase in units
4,000
96,000
Units completed
Units IP end
Costs – IP beg.
17,735
86,000
100%
10,000
100%
06,000
Transf. In
P 11,800
86,000
100%
10,000
2/5
96,000
86,000
4,000
90,000
Materials
Labor
Overhead
Total
P 3,125
P 1,490
P 1,320
P
Current cost
186,145
Total costs
P203,880
Divided by EP
Unit cost
2.18
86,120
P 97,920
21,835
P 24,960
96,000
P
1.02
96,000
P 0.26
43,510
P45,000
90,000
P 0.50
34,680
P 36,000
90,000
P 0.40
P
2)
Completed & transferred ( 86,000 x 2.18)
187,480
3)
P
IP end
Cost from prec. Dept (10,000 x 1.02)
P
10,200
Materials ( 10,000 x 0.26)
Labor ( 4,000 x 0.50)
2,600
Overhead ( 4,00 x 0.40)
1,600
P
2,000
16,400
Problem 15 1)
Units received.
60,000
Units completed
50,000
100%
50,000
100%
50,000
Units IP beg.
9,000
100%
9,000 50%
4,500
Units lost – abnormal 1,000
______
______
60,000
59,000
54,500
Cost from prec. Dept.
212,400
3.54
Materials
84,370
1.43
Coversion
129,710
2.38
426,480
7.35
2)
Factory OH
3,540
( 1,000 x 3.54)
P
3)
Completed & transf. (50,000 x 7.35)
367,500
4)
IP end
Cost from prec. Dept ( 9,000 x 3.54)
31,860
Materials ( 9,000 x 1.43)
Conversion ( 4,500 x 2.38)
55.440
12,870
10,710
Problem 16 – Bewitched Co.
1)
Cost per unit = 122,360/19000
=
6.44
Completed & transferred
From IP beg.
Cost last month
Cost added ( 1,000 x 1.45)
Received & completed ( 14,000 x 6.45)
Unit cost
Cost from preceding dept.
M,L,O
Units completed ( 19,000)
From IP beg.
From units received
Units IP end
2)
30,610
1,450
90,300
122.360
110,000/22,000
30,450 /21,000
5.00
1.45
5,000 1/5
1,000
14,000 100% 14,000
8,000 ¾
6,000
27,000
21,000
IP end
Cost from preceding ( 8,000 x 5)
M, L, O ( 6,000 x 1.45)
Problem 17 – Nicole Company
Units IP beg.
Units received
=
=
6,45
40,000
8,700
48,700
1,400
14,000
15,400
Units Completed & transf.
Units IP end
Units lost – normal
Units lost – abnormal
11,200
100%
11,200 100% 11,200
3,500
100%
3,500
40%
1,400
560
100%
560
100%
560
140
100%
140
100%
140
15,400
1)
Completed & transf. ( 11,200 x 9) + (560 x 9)
105,840
2)
FOC
( 140 x 9)
15,430
13,300
P
1,250
3)
IP end
Cost from prec dept. ( 3,500 x 5)
17,500
Materials ( 3,500 x 1)
Conversion ( 1,400 x 3)
3,500
4,200
26,200
Problem 18 - Samahan Inc.
1)
Units IP end ( 500 x 50% x 1.32)
P 33,000
2)
Finished goods, end ( 700 x 132)
P 92,400
3)
From FG beg.
600 uittz
From units completed – IP beg.
1,250 “
From units received and completed
800 “
P 76,800
161,000
105600
Cost of goods sold
2,650
Or
Total available for sale
FG beg.
600 units
Completed from IP beg.
1,250
Completed from started
1,500 x 132
Total goods available for sale
435,800
Less: FG Inventory
Cost of goods sold
P 343,400
P 76,800
161,000
198,000
92,400
P 343,400
Computation of equivalent production
Units IP beg.
1,250
Units started
2,000
3,250
Units completed (2,750)
IP beg.
1,250
20%
250
Started & completed 1,500
100%
1,500
Units IP end
500
50%
250
3,250
2,000
Unit cost ( 264000/2000 =
Completed & transferred
IP beg.
Cost last month
128,000
132.00
P
Cost added ( 250 x 132)
Cost of IP beg. upon completion
33.000
P
161,000
Units started & completed ( 1,500 x 132)
P
198,000
Problem 19 - Michelle Company
Department 1
Actual Materials Conversion
Conversion
Started or received 60,000
Comp. & transf.
40,000
IP end
Department 2
Actual Materials
45,000
45,000
45,000
45,000
40,000
40,000
15,000
60,000
15,000
60,000
9,000
54,000
5,000
45,000
5,000
45,000
4,000
44,000
Costs charged to the dept.
Cost from preceding dept.
Cost added in the dept.
Materials
90,000
1,50
Labor
64,800
1.20
Overhead
59400
1.10
Total added
214,200
3.80
Total costs
214,200
3.80
Costs accounted for as follows
Comp. & transf. ( 45,000 x 3.80)
171,000
354,000
IP beg
Cost from prec dept
Mat. ( 15,000 x 1.50)
22,500
Labor ( 9,000 x 1.20)
10,800
OH ( 9,000 x 1.10)
9,900
43,200
41,700
Total costs as accounted for
214,200
395,700
Journal entries
1.
Materials
Accounts payable
2.
Work in process – Dept. 1
Work in process – Dept. 2
Materials
171,000
3.80
112,500
2.50
61,600
1.40
50,600
1.15
224,700
5.05
395,700
8.85
(40,000 x 8.85)
(5,000 x 3.80) 19,000
(5,000 x 2.50) 12,500
(4,000 x 1.40) 5,600
(4,000 x 1.15) 4,600
180,000
180,000
90,000
112,500
202,500
3.
Payroll
Accrued payroll
125,600
125,600
4.
Work in process – Dept. 1
Work in process – Dept. 2
Factory OH
Payroll
64,800
61,600
2,200
128,600
5.
Work in process – Dept. 1
Work in process – Dept. 2
Factory OH Applied
59,400
50,600
110,000
6.
Work in process – Dept. 2
171,000
Work in process – Dept. 1
171,000
7.
Finished goods
354,000
Work in process – Dept. 2
354,000
8.
Accounts receivable
Sales
600,000
600000
Cost of goods sold
252,000
Finished goods
75,000 + (20,000 x 8.85)
252,000
Michelle Company
Cost of Goods sold Statement
For the month of June, 2008
Direct materials used
Materials, June 1
Purchases
Total available for use
Less: Materials, June 30
Direct labor
Factory overhead
Total manufacturing costs
Less: Work in process, June 30
Cost of goods manufactured
354,000
Finished goods, June 1
75,000
Total goods available for sale
429,000
P 50,000
180,000
230,000
27,500 P 202,500
126,400
110,000
438,900
84,900
Less: Finished goods, June 30
177,000
Cost of goods sold
Multiple choice (problems)
1. A
11. B
2. A
12. C
3. D
13 A
4. C
14. C
5. A
15. C
6. A
16 B
7. A
17. A
8. C
18. A
9. D
19. A
10. C
20. A
21. A
22. D
23. C
24. D
25. B
26 A
27. B
28. B
29 C
30. B
P 2,52,000
31. C
CHAPTER 11 –JOINT PRODUCTS/BY-PRODUCTS
TRUE/FALSE
1. T
2. F
3. F
4. T
5. T
6. T
7. T
8. F
9. T
10.T
Problem 1 – Owen Company
1. Market Value method
Product
Units Produced MVat SO
JC
A
20,000
4.00
B
32,000
1.75
C
36,000
3.00
75,600
D
24,000
2.75
46,200
11. T
12, F
13. T
14. T
15. F
Total MV Percentage
80,000
56,000
108,000
70%
56,000
39,200
66,000
310,000
217,000
2. Average Unit Cost Method
Product
Units Produced Average Unit Cost
A
20,000
1.9375
B
32,000
C
36,000
D
24,000
3.Weighted average method
Share in
Share in JC
38,750
62,000
69,750
46,500
217,000
Product
A
B
C
D
Units Produced WF Total WF Cost/WF Share in JC
20,000
3.0
60,000
.3875
23,250
32,000
5.5
176,000
68,200
36,000
5.0
180,000
69,750
24,000
6.0
144,000
55,800
217,000
Problem 2 - Meadows Company
a. Sales value at split-off method
Product
SV at SO
Percentage
A
88,000
60%
B
77,000
C
55,000
b. Physical units method
Product
Units Produced
A
13,200
B
8,800
C
4,400
Page 2
Problem 3 – Anchor Company
1. Market value method
Product
SV at SO Percentage
A
420,000
60%
340,000
B
270,000
192,000
C
60,000
48,000
Share in JC
52,800
46,200
33,000
132,000
Average UC Share in JC
5.00
66,000
44,000
22,000
132,000
Share in JC Add’l Cost
252,000
88,000
162,000
30,000
36,000
12,000
450,000
580,000
2. Average unit cost method
Product Units Produced Ave UC Share in JC
Cost
A
50,000
4.50
225,000
313.000
B
40,000
180,000
210,000
C
10,000
45,000
57,000
Total Cost
130,000
Add’l Cost
88,000
30,000
12,000
Total
450,000
130,000
580,000
Problem 4 – Laguna Chemical Company
1)
a) - Revenue from by-product shown as additional sales
Sales
Main product
180,000
By-product
1,000
181,000
Less: Cost of goods sold
Materials
30,000
Labor
17,400
Overhead
17,400
Cost of goods manufactured
64,800
Less: Inventory, end
6,480
58,320
Gross profit
122,680
Less: Selling and administrative expenses
54,000
Net Income
68,680
b)
Revenue from by-product shown as deduction from cost of goods sold of
MP
Sales
Main product
Less: Cost of goods sold
Materials
Labor
Overhead
Cost of goods manufactured
Less: Inventory, end
Cost of goods sold
Less: Revenue from by-product
Gross profit
Less: Selling and administrative expenses
180,000
30,000
17,400
17,400
64,800
6,480
58,320
1,000
57,320
122,680
54,000
Net Income
Page 3
68,680
c)
Revenue from by-product shown as other income
Sales
Main product
180,000
Less: Cost of goods sold
Materials
30,000
Labor
17,400
Overhead
17,400
Cost of goods manufactured
64,800
Less: Inventory, end
6,480
Cost of goods sold
58,320
Gross profit
121,680
Less: Selling and administrative expenses
54,000
Net operating icome
67,680
Other income – Revenue from by-product
1,000
Net Income
68,680
2. Revenue from by-product shown as deduction from production cost of main
product
Sales
Main product
Less: Cost of goods sold
Materials
Labor
Overhead
Total mfg. cost/cofg manufactured
Less: Rev. from by-product
Net manufacturing cost
Less: Inventory, end
Cost of goods sold
Gross profit
Less: Selling and administrative expenses
Net income
Problem 5 – Fisher Company
1,
By-product A
Sales value
P 6,000
Mfg. cost after separation
( 1,100)
Marketing & adm. Exp.
( 750)
Desired profit
( 900)
Share in the joint cost
3,250
180,000
30,000
17,400
17,400
64,800
1,000
63,800
6,380
57,420
122,580
54,000
68,580
By-product B
P 3,500
( 900)
( 500)
( 420)
1,680
Total manufacturing cost before separation or joint cost
Share of by-product A
Share of by-product B
37,500
( 3,250)
( 1,680)
Share of main product in the mfg. cost before separation
Page 4
2.
Main Product
Byproduct B
Sales
75,000
Less: Cost of goods sold
Share in joint cost
32,750
Cost after separation 11,500 44,250
2,580
Gross profit
30,750
Less: Marketing & Adm. Exp. 6,000
500
Net Income
24,750
420
Problem 6 - Eternity Company
1.
Sales value – Z
Further processing cost
Marketing & adm. Exp.
Desired profit
Share of Z in the joint cost
32,570
By-product A
6,000
3,500
3,250
1,100
4,350
1,680
900
1,650
920
750
900
12,000
( 4.000)
( 2,000)
( 2,000)
4,000
Hypothetical MV
2.
Product
Units
Per Unit
Total HMV
Share in JC
X
8,000
20-5
120,000
80,000
Y
10,000
25-7
180,000
120,000
300,000
200,000
Problem 7 – North Avenue Products Company
1.
East
Sales
17,500
Less: Cost of goods sold
Share in Joint cost
6,480
Cost after split-off
3,000
3,000
Total mfg. cost
9,480
Less: Inventory end
1,580
7,900
10,960
Percentage
40%
60%
West
8,500
Total
26,000
3,600
10,080
-
3,600
540
13,080
3,060
2,120
Gross profit
9,600
5,440
15.040
Less: Selling & Adm. Exp.
3,500
1,700
Net income
6,1 00
3,740
5,200
9,840
2. Schedule allocating the joint cost to “East” and “West”
Hypothetical MV
Products
Units Produced
Per Unit
Total
Percentage
Share in JC
East
3,000
7.00 – 1,00 18,000
36%
6,480
West
2,000
5.00
10,000
3,600
28,000
10,080
Total joint cost
Less: Net revenue of by-product
Sales value
200
Less: Selling & adm. Exp
( 20)
Net joint cost to be allocated
10,260.00
180.00
10,080.00
Page 5
Problem 8
Products
X
Y
Z
Sales value at SO
138,900
69,100
42,000
250,000
Percentage
55.56%
Share in JC
100,000
27.64%
49,760
16.80%
_30,240
100.00%
180,000
42000/250,000 = 16.80% x 180,000
100,000/180,000 = 55.56% x 250,000 = 138,900
100% - 55.56% - 16.80%
= 27.64%
Problem 9 - Magnolia Company
1) Joint cost allocated, if C is treated as a main product.
Products Sales Value at FP
Add’l cost
HMV
Percentage Share in JC
A
250,000
25,000
225,000
B
175,000
20,000
155,000
C
12,200
Multiple choice – Theory
1.
C
2.
D
3.
A
4.
D
5.
B
-
6.
7.
8.
9.
10.
Multiple choice – Problems
1.
B.
2.
D
3.
C
4.
D
5.
DECREASE – 90,000
6.
B
7.
C
8.
A
9.
C.
10.
B.
12,200
392.200
D
B
C
A
C
11.
12.
13.
14.
15.
16.
17.
18.
19.
20.
11.
12.
13.
14.
15.
A
B
C
B
C
D
D
D
A
B
C
C
A
A
B
21.
22.
23.
24.
25.
26.
27.
D
A
C
C
C
D
C
CHAPTER 12 - STANDARD COSTING
Problem 1
1. Actual price
Std. price
Difference
X Act. Qty.
MPV
3 Actual rate
Std. rate
Difference
X Actual Hrs.
Labor rate var.
P 2.52
( 2.50)
0.02
4,450
89.00 U
P 3.00
( 3.10)
( 0.10)
3,150
( 315) F
Problem 2
1. Actual price (9,540/3,600) 2.65
Std. price
(2.75)
Difference
(0.10)
X Actual quantity
3,600
MPV
( 360) F
2/. Actual qty. used 4.450
Std. qty.
(4,050)
Difference
400
x Std. price
x 2.50
MQV
1.000 U
4. Actual hours
3,150
Std. hours
( 3,000)
Difference
150
x Std. rate
3.10
LEV
465 U
2. Actual qty. used 3,200
Std. qty ( 1,500 x2)(3,000)
Difference
200
x Std. price
2.75
MQV
550 U
2. Actual rate (5100/340)
Std. rate
Difference
5. Actual hrs.
Std. hrs.
Difference
X Variable rate
Variable efficiency
15.00
15.00
0
4. Actual hrs.
340
Std. hrs. (1,500 x .2) (300)
Difference
40
X Std. rate
15.00
LEV
600 U
340
( 300)
40
7.00
280 U
Problem 3
Fixed
Variable
Total
Total
5,000
7,500
12,500
5,000 DLHrs.
Per DLHr
1.00
1.50
2.50
Std. hrs./unit = 5,000 DLHrs..
4,000 units
Materials
1. Actual price
P 1.02
2.
Std. price
( 1,00)
Difference
.02
X actual qty.
7,200
MPV
144 U
Labor
1. Actual rate (33,750/4,500) 7,50
2/
Std. rate
( 8.00)
Difference
( 0.50)
X actual hrs.
4,500
LRV
(2,250) F
Factory overhead
1. Actual overhead
Less: Budget allowed on std. hrs.
Fixed
5,000
Variable (4,375 x 1.50)
6,562.50
Controllable variance
2. Budget allowed on std hrs.
Less: OH applied to production
(4,3,75 x 2.50)
Volume variance
= 1.25 Hrs./unit
Actual qty.
Std.(3,500 x 2)
Difference
x Std. price
MQV
7,200
7,000
200
1.00
200 U
Actual hrs.
4,500
Std. hrs. (3,500 x 1.25) 4,375
Difference
125
x Std. rate
8.00
LEV
1.000
11.250.00
11,562.50
( 312.50)
11,562.50
10,937.50
625.00
Problem 4
Fixed
Total
620,000
155,000 DLHrs.
Per DLHr
4.00 (4 x 155,000)
Std. hrs./unit = 10.00/4
Variable
465,000
Total
1,085,000
3.00
7.00
(465,000/155,000)
1. Actual variable overhead
Less: AH x Variable rate ( 148,000 x 3)
Variable spending variance
= 2.5 Hrs.
475,000
444,000
31,000 U
AH x Variable rate
Less: Std. hrs. x V rate ( 60,000 x 2.5 x 3)
Variable efficiency variance
444,000
450,000
( 6,000) F
2. Actual fixed overhead
Less: Fixed overhead at normal capacity
Fixed spending variance
632,500
620,000
12,500 U
Fixed overhead at normal capacity
Less: Std. hrs. x fixed rate (150,000 x 4)
Fixed volume variance
3. Actual factory overhead (475,000 + 632,500)
Less: Budget allowed on std. hrs.
Fixed
620,000
Variable ( 150,000 x 3)
450,000
Controllable variance
Budget allowed on std. hrs
Less: Std. hrs. x OH rate (150,000 x 7)
Volume variance
4. Actual factory overhead
Less: Budget allowed on actual hrs.
Fixed
Variable (148,000 x 3)
Spending variance
620,000
600,000
20,000 U
1,107,500
1,070,000
37,500 U
1,070,000
1,050,000
20,000 U
1,107,500
620,000
444,000
1,064,000
43,500 U
Budget allowed on actual hrs.
Less: Budget allowed on std. hrs.
Efficiency variance
1,064,000
1,070,000
(
6,000) F
Budget allowed on std. hrs.
Less: Std. hrs. x FO rate (150,000 x 7)
Volume variance
1,070,000
1,050,000
20,000 U
5. Spending variance
Variable efficiency variance
43,500 U
(
6,000) F
Actual hours
Less: Standard hours
Difference
X Fixed overhead rate
Fixed efficiency variance
148,000
150,000
( 2,000)
4.00
( 8,000) F
Budget allowed on actual hours
Less: Actual hrs. x factory OH rate
148,000 x 7
Idle capacity variance
1,064,000
1,036,000
28,000 U
Problem 5
Additional information - Actual materials used – 1,200,000 pounds. Materials
added 100% at the beginning
Units completed
40,000
From in process, beg.
10,000
20%
2,000
From started
30,000 100% 30,000 100%
30,000
Units in process, end
20,000 100% 20,000
40%
8,000
Total
60,000
50,000
40,000
Materials
Actual price
Less: Std. price
Difference
X Actual mat. Purchased
Mat. Price variance
1.20
1.00
0.20
2,000,000
400,000 U
Actual qty. used
1,200,000
Less: Std. qty.
1,000,000
Difference
200,000
x Std. price
1.00_
Mat. Usage variance 200,000 U
Labor
Actual rate
Less: Std. rate
Difference
X Actual hrs.
Labor rate variance
14.00
15.00
( 1.00)
60,000
( 60,000)
Actual hours
Less: Std. hours
Difference
x Std. rate
Labor efficiency
Factory overhead
Actual factory overhead ( 280,000 + 83,000)
Less: Budget allowed on std. hrs.
Fixed
Variable (40,000 x 5)
Controllable variance
60,000
40,000
20,000
15.00
300,000
363,000
80,000
200,000
280,000
123,000
-
Budget allowed on std. hrs.
Less: Overhead applied (40,000 x 7)
Volume variance
Problem 6
Materials
Actual price
1.05
Less: Std. price
1.00
Difference
0.05
X Actual qty. (63,525/1.05) 60,500
Mat. Price variance
3,025
280,000
280,000
-
Actual qty. used
60,500
Less: Std. qty. (5,000 x 12) 60,000
Difference
500
x Std. price
1.00
Mat. Qty. variance
500
Labor
Actual rate
Less: Std. price
Difference
X Actual hrs.(96,075/9.15)
Labor rate variance
9.15
9.00
0.15
10.500
1,575
Actual hours
Less: Std. hrs. (5,000 x 2)
Difference
x Std. rate
Labor efficiency
144,000 DLHrs.
Per Hour
2.00
2.50
4.50
Total
Fixed
288,000
Variable
360,000
Total
648,000
Factory overhead
Actual factory overhead
(27,000 + 24,500)
51,500
Less: Budget allowed on std. hrs.
Fixed (288,000/12)
24,000
Variable ( 10,000 x 2.50)
25,000 49,000
Controllable variance
2,500
B udget allowed on std. hours
Less: Std. hrs. x std. rate (10,000 x 4.50)
Volume variance
1.
2.
49,000
45,000
4,000
Materials ( 60,500 x 1.00)
Material price variance
Accounts payable
60,500
3,025
Work in process (5,000 x 12 x 1)
Material quantity variance
60,000
500
63,525
10,500
10,000
500
9.00
4,500
Materials
3.
4.
5.
6.
7.
60,500
Payroll
Accrued payroll
96,075
Work in process (5,000 x 2 x 9.00)
Labor rate variance
Labor efficiency variance
Payroll
90,000
1,575
4,500
Factory Overhead Control
Misc, Accounts
51,500
Work in process
Factory overhead applied
45,000
Factory overhead applied
Factory overhead - Controllable variance
Factory overhead - Volume variance
Factory overhead control
45,000
2,500
4,000
96,075
96,075
51,500
45,000
51,500
8.
Finished goods (5,000 x 39)
Work in process
9.
Accounts receivable (4,500 x 100)
Sales
450,000
450,000
10.
Cost of Goods sold ( 4,500 x 39)
Finished goods
175,500
175,500
11.
Cost of goods sold
16,100
Material price variance
3,025
Material quantity variance
500
Labor rate variance
1,575
Labor efficiency variance
4,500
Factory overhead – controllable variance
2,500
Factory overhead – volume variance
4,000
Problem 7
1.
2.
Actual hours
Less: Std. hrs.
Difference
X Variable rate
Variable efficiency
Actual variable overhead
195,000
195,000
101,000
101,300
(300)
3_
(900)
303,750
3.
Less: Variable spending variance
Actual hrs. x variable rate
Divide by variable rate
Actual hrs.
750
303,000
3.00
101,000
Fixed overhead at normal capacity
Les: Overhead applied to production
Fixed volume variance
295,000
398,835_
( 3,835)
Actual fixed overhead
Less: Fixed spending
Fixed overhead at normal capacity
299,950
4,950
295,000
Actual hours
Less: Standard hours
Difference
X Standard rate
Labor efficiency variance
11,120
10,000
1,120
3.75
4.200
Problem 8
Multiple choice
1.
C
2.
A
3.
C
4.
C
5.
B
6.
D
7.
B
8.
C
9.
B
10.
12,000 Unf
11.
B
12.
B
13.
D
14.
C
15.
C
16.
C
17.
D
18.
C
19.
D
20.
D
21.
B
22.
23.
24.
25.
26.
27.
28.
29.
30.
A
D
D
B
D
400 CREDIT
D
D
NOT ENOUGH INFORMATION