Chapter 1 – Cost Concepts, Classifications and Accounting Cycle
Summary of Answers
Exercise 1-1
1.
2.
3.
4.
5.
6.
7.
8.
9.
10.
Administrative Expense 11.
Factory Overhead
12.
Factory Overhead
13.
Direct Labor
14.
Factory Overhead
15.
Selling Expenses
16.
Factory Overhead
17.
Factory Overhead
18.
Factory Overhead
19.
Selling Expenses
20.
Selling Expenses
Selling Expenses
Factory Overhead
Selling Expenses
Factory Overhead
Selling Expenses
Selling Expenses
Factory Overhead
Selling Expenses
Administrative Expenses
Exercise 1-2
1.Product/Service Costs
2.Product/Service Costs
3.Period Costs
4.Period Costs
5.Period Costs
6.Period Costs
7.Product/Service Costs
8.Period Costs
9.Product/Service Costs
10.
11. Product/Service Costs
12. Product/Service Costs
13. Product/Service Costs
14. Product/Service Costs
15. Period Costs
16. Product/Service Costs
17. Period Costs
18. Product/Service Costs
19. Product/Service Costs
Period Costs 20. N/A
Exercise 1-3
1.
hfajkak
2.
P0.125
3.
Highest: 3750 Lowest:
1500 4. 15000
Exercise 1-4
1.
a, P 352820
b. 1. P 140000
2. P 113205
3. P 84904
c. P 339615
2. Journal Entries
d. P 314711
e. P 472067
f. P 157356
21. Product/Service Costs
22. N/A
23. N/A
24. Product/Service Costs
25. N/A
a. Raw Materials
Accounts Payable
240000
b. Work in Process
Manufacturing Overhead
Raw Materials
168000
12000
c. Factory Payroll
Accrued Payroll
150000
Work in Process
Manufacturing Overhead
Work in Process
120000
30000
240000
180000
150000
150000
d. Manufacturing Overhead
Accumulated Depreciation
12000
12000
e. Manufacturing Overhead
Taxes Payable
1500
f. Manufacturing Overhead
Prepaid Insurance
4320
Manufacturing Overhead
Utilities Payable
5 000
1500
4320
5000
2. (Financial Statement)
Exercise 1-5
Exercise 1-6
Test Material 1.1 Multiple Choice Theories
a.
b.
c.
d.
e.
f.
g.
h.
i.
a. P600 000
b. P 252 000
c. P 682 000
d. P190 960
1. B
2. B
3. C
4. C
5A
6. B
7. B
8. B
9. B
10. C
P 86 500
P 12 500
P7 500
P80 500
P24 500
P11 000
P55 000
P15 000
P148 500
Exercise 1-7
(below, Table 1.3)
Exercise 1-7 (Table 1.3)
11. D
12. D
13. C
14. D
15. A
16. D
17. C
18. C
19 .D
20. D
21. C
22. D
23. C
24. D
25. A
26. C
27. D
28. A
29. C
30. D
Item Number
1.
2.
3.
4.
5.
6.
7.
8.
9.
10.
11.
12.
13.
14.
15. Other Category
16. Other Category
17. Other Category
18.
19.
20.
Total
Direct
Materials
P 50 000
20 000
Period Cost
P 2 500
P 15 000
5 000
1 200
28 000
2 800
8 500
3 500
9 000
800
2 400
5 000
P 103 000
P 15 000
1 500
7 500
P 37 500
Test Material 1-3
11. False
12. True
13. False
14. True
15. True
16. False
17. False
18. False
19. True
20. False
11. P 930000
12. P 127000
13. P 4500
14. P 88500
15 P 742500
16. P 1049000
17. P 1108500
Manufacturing
OH
P 10 000
Test Material 1-2
1. True
2. True
3. False
4. False
5. False
6. True
7. False
8. False
9. False
10. False
Direct Labor
1. Direct Material
2. Direct Material
3. Factory Overhead
4. Period Costs
5. Direct Labor
6. Period Costs
7. Period Costs
8. Direct Material
9. Factory Overhead
10. Period Costs
Test Material 1-5
1.C
11. A
2.D
12. D
3.D
13. C
4.C
14. C
5.A
15. B
6.A
16. D
7.B
17. B
P 17 200
Test Material 1-4
11. Factory Overhead
12. Factory Overhead
13. Factory Overhead
14. Factory Overhead
15. Period Costs
Test Material 1-6
1.C
11.
2.A
12.
3.B
13.
4.B
14.
5.C
15.
6.B
16.
7.D
17.
B
C
A
B
A
C
B
1. P2
2. P19171.84
3. P3432000
4. P60000
5. P9000
6. P12000
7. P215000
8. P475000
9. P3110000
10. P3450000
21.
22.
23.
24.
B
C
D
C
18. P 156200
19. P 41700
20. P 3432000
8.B
9.C
10.
A
18. B
19. A
20. C
8.B
9.B
10.A
18. B
19
B
20.B
COMPUTATIONS:
Exercise 1-1 Ex 1-1. Cost classification. Classify the following as direct materials (DM) , direct
labor (DL) , factory overhead (FOH) , administrative (AD) ,and selling (SE) expenses by putting
a check on the appropriate column.
DM
DL
FOH
1
Wages of company officials other the
plant supervisor.
2
Wages of raw material inventory clerk.
∕
3
Wages of finished goods inventory clerk.
∕
4
9
Wages of ironworker in a construction company.
Transportation and representation allowance of
plant managers and supervisors.
Transportation and representation allowance of
sales managers.
Wood glue and other related adhesives used
by furniture factories.
Buttons, threads and zippers used by ready
to wear manufacturing company.
Lubricating oil used by factories in
their operations.
10
Gas and oil used by the company president.
5
6
7
8
∕
∕
∕
∕
∕
∕
∕
Gas and oil used by trucking company.
Electric and power consumption of
12 the administrative office.
Electric and power consumption of
13 factory companies.
Depreciation of delivery truck of a
manufacturing company used un delivering
14 finished goods to
customers.
∕
15
∕
16
17
18
19
SE
∕
11
Cloth used by a ready to wear factory.
Cloth used by advertising companies in
making billboards.
Cost of daily advertisements in local
newspaper regarding new product line.
Overtime pay of the employee who repairs
the company’s copier.
Cost of renting a private helicopter to fly
along the grandstand pulling a banner
advertising a
new product.
AD
∕
∕
∕
∕
∕
∕
∕
20
Cost of dishes broken by restaurant servers.
∕
Ex 1-2 Cost Classification. Classify each cost as product cost or period cost by putting a check
mark on the appropriate column. If the item is not appropriate to be the product or period costs ,
write N/A to both columns.
Product
Cost
1
Period
Cost
∕
2
Depreciation of plant and machineries.
Depreciation of sports equipment used by sports and
fitness center.
3
Depreciation of delivery equipment of trading companies.
∕
4
Depreciation of service vehicle used by sales person.
5
Depreciation of office equipments.
6
Paper and toner used for office copier machine.
∕
7
Paper used by printing company.
∕
8
Paper and plastic bags used by supermarkets.
∕
9
Bonuses paid to factory workers of an efficient performance.
10
Transportation costs of goods delivered to customers.
11
Transportation costs of goods purchased from suppliers.
12
Cost of medical supplies of a hospital.
Cost of continuing education of a resident physician
in a hospital.
Transportation expenses of a resident doctor in
attending seminar abroad.
Costs of goods served to the visitors of the
company president.
13
14
15
16
Costs of food served by restaurant owners to their
customers
17
Gas and oil consumed by sales manager.
∕
∕
∕
∕
∕
∕
∕
∕
∕
∕
∕
∕
18
Gas and oil consumed by plant machineries
∕
19
Gas and oil consumed by trucking companies.
∕
20
Gas and oil consumed by the company president.
Cost of insurance intended for the workers of a
construction company.
Cost of newspaper ads to the announcement of new
office location.
Salaries and compensation and other benefits paid to
Human Resource Manager.
Salaries and compensations and other benefits paid to
workers of a factory.
Maintenance costs for the family vehicle of the
company executive officer.
21
22
23
24
25
∕
∕
∕
∕
∕
∕
Ex 1-3 High-Low Method.
Dagupan Trans Inc. has incurred the following bus maintenance costs during the past six months.
Miles Travelled
Maintenance
Costs
January
12,750
17,100
February
15,900
17,400
March
19,050
17,550
April
22,500
18,000
May
30,000
18,750
June
12,000
16,500
Required: Using high-low method to separate mixed cost, estimate the total fixed costs
component of the maintenance costs.
Highest
Lowest
Difference
Machine Cost
18750
-16500
2250
2. Variable Cost per Unit: 2250 / 18000 = 0.125
Miles Traveled
30000
12000
18000
3. Compute Variable Cost at Highest and Lowest Level of Activity
Highest Level
Lowest Level
30000 * 0.125 = 3750
12000 * 0.125 = 1500
4. Determining Fixed Cost at each level of activity
Highest Level
Lowest Level
18750 - 3750 = 15000
16500 - 1500 = 15000
Ex 1-4 Actual Costing Method
During the month of July, the following transactions were completed and reported by Bubbles
Manufacturing Company.
a. Raw materials purchased on account, P240,000
b. Materials requisitioned for the month was P180,000 , P12,000 of which were
factory supplies.
c. Factory payroll for the month was P150,000 of which P30,000 was for indirect laborers.
d. Depreciation on factory plant and equipment for the month is P12,000
e. Factory taxes amounted to P1,500
f. Factory insurance expired amounted to P4,320
g. Factory utilities for the month amounted to
P5,000 Additional Information:
a. Actual overhead is charged to production.
b. 75% of the jobs put into process are completed.
c. All beginning inventory plus 75% of the goods completed during the period were
delivered to customers at 50% mark-up cost. The company’s terms on sales are
30 days.
Inventories reported by the company at the beginning of the month
are: Raw Materials
P80,000
Work in Process
P100,000
Finished Goods
P60,000
REQUIRED:
(1) Determine the following:
a. The total manufacturing cost for the period. P 352820
b. The balances of the inventory accounts at the end of the month.
1. Raw Materials P 140000
2. Work in Process P 113205
3. Finished Goods P 84904
c. The costs of goods manufactured amounts to P 339615
d. The costs of goods sold amounts to P 314711
e. The sales price of the goods sold amounts to P 472067
f. Gross profit for the period amounts to P 157356
(2) Journal Entries to record the above (Use a yellow pad for your entries.)
(3) Prepare a Statement of Costs of Goods Manufactured and Sold, in good form
a. RM inventory, July 1
Add: Purchases
Raw Materials Available
Less: RM inventory, July 31
(80000+240000-180000)
Indirect Material
Raw Materials
Direct Labor
Manufacturing Overhead
Total Manufacturing Cost
P 80000
240000
P 320000
b. 1. RM inventory, July 1
Add: Purchases
Materials Used
RM inventory, July 31
P 80000
240000
-180000
P 140000
2. WIP, July 1
Direct Material
Direct Labor
Manufacturing Overhead
Total Cost of Work put into Process
Multiply by
WIP, July 31
P 100000
168000
120000
64820
P 452820
25%
P 113205
3. Cost of Goods Manufactured
Multiply by
Finished Goods
P 339615
25%
P 84904
c. Total Cost of Work put into
Process
Multiply by
Cost of Goods Manufactured
P 452820
-140000
-12000
P 168000
120000
64820
P 352820
75%
P 339615
d.Finished Goods, July 1
60000 CGM
(339615*75%)
Cost of Goods
Sold
P
254711
P 314711
e. (Journal
Entries) f.
Bubbles Manufacturing Company
Statement of Cost of Goods Sold
July 31, 2012
Raw Materials Used:
RM iventory, July 1
Add: Purchases
Raw Materials
Less: Inventory, July 31
Indirect Materials Used
Direct Labor
Manufacturing Overhead
Indirect Materials Used
Indirect Labor
Depreciation
Insurance
others
Total Manufacturing Costs
Add: Work in Process, July 1
Total Cost of work put into Process
Less: Work in Process, July 31
Cost of Goods Manufactured
Add: Finished Goods, July 1
Goods Available for sale
Less: Finished Goods, July 31
Cost of Goods Sold
P 80000
240000
P 320000
P 140000
12000
152000 P 168000
120000
P 12000
30000
12000
4320
6500
64820
P 352820
100000
P 452820
-113205
P 339615
60000
P 399615
84904
P 314711
EXERCISE 1-5
a.) Direct Materials Used
Direct Labor
Manufacturing Overhead
Total Manufacturing Cost
P 41 500
15 000
30 000
P 86 500
b.) Total Manufacturing Cost
P 86 500
Add: Work in Process, Beginning
Total Cost of Goods placed into
process Less: Cost of Goods
Manufactured Work in Process,
Ending Inventory
5 000
P 91 500
(79 000)
P 12 500
c.) Cost of Goods Available for Sale
Less: Cost of Goods
Manufactured Finished Goods,
Beginning
P 86 500
(79 000)
P 7 500
d.) Cost of Goods Available for Sale
Less: Finished Goods, Ending
Inventory Cost of Goods Sold
P 86 500
(6 000)
P 80 500
e.) Sales
Less: Sales Discount
Net Sales
Less: Cost of Goods Sold
Gross Profit
P 112 500
(7 500)
P 105 000
80 500
P 24 500
f.) Gross Profit
Less: Operating Expenses
Net Income
P 24 500
(13 500)
P 11 000
g.) Total Manufacturing Cost
Less: Direct Labor
Manufacturing Overhead
Direct Materials Used
P 100 000
(20 000)
(25 000)
P 55 000
h.) Cost of Goods Manufactured
Add: Work in Process, Ending Inventory
Total Cost of Goods placed Into process
Less: Total Manufacturing Cost
Work in Process, Beginning
P 105 000
10 000
P 115 000
(100 000)
P 15 000
i.) Gross Profit
Add: Cost of Goods Sold
Sales Discount
Sales
P 30 000
112 000
6 000
P 148 500
j.) Cost of Goods Manufactured
Finished Goods, Beginning
Cost of Goods Available for Sale
P 105 000
20 000
P 125 000
k.) Cost of Goods Available for Sale
Less: Finished Goods, Ending
Inventory Cost of Goods Sold
P 125 000
12 500
P 112 500
l.) Gross Profit
Less: Operating Expenses
Net Income
P 30 000
(16 000)
P 14 000
EXERCISE 1-6
a.) Direct Materials Issued to Production
Direct Labor (150 000 x
80%) Total Prime Cost for
the Period
P 480 000
120 000
P 600 000
b.) Indirect Materials Issued
Indirect Labor (150 000 x 20%)
Depreciation of Sewing and Comp. equipment
Utilities Paid
Factory Insurance Expired
Factory Rent (Net of 10 000 deposit & 5000 adv. rental)
Total Manufacturing Overhead
Add: Direct Labor (50 000 x
80%) Total Conversion Cost for
the Period
P 4 500
30 000
8 000
22 000
7 500
60 000
P 132 000
120 000
P 252 000
c.) Direct Materials Issued to Production
Direct Labor (150 000 x 80%)
Manufacturing Overhead
Total Manufacturing Cost
Less: Work in Process, Ending
Inventory Cost of Goods Manufactured
for the year
P 480 000
120 000
132 000
P 732 000
(50 000)
P 682 000
d.) Cost of Goods Manufactured for the year
Multiply by: Percentage of units sold
Cost of Goods Sold
P 682 000
80%
P 545 600
Multiply by: Percentage of Gross profit
Gross Profit for the Period
35%
P 190 960
EXERCISE 1-7
Item Number
Direct Materials
21.
P 50 000
22.
20 000
23.
24.
25.
26.
27.
28.
28 000
29.
30.
31.
32.
33.
34.
35. Other Category
36. Other Category
37. Other Category
38.
5 000
39.
40.
Total
P 103 000
Direct Labor
Manufacturing
OH
P 10 000
P 2 500
P 15 000
5 000
1 200
2 800
8 500
3 500
9 000
800
2 400
P 15 000
1 500
7 500
P 37 500
Test Material 4
1.
Highest
Lowest
Difference
Machine hours
1200
400
800
Power costs
14400
12800
1600
VC/unit = 1600/800 = P 2
2.
Highest
Lowest
Difference
VC/unit
Period Cost
Hrs. worked
3360
2600
760
= 3380/760
= P4.447368421
Utility costs
21440
18060
3380
P 17 200
Fixed cost:
(highest)
(lowest)
= 3360 x 4.447368421
= P 14943.16
= 2600 x 4.447368421
= P 11563.16
Highest
= P21440 - 14943.16
= P6496.84
Lowest
= P18060 - 11563.16
= P6496.84
Total Utility costs
= (P 2850 x 4.447368421) + 6496.84
= P 19171. 84
3. Gross Profit
Cost of goods
manufactured
Increase in finished
goods Total sales
4. Cost of fabric used in
dresses
P 768000
2720000
(56000)
P3432000
P 60000
5. Wages of dressmakers
Wages of dress
designers Direct labor
P 5000
4000
P 9000
6. Wages of the maintenance employee
Cost of electricity in the shop
Cost of space rental
P 2000
3500
6500
Overhead
P12000
7. Office depreciation
Freight costs for goods delivered to customers
Janitor’s wages for cleaning the office
Total selling, general & administrative expenses
Period costs
P28000
12000
10000
165000
P215000
8. Materials
Direct labor
P264000
143000
Factory depreciation
Freight costs for materials purchased
Janitor’s wages for cleaning the production area
Product costs
9. Direct material [1640000-(1640000x10%)+540000-570000]
Direct labor
MOH (164000+180000+360000+120000)
Total factory costs
10. Total factory costs
Work in process-beg.
Work in process-end.
Cost of goods manufactured
Finished goods-beg.
Finished goods-end.
Cost of goods sold
50000
8000
10000
P475000
P1446000
840000
824000
P3110000
P3110000
600000
(440000)
P3270000
580000
(400000)
P34500000
11. Gross Profit [(3450000/75%) x 25%]
Office salaries
Sales salaries
Net Income
P1150000
(140000)
( 80000)
P 930000
12. Total factory costs (P12500+45000+90000)
Cost of goods manufactured
WIP, end.
WIP, beg.
(P 147500)
237000
37500
P 127000
13. Cost of goods available for sale
Goods produced
FG, end
Increase in FG
P 259500
(237000)
( 18000)
P 4500
14. Sales (337500-7500)
Cost of goods available for sale
FG, end
Gross Profit
P 330000
(259500)
18000
P 88500
15. Gross Profit
Sales Discount
Cost of goods sold
Sales
P150000
30000
562500
P742500
16. Direct labor
Direct materials
MOH (110000+50000+31000+8000+5000)
Total factory costs
P 350000
460000
239000
P1049000
17. Total factory costs
WIP, beg.
WIP, end.
Cost of goods manufactured
P1049000
220000
(160500)
P1108500
18. Total Factory costs (P62400 +32000+ 64000)
WIP, beg.
WIP, end
Cost of goods manufactured
P 158400
14700
(16900)
P 156200
19. Sales
Cost of goods sold (156200 +12600 -10500)
Gross Profit
P 200000
(158300)
P 41700
20. Same answer and solution in number 3.
Test Material 5
1. Direct Materials (174000-132000+1500000)
Direct labor [(21000x45) + (1000x45)]
Prime costs
P 1542000
990000
P 2532000 c.
2. Direct labor (21000x45)
MOH [(300000 +175000 + (1.5 x 45)]
Conversion costs
P 945000
542500
P 1487500 d.
3. d.
Materials (3200000-180000)
Labor [6900000+(2040000-320000)-2040000=6580000]
[6580000+(800000 x 90%)-800000=6500000-3020000 /
160%]
Overhead (2175000 x 60%)
P 3020000
P 1275000
P1305000
4. Prime Costs
Direct labor (4500000/150%)
Decrease in raw materials
Raw material purchases
P 6750000
(3000000)
( 250000)
P 3500000 c.
5. Direct material (4400000+9000000-2800000-850000)
Conversion costs [6500000+1250000+560000+(1200000x60%)
+(600000x60%)+(1500000x60%)+850000]
WIP, beg.
P 9750000
11400000
3000000
WIP, end.
Cost of goods manufactured
(2400000)
P21490000 a.
6. Cost of goods manufactured
FG, beg.
FG, end.
Cost of goods sold
Divided by:
Total sales
P 21490000
2400000
(2950000)
P 20940000
75 %
P 27920000 a.
7. c.
Work in process inventory:
{[7920000 / (38.50-30.80)] x 30.80} = 3520000
3520000 + 13680000 – 17400000
= decrease of 200000
Finished goods inventory:
(17400000+1500000-16800000) = 2100000
2100000-1500000
= increase of 600000
8. Sales (25000 / 12.5 %)
Gross profit (25000+25000)
Cost of goods sold
P 200000
( 50000)
P150000 b.
9. Beginning:
Materials (50000+30000)
Labor (80000+60000)
OH (120000+90000)
Cost added:
Materials (80000+50000+75000)
Labor (100000+80000+110000)
OH (290000 x (120000/80000)
Finished goods, end
P 80000
140000
210000
P 205000
290000
435000
P1010000 c.
10. Overhead applied
Overhead actual
Over applied
11.
12.
13.
Total manufacturing cost:
P 975000-600000+55000-40000+15000-35000
P 435000
(420000)
P 15000 a.
=
Total raw materials purchased:
P 370000-(520000-400000)-(120000/75%)+10000-5000 =
P 370000 a.
P 95000 d.
FG, end:
P 85000+970000-110000 + (48000 x 20) + (48000 x 20 x 60%) + 90000 – 271000
+180000-(1050000/60%) = 730000 c.
14.
Sales revenue:
P 1050000/60% = P 1750000 x 160% = P 2800000 b.
15. Direct labor (30101.80/ 50%)
60203.6 MOH
CC
P
30101.8
P 90305.40 / 50% = P180610.80
P 180610.80 + 590 = P 181200.80 b.
16. RM available for used
RM issued to production
RM, beg. (47500-37500)
Increase in RM
P 47500
(30000)
(10000)
P 7500 d.
17. b.
Direct material (P 15000+ 33000 – 19000 – 1000)
MC (P 12000+30000-40000)
FG, June 30 (P 190000-140000)
P 28000
P 110000
P 50000
18. Materials (P 380000-20000)
Direct labor (P 420000-40000)
Prime costs
P 360000
380000
P740000 b.
19. MOH (P 380000 / 20 =P 19000 x 28)
Prime costs
WIP, beg.
Cost of goods manufactured
WIP, end
P 532000
740000
20000
940000
P 352000
a.
20.
Same solution and answer in number 7.
CHAPTER 2 ACCOUNTING FOR MATERIALS
Summary of Answers
EXERCISE 2-1
1. Raw Materials Inventory
Accounts payable
2. Work in Process
Manufacturing Overhead
Raw materials Inventory
541000
510000
344250
38250
382500
3. Raw Materials Inventory
Work in Process
Manufacturing Overhead
5900
4. Accounts payable
Raw Materials inventory
4000
5100
800
4000
5. Work in process
Accounts payable
50000
6. Raw materials Inventory
Accounts payable
107000
7. Work in Process
Manufacturing Overhead
Raw Materials Inventory
120824
30200
510000
5900
107000
86400
Exercise 2-2
1. (36 000) units; (P 82 850)
2. 12 000 units; P 28 300
Exercise 2-3
1. 2 078.46
2. 69.28
3. 5.20
4. 10 392
5. 2 400
Exercise 2-5
Journal Entries
1. Raw and in Process
Accounts Payable
Cost of goods sold
Payroll
50000
107000
151030
Raw Materials Inventory
382500
4000
150000
Exercise 2-4
1. 2 598.1
2. 11.1
3. 4 687.6
4. 3 897.6
200 000
200
000
280 000
Various Accounts
Finished goods
Raw and in Process
210 000
130
000
150
000
210
000
2. Cost of goods sold
Finished goods
195 000
3. Cost of goods sold
Raw and in Process
Finished goods
20 000
4. Raw materials
Accounts Payable
200 000
Work in process
Raw materials
200 000
Work in process Payroll
Manufacturing overhead
130 000
Manufacturing overhead
Various Accounts
150 000
Test Material 2-1 Supply the
Answer
1.1,294,000
11. P 600,000
2.1,292,000
12. P 200,100
3.4,640,000
13. P 131,400
4.301,429
14. P
5.285,000
1,160,000
6.708,750
15. P
7.156,200
1,637,000
8.41,700
16. P
9.423,100
1,629,000
10.
1,625,000 17. P(1000)
195
000
15 000
5 000
200
000
200
000
130
000
Test Material 2-1 MC
Problems
1.B
1. B
2.D
2. 129700
3.C
3. A
4.D
4. C
5.D
5. C
6.D
6. B
7.A
7. A
8.B
8. D
9.A
9. C
10.A
10.36000
11.B
150
000
Test material 2-3
1. C
2. C
3. D
4. D
5. A
6. B
7. B
8. C
9. A
10. B
11.B
12.B
13.D
14.D
15.A
16.C
17.C
18.C
Exercise 2-2
Inventory, August
Purchases: August
7
12
15
22
29
Raw materials available
Less issuance: August
7
Units
5 000
6 000
8 000
9 000
10 000
10 000
48 000
(9 000)
14
21
28
Unit cost
P 2.00
2.50
2.30
2.25
2.40
2.35
Amount
10 000
15 000
18 400
20 250
24 000
23 500
111 150
(20 000)
(9 000)
(9 000)
(9 000)
(36 000)
12 000
Raw materials issued
Raw materials inventory, end
(21 100)
(20 300)
(21 450)
(82 850)
28 300
Exercise 2-3
1.Economic Order Quantity or EOQ = 2 x annual demand x cost per order
Annual carrying cost per unit
= 2 x 144 000 x 150 = 2 078.46
(200 x 5%)
2.Number of orders = annual requirement = 144 000 = 69.28
EOQ
2 078.46
3.Time to order = 360 days = 5.20
69.28
4.Total ordering cost = Number of orders per year x Cost per order
= 69.28 x 150 = 10 392
5.(Daily usage x Lead time) + Safety stock = (400 x 5) + 400 = 2 400
Exercise 2-4
1.Economic Order Quantity or EOQ = 2 x annual demand x cost per order
Annual carrying cost per unit
= 2 x 84 375 x 120 = 2 598.1
3
2.Time to order = 360 days = 11. 1
32.48
*Computation for 32.48 = 84 375
2 598
3. Annual demand = 84 375 = 234.38 x 20 days = 4 687.6
360 days
360 days
4. Number of orders x Cost of placing an order = 32. 48 x 120 = 3
897.6
Exercise 2-5
1. Raw and in Process
Accounts Payable
Cost of goods sold
Payroll
200 000
200
000
280 000
Various Accounts
Finished goods
Raw and in Process
*Materials in RiP (75 000 - 45 000)
Add: Purchases
Less: Materials in RiP (50 000 - 30 000)
Amount backflush RiP to FG
2. Cost of goods sold
Finished goods
*Materials in Finished goods, beg. (80 000 - 35 000)
Add: Backflush
Less: Materials in FG, end. (90 000 - 30 000)
Amount backflush FG to CGS
3. Conversion cost in Raw and in Process, beg.
Conversion cost in Raw and in Process, end.
Conversion cost in finished goods, beg.
Conversion cost in finished goods, end.
Cost of goods sold
Raw and in Process
Finished goods
130
000
150
000
210 000
210
000
30 000
200 000
20 000
210 000
195 000
195 000
45 000
210 000
60 000
195 000
45 000
30 000
(15 000)
35 000
30 000
(5 000)
20 000
15 000
5 000
4. Raw materials
Accounts Payable
200 000
200 000
Work in process
Raw materials
200 000
200 000
Work in process Payroll
Manufacturing overhead
130 000
Manufacturing overhead
Various Accounts
150 000
130
000
Test Material 2-6
CHAPTER 1 – TEST MATERIAL 6
MULTIPLE CHOICE PROBLEMS
1. Direct Materials
Direct Labor
Manufacturing Overhead
Total Factory Costs
977,400
1,691,500
1,353,200
4,022,100
2. Total Factory Costs
Add : Work in Process, beginning
Less : Work in Process, ending
Costs of Goods Manufactured
4,022,100
354,000
(434,000)
3,942,100
3. Work in Process
4. Direct Materials
Utilities
Office Depreciation
Rent paid
Period Costs
42,200
6,960
10,000
9,600
68,760
5. Direct Materials
Direct Labor
Overhead
Total Factory Costs
42,400
100,000
61,840
204,240
6. Gross Profit
203,840
7. Cost of Goods Sold
345,000
(3,000)
150
000
Costs of Goods Manufactured
348,000
(4,000)
344,000
Total Factory Costs
8. Total Manufacturing Costs
2,081,000
9. Overhead for the year
Overhead applied by 117,000
10. Costs of Goods Manufactured
1,841,000
Chapter 3: Accounting for Factory Labor
Summary of Answers
Exercise 1
(Journal Entries)
Exercise 3-2
1P13,936.26
2P13,208
3P1,107.82
4 (entries)
Exercise 3-3
1. .P5,295.97
2..P2,549.7
3..P900
4.. P75,953.73
5.. P6,396.30
6..(entries)
Test Material 1
1. P1, 039, 000
2. P13, 340
3.P11,280
4..P2,150
5.P3530.34
6.P170.4
7.P3,600,000
8.P1,000,000
9.P5,500,000
10.18,900
11. 2,250
12. 225,000
13. 270,000
Test Material 2
1. A
2. C
3. A
4. B
5. B
6.A
7.B
8. C
9. A
10. D
11. B
Exercise 1
Factory payroll
106000
Withholding tax payable
9000
SSS payable
5000
Pag-ibig payable
2000
Cash
90000
Work in process
95400
Manufacturing overhead
10600
Factory Payroll
106000
Exercise 3-2
No.of
hrs
6am-2pm
Tibo, (S)
Jason, (ME)
2pm-10pm
Rica, (Z)
Princess,
(S1)
10pm-6am
Bianca, (S)
Toni, (M)
Total
Reg
Rate
Basic
Pay
40
52
2080
47
52
2444
40
52
2080
43
52
2236
40
44
52
52
2080
2288
13208
Shift
OT Prem.
Prem
(10%)
(5%)
Night
Prem
(10%)
Total
WHT
2080
129.38
1950.6
2480.4
197.94
2282.5
104
2184
310.26
1873.7
111.8
2364.2
99.86
2264.3
36.4
16.38
22.88
75.66
215.8
208
228.8
436.8
2288
2539.7
P13,936.26
160.58 2127.4
209.8 2329.9
1107.82 12828.44
1. Total Payroll, P13,936.26
2. Direct Labor, P13,208
3. Total WHT, P1,107.82
Tibo (S)
Gross Pay – P2,080
Tax Due on P1,538
Add: 15% of 542
Total
Jason (ME)
Gross Pay – P2,480.4
P48.08
81.3
P129.38
Princess (S1)
Gross Pay – P2364.18
Tax Due on P2019
Add: 15% of 345.18
Total
Bianca (S)
Gross Pay – P2288
Net Pay
P48.08
51.78
P99.86
Tax Due on P2308
Add: 20% of 172.4
Total
Rica (Z)
Gross Pay –
P2080 Tax Due
on P1346
Add: 20% of 734
Total
4. Journal Entries:
Factory Payroll
WHT Payable
Cash
P163.46
34.48
P197.94
Tax Due on 1538
Add: 15% of 750
Total
P48.08
112.5
P160.58
P163.46
Toni (M)
Gross Pay – P2539.68
Tax Due on 2308
P163.46
146.8
P310.26
Add: 20% of 231.68
Total
46.34
P209.80
13,936.26
1107.82
12,828.44
Work in Process
Manufacturing Overhead
Factory Payroll
13,208
728.26
13,936.26
Exercise 3-3
6am-2pm
Tibo, (M1)
Jason, (S)
Willie, (ME)
2pm-10pm
Rica, (S1)
Princess, (M1)
Kathy, (S)
10pm-6am
Bianca, (S)
Toni, (S1)
Yeng, (Zero)
Total
*4th week
1st Shift
1st week
2nd Week
3rd Week
*4th week
Total
2280
2250
2300
2280
2150
2250
2300
2150
2190
2080
2480.4
2308.8
8940
9030.4
9048.8
2500
2480
2300
2400
2450
2300
2380
2280
2300
2184
2364.18
2544.36
9464
9574.18
9444.36
2600
2750
2600
22060
2570
2400
2300
21100
2580
2450
2480
21110
2288
2539.68
2539.68
21329.1
10038
10139.7
9919.68
85599.1
Tibo, (M1) (52php*40hrs)
2,080
Jason (S)
Basic Pay (52*47)
OT Prem (5.2*7)
Total
2,444
36.4
2,480.8
Willie, (ME)
Basic Pay (52*44)
OT Prem (5.2*4)
Total
2,288
20.8
2,308.8
2nd Shift with 5% Shift Premium
Rica (S1) (52*1.05*40)
2,184
Princess (M1)
Basic Pay (54.6*43)
OT Prem (5.46*3)
Total
2,347.8
16.38
2,364.18
Kathy (S)
Basic Pay (54.6*46)
OT Prem (5.46*6)
Total
2,511.6
32.73
2,544.36
3rd Shift with 10% Night Premium
Bianca (S) (52*1.1*40)
2,288
Toni (S1)
Basic Pay (57.2*44)
OT Prem (5.72*4)
Total
2516.8
22.88
2539.68
Yeng, (Zero)
Basic Pay (57.2*44)
OT Prem (5.72*4)
Total
2516.8
22.88
2539.68
Tibo, (M1)
Jason, (S)
Willie, (ME)
Rica, (S1)
Princess, (M1)
Kathy, (S)
Bianca, (S)
Toni, (S1)
Yeng, (Zero)
Total
Gross
Payroll for
the month
WHT
SSS
PhilHealth
Pag-ibig
8940
9030.4
9048.8
9464
9574.18
9444.36
10038
10139.7
9919.68
85599.12
236.83
562.78
565.63
315.43
331.93
624.88
715.93
416.83
1525.73
5295.97
283.3
283.3
283.3
283.3
283.3
283.3
283.3
283.3
283.3
2549.7
100
100
100
100
100
100
100
100
100
900
100
100
100
100
100
100
100
100
100
900
Total
Deductions
720.13
1046.08
1048.93
798.73
815.23
1108.18
1199.23
900.13
2009.03
9645.67
With Holding Taxes:
Tibo (M1)
Gross Pay –
P8,940 Tax Due
on P8,750
Add: 15% of 190
Total
Jason (S)
Gross Pay –
P9,030 Tax Due
on P6,667
Add: 15% of 2,363
Total
Willie (ME)
Gross Pay –
P9,049 Tax Due
on P6,667
Add: 15% of 2382
Total
Rica (S1)
Gross Pay – P9,464
Tax Due on P8750
P208.33
Princess (M1)
Gross Pay – P9574
Tax Due on P8750
P208.33
28.5
P236.83
Add: 15% of 824
Total
123.6
P331.93
P208.33
Kathy (S)
Gross Pay – P9444
Tax Due on 6667
P208.33
354.45
P562.78
Add: 15% of 2777
Total
P208.33
Bianca (S)
Gross Pay – P10,038
Tax Due on 10,000
357.3
P565.63
Add: 20% of 38
Total
P208.33
Toni (S1)
Gross Pay – P10,140
Tax Due on 8750
416.55
P624.88
P708.33
7.6
P715.93
P208.33
Net Payroll
8219.87
7984.32
8000.07
8665.27
8758.77
8335.82
8838.77
9239.87
7910.97
75953.73
Add: 15% of 714
Total
Yeng, (zero)
Gross Pay – P9920
Tax Due on 5833
Add:20% of 4087
Total
107.1
P315.43
P708.33
817.4
P1,525.73
1. Total Tax Withheld
P5,295.97
2. Total SSS Deductions
P2,549.7
3. Total Philhealth Deductions
4. Total Net Payable
208.5
P416.83
Add: 15% of 1390
Total
P900
P75,953.73
5. Employer’s Share in SSS, Philhealth Medicare Payable
Basic Pay of Employee, Monthly (52*8hrs*20)
P6,396.30
P8,320
SSS
Range of Compensation (8,250-8,749.99)
Amount Due to SSS: if SSS ER P610.70
if SSS EE
P283.30
Philhealth
Range of Compensation (8,000-8,499.99)
Amount Due to Philhealth: if Employer’s Share
If Personal Share
P100.00
P100.00
SSS ER (610.70*9)
Philhealth ER (100*9)
Total Employer’s Share
P5,496.3
900.00
P6,396.30
6. Factory Payroll
WHT Payable
SSS Payable
Pag-ibig Payable
Philhealth Payable
Cash
85,599.12
5,295.97
2,549.70
900.00
900.00
75,593.73
Manufactuing Overhead
SSS Payable
Pag-ibig Payable
Philhealth Payable
7,296.30
Work in Process
Manufacturing Overhead
Factory Payroll
20,176
1,153
5,496.30
900.00
900.00
21329.10
Test Material 1 Supply the answer.
1. Purchases of Raw Materials
Add: Decrease in Raw Materials
Raw Materials used
Multiply by: Percentage of material charged to
job
Direct Material charged to the
job Add: Direct Labor
Labor Cost
Less: Indirect Labor (550,
000*10%) Prime Cost
2. Direct Laborers
Basic Pay – No. of worked hours
Multiply by: Rate/hr.
P600, 000
80, 000
680, 000
80%
544, 000
550, 000
(55, 000)
268
40
OT Premium – OT hours (268-240)
28
Multiply by: Rate/hr. (P40*50%) 20
Supervisor
Basic Pay – No. of worked hours
Multiply by: Rate/hr.
42
50
P10,720
560
P2, 100
OT Premium – OT hours (42-40)
2
Multiply by: Rate/hr. (P50*50%)
25 50
Gross Payroll
P13, 430
495, 000
P1, 039, 000
3. Basic Pay – No. of worked hours
Multiply by: Rate/hr.
OT Premium – OT hours (268-240)
Multiply by: Rate/hr. (P40*50%)
Amount charged to Work in Process
268
40
P10, 720
28
20
560
P11,
280
4. Basic Pay – No. of worked hours
Multiply by: Rate/hr.
OT Premium – OT hours (42-40)
Multiply by: Rate/hr. (P50*50%)
Amount charged to Factory Overhead
42
50
P2, 100
2
25 50
P2, 150
5. Regular Shift
8am- 5pm
P48
Ordinary Overtime Hours
5pm - 10pm
OT premium (P48*10%) = P4.80
+ P48
OT Hour with Night Premium 10pm - 11pm
Night Premium (P48*10%) = P4.80
OT Premium (P52.80*20%) =
P5.28
Regular Rate
P48
Rate/hr.
Regular Shift
48
Ordinary OT
52.80
OT with Night Premium 58.08
*
Total Earnings of 1 worker that day
Multiply by: No. of workers
*5
Total Earnings of 5 workers that day
6. Net Pay
Less:Basic Pay (14hrs*48)
P52.80
P58.08
* No. of hours worked Total
*
8
P384
*
5
264
1
58.08
P706.08
P3, 530.34
P706.08
(672)
Labor Premiums of
1worker Multiply by:
No.of workers
Total amount of Manufacturing Overhead
34.08
*5
P170.4
7. Overhead Applied (P10,000,000*27%)
Divide by: Overhead Rate
Direct Labor
P2,700,000
75%
P3,600,000
8. Cost of Goods Manufactured
Less: Manufacturing Cost
Net Effect in Work in Process
P10,250,000
(10,000,000
P250,000
Let X = WIP, Beginning
.80X = WIP, Ending
WIP, Beg. - WIP, Ending =
CGM X - .80X = 250,000
.20X = 250,000
.20
.20
X = P1,250,000
WIP, Beginning
Multiply by:
WIP, Ending
9. Direct Materials, Beginning
Add: Purchases
Direct Materials Available
Less: Direct Materials, Ending
Direct Materials Used
Cost of Goods Manufactured
Add: WIP, Ending
Less: WIP, Beginning
Total Manufacturing Cost
Less: Direct Materials Used
Conversion Cost
P1,250,000
80%
P1,000,000
P450,000
2,650,000
P3,100,000
(600,000)
P2,500,000
P6,800,000
760,000
(560,000)
P7,000,000
(2,500,000)
P4,500,000
Let X = Direct Labor
.50X = Factory Overhead
Direct Labor + Factory Overhead = Conversion
Cost X + .50X = 4,500,000
1.50X = 4,500,000
1.50
1.50
X = 3,000,000
Direct Materials
Add: Direct Labor
Prime Cost
P2,500,000
3,000,000
P5,500,000
10. OT Premium
No. of hours worked
Multiply by: OT premium rate (P18*50%)
300
9
Night Shift Premium
No. of hours worked
Multiply by: OT premium rate (P18*15%)
Labor charged to FOH
6000
2.7
11. No. of hours worked (including OT
hours)
Multiply by: Rate per hour
Amount debited too WIP
12. Let X = CGM
.20X = FG, end
CGM – FG, end = CGS
X - .20X = 540,000
.80X = 540,000
.80
.80
X (CGM) = 675,000
Total Manufacturing Cost
P2,700
16,200
P18,900
50
*45
P2, 250
Let X = TMC
.10X = WIP, End
TMC – WIP, End = CGM
X - .10X = 675,000
.90X = 675,000
.90
.90
X (TMC) = 750,000
P750,000
Multiply by: Percentage allocable to DL
Direct Labor
*30%
P225,000
13. Cost of Goods Manufactured
Less: Decrease in WIP
Manufacturing Cost
Less: Factory Overhead
Prime Cost
Test Material 2 Multiple Choice
1. Purchases of Raw Materials
Add: Decrease in Raw Materials
Direct Materials Used
Add: Direct Labor
Prime Cost
2. Direct Labor
Add: Factory Overhead
No. of DLH (P30,000/P7.50)
Multiply by: OH rate/DLH
Conversion Cost
3. Raw Materials Available
Less: RM, end
Indirect Materials
Direct Materials Used
Direct Labor
Factory Overhead
Manufacturing Cost
Add: WIP, Beginning
Cost of Goods placed into process
Less: Cost of Goods Manufactured
Wip, Ending
P450,000
(30,000)
420,000
(150,000)
P270,000
P42,000
3,000
45,000
30,000
P 75,000 A
P30,000
4000
10
40,000
P70,000 C
P410,000
(60,000)
(10,000)
P340,000
300,000
337,500
P977,500
150,000
1,127,500
(975,000)
P152,500 A
4. OT Premium (1000hrs.*50%*P35)
10% Pay Premium - 2nd Shift (5000hrs*10%*P35)
20% Pay Premium - 3rd Shift (5000hrs*20%*P35)
Labor Premiums
P17,500
17,500
35,000
P70,000
B
5. Basic Pay
Shift 1 (5000hrs*P35)
P175,000
Shift 2 (5000hrs*P35*1.10%)
Shift 3 (5000hrs*P35*1.20%)
Add: OT Basic
OT hours
Rate/hr.
Add: OT Premium
OT hours
Rate/hr. (P35*50%)
Total Payroll
192,500
210,000
1000
35
1000
17.5
35,000
17,500
P630,000 B
6. Basic Pay (800hrs*P30)
Add: OT Premium (800hrs*P30*50%)
Direct Labor
24,000
12,000
P36,000 A
7. Sales (2500u*20)
Less: Cost of Sales
Direct Material (2500u*P3)
Direct Labor
Factory Overhead (800hrs*P18)
Gross Margin
P50,000
7,500
36,500
14,400 (57,900)
(P7,900) B
8. Basic Pay (44hrs*P48)
Add: OT Premium (4hrs*24)
Weekly Earnings
P2,112
96
P2,208 C
CHAPTER 4 ACCOUNTING FOR MANUFACTURING OVERHEAD
Exercise 4-1
a. P10/DLH
b. P5450
c. P44875
d. P58337.5
Summary of Answers
Exercise 4-6
AA2
A. P130 000
B. P390 000
Budg OH
P1800000
C. P310 000
2. SD –P4864
Actual OH
D. P288 000
TD- P13300
P1717200
3. P18 164
4. SD- 28.04
AA3
Exercise 4-7
1.P596 000
TD-13 459.2
App OH
2.P1015000
P1550000
3.P6100
Budg LOA
4. P1029500
P600000
Exercise 4-3
1. SD- 60.8
TD- 35
Exercise 4-9
1. P237 500
2.P465000
3.P309 266
4.P50742
Test Material 1
1.P8 571
2.P62 200
3.P64 000
4.P5/MH
5.P1 375 000
Exercise 4-2
a.P550,000
b. P2.20
c. P30,000
d.P50,000
Exercise 4-4
AA1 Co.
Exercise 4-5
ALOA P536000 1. P2 664 900
Over P29000
P 2, 199,120
2. P4 763 700
11.9.75/DLH
12.9.90/DLH
13.P537 250
14.P1 030 000
15.P204 398
16.P534 060
4.P3 631 380
5.P39.38/DLH
6.P2 835 360
7.P2 860 000
8.P140 000
9.P192 600
10.P622 000
Test Material 2 11.86.67/DLH
1.P1 775 700
44.44/MH
2.P5 677 380
12.P5 986 600
3.P3 775 680
13.86.70/PLH
44.43/DLH
14.P5 869 900
8.D
9.A
10.B
Test Material 3 11.D
1.B
12.B
2.A
13.C
3.C
14.D
4.A
15.P258 000
5.C
16.B
6.C
7.C
11.D
12.A
13.A
14.A
15.E
16.B
Problem 4-1
C. MI P35 806
Dep1 P858 743.92
FA 49 501
Dep2 P1 001 256.32 FI P36 692
17.A
18.D
19.D
FA P315 544
FI P356 718
B. MI P268 257
20.B
FA P315 839
FI P356 904
Problem 4-2
A. MI P268 738
Exercise 4-8
1.P2860000
2.P140000
Problem 4-3
A1. Dep1 P262
500
Dep 2 P87 500
Test Material 4
1.D
2.A
3.C
4.C
5.A
6.D
7.A
8.C
9.D
10.A
B1 Dep1 P135 000
Dep2 P64 257
B2 Dep1 P610 000
Dep2 P239 275
A2. Dep1 P737
500
Dep2 262 500
COMPUTATIONS:
Exercise. 4-1
(a)
Total estimated overhead (110000+84000+6000)
Divided by: Total estimated DLH
(4000+14000+2000) Overhead application rate
(b)Direct Labor hours
Design
Sewing
Beading
6.P185.97/unit
7.P137.90/unit
8.P2 490 788
9.P5.90/unit
10.10.70/DLH
P 200000
20000
P 10DLH
Multiplied by: overhead rate
Total overhead applied to the job
25
320
200
545
P
10
P 5450
(c)Direct Materials
P 30000
Direct Labor hours
Design (25hrs x P25)
Sewing (320hrs x P15)
Beading (200hrs x P20)
Overhead applied to the job
Total cost of the job
(d)
Total cost of the job
Multiply by:
Billing price
Exercise. 4-2
(a)Manufacturing overhead for the year
(b)
Overhead cost
Estimated hours
Overhead rate
Actual overhead, January 1
Applied overhead, January 1 (10000hrs x P2.20)
Under applied overhead, January 1
(c)Actual overhead, December 31
Applied overhead, December 31 (240000hrs x P2.20)
Under applied overhead,
Under applied overhead, January 1
Under applied overhead, December 31
625
4800
4000
9425
5450
P 44875
P 44875
130%
P 58337.50
P 550000
P 550000
250000
P 2.20
P 52000
22000
P 30000
P 548000
(528000)
P 20000
30000
P50000
Exercise 4-3
(1)Sewing department
Total budgeted overhead
Divided by: estimated total machine hours
Overhead rate
P 76000
1250
P 60.80
Treating department
Total budgeted overhead
Divided by: direct labor hours
Overhead rate
P 182000
5200
P
35
(2) Machine hours on job no.4 (sewing)
Overhead rate
OH applied
80
P 60.80
P 4864
Direct labor hours on Job no.4
(treating) Overhead rate
OH applied
OH applied (sewing)
OH applied (treating)
Total OH applied
380
P 35
P13300
P 4864
13300
P18164
(3) Total budgeted overhead
Divided by: Total DLH
Plant wide rate
P 258000
9200
P 28.04
(4) Direct labor hours
Plant wide rate
OH applied to Job No.4
480
P
28.04
P 13459.20
Exercise 4-4
AA1 Co.
Budgeted manufacturing OH
Budgeted level of activity
OH rate
Applied OH
Divided by: OH rate
Actual level of activity
Actual OH
Applied OH
Under applied
AA2 Co.
Applied OH
Divided by: actual level of activity
Multiplied by: budgeted level of activity
Budgeted OH
P1600000
500000
P
3.20
P 1715200
3.20
P 536000DLH
P1744000
1715200
P 28800
P 1764000
392000DLH
400000DLH
P 1800000
Applied OH
Over applied OH
Actual OH
P 1764000
46800
P 1717200
AA3 Co.
Actual OH
Over applied OH
Applied OH
P 1486000
64000
P 1550000
Applied OH
Divided by: actual level of activity
OH rate
P 1550000
620000DLH
P
2.50
Budgeted OH
Divided by: OH rate
Budgeted level of activity
P 1500000
2.50
600000DLH
Exercise 4-5
(1) Using departmental
rates Department 1
Overhead cost (budgeted data)
Direct labor hours (budgeted data)
Total
Units produced
Total
Direct labor hours per unit (79 000/9 400)
Overhead applied
2 700 000
/ 80 000
33.75
* 9 400
317 250
*
8.40
2 664 900
Department 2
Overhead cost (budgeted data)
Machine labor hours (budgeted data)
Total
Units produced
Total
Machine hours per unit (43 000/56 000)
Overhead applied
2 040 000
/ 40 000
51
* 56 000
2 856 000
*
.77
2 199 120
(2) Using plant wide rate
Overhead rate = 2 700 000 + 2 040 000
80 000 + 120 000
=23.7 / DLH
Total overhead applied = Overhead rate * Units produced * Direct labor per unit
= 23.70 * 65 500 * 3.07
= 4 763 700
Ex. 4-6.
(A)Direct materials beginning
Purchases
Total
Direct materials ending
Direct materials used
85 000
150 000
235 000
- 105 000
130 000
(B)Direct materials
Direct labor
Factory overhead
Total manufacturing cost
Work in process beginning
Cost of goods put into process
(C) Cost of goods put into process
Work in process ending
Cost of goods manufactured
(D)Actual overhead
Applied overhead
Under applied overhead
Cost of goods manufactured
Finished goods beginning
Cost of goods available for sale
Finished goods ending
Cost of goods sold
Under applied overhead
Adjusted cost of goods sold
130 000
90 000
72 000
292 000
98 000
390 000
390 000
- 80 000
310 000
75 000
-72 000
3 000
310 000
50 000
360 000
- 75 000
285 000
3 000
288 000
Exercise 4-7
(1) Direct labor
Indirect labor
Indirect materials
Depreciation
Maintenance
Miscellaneous
Conversion cost
350 000
35 000
200 000
11 000
50 000
31 000
596 000
(2) Conversion cost
Direct materials
Total manufacturing cost
Work in process beginning
Cost of goods put into process
Work in process ending
Cost of goods manufactured
596 000
360 000
956 000
220 000
1 176 000
- 160 500
1 015 500
(3) Factory overhead (10.40*25 000)
Direct labor cost
Conversion cost
(4) Conversion cost
260 000
350 000
610 000
610 000
Direct materials
Total manufacturing cost
Work in process beginning
Cost of goods put into process
Work in process ending
Cost of goods manufactured
360 000
970 000
220 000
1 290 000
- 160 500
1 029 500
Exercise 4-8
(1) Overhead
Machine hours (budgeted)
Overhead rate
Machine hours worked (10 000 + 120 0000
Overhead applied to production
(2) Actual overhead (260 000 + 2 740 000)
Applied overhead
Under applied overhead
Exercise 4-9
1. Total Service Cost allocated to ASSEMBLY: (direct method)
Personnel Cost (200 000 x 100/400)
Assembly (500 000 x 1800/4800)
Total
2. Total Service Cost allocated to FINISHING: (step
method)
Service Departments
Administration
Personnel
Estimated Overhead Costs
500 000
200 000
Service Provided by:
Administration
(500 000)
Personnel (500 000 x 2/50)
20 000
Assembly (500 000 x 18/50)
Finishing (500 000 x 30/50)
Personnel
(220 000)
Assembly (220 000 x 10/40)
Finishing (220 000 x 30/40)
Total Service Cost
Estimated Overhead Costs
No. of employees
Service Departments
Administration Personnel
200 000
500 000
10
30
2 750 000
/ 125
000
22
* 130 000
2 860
000
3 000 000
- 2 860 000
140 000
50 000
187 500
237 500
Producing Department
Assembly Finishing
1 800 000 3 000 000
180 000
300 000
55 000
235 000
165 000
465 000
Producing Department
Assembly Finishing
1 800 000 3 000 000
100
300
Service provided by:
Personnel
Administration
*
2/50=4%
3/43=7%
*
10/43=23% 30/43=70%
18/50=36% 30/50=60%
Cost Formula
Personnel Cost= 200 000 + 4%A
Administration Cost= 500 000 + 7%P
New Value of each Service Department
Personnel Cost = 200 000 + 4% (500 000 + 7%P)
= 200 000 + 20 000 + 0.0028P
= 220 000/0.9972
= 220 618
Administration Cost = 500 000 + 7%P
= 500 000 + 7% (220 618)
= 515 443
3.Administration Cost allocated to FINISHING Department
515 443 x 60%
4.Personnel Cost allocated to ASSEMBLY Department
220 618 x 23%
309 266
50 742
Problem 4-1:
1st step:
2nd
step:
a) Repairs and Maintenance costs = P 870,000 + 20%HR
b) Human Resource costs = P 990,000 + 16%RM
a) Repairs and Maintenance costs = P 870,000 + 20% (990,000 + 16%RM)
= P 870,000 + 198,000 + 0.032RM
= P 1,103,306
b) Human Resource costs = P 990,000 + 16% (1103,306)
= P 1,166,529
3rd step:
Department 1
Repairs & Maintenance costs:
Dept. 1: 44% x 1,103,306
Department 2
P 485,454.64
Dept. 2: 40% x 1,103,306
P 441,322.40
Human Resource costs:
Dept. 1: 32% x 1,166,529
Dept. 2: 48% x 1,166,529
373,289. 28
559,933.92
Total allocated service costs
P 858,743.92
P 1,001,256.32
Problem 4-2:
a. Direct method
Est. Dept. OH costs
Gen. Factory Office costs:
Mixing: (23,200 / 68,000) x
43,000
Fabricating: (25,600 /
68,000) x 43,000
Finishing: (19,200 / 68,000)
x 43,000
Employee Relations costs:
Mixing: (144 / 540) x
79,000
Fabricating: (228 / 540) x
79,000
Finishing: (168 / 540) x
79,000
Total est. factory overhead
b. Step method
Est. Dept. OH costs
Gen. Factory Office
costs:
Employee Relations:
(12,000 / 80,000) x
43,000
Mixing: (23,200 / 80,000)
x 43,000
Fabricating: (25,600 /
80,000) x 43,000
Finishing: (19,200 /
80,000) x 43,000
Employee Relations costs:
Mixing: (144 / 540)
x 85,450
Fabricating: (228 / 540)
x 85,450
Finishing: (168 / 540)
x 85,450
Service Departments
Gen. Factory Employee
Office
Relations
P 43,000
P 79,000
(43,000)
Producing Departments
Mixing
Fabricating Finishing
P 233,000 P 266,000 P 320,000
14,671
16,188
12,141
(79,000)
21,067
33,356
24,577
P 268,738 P 315,544 P 356,718
Service Departments
Gen. Factory Employee
Office
Relations
P 43,000
P 79,000
(43,000)
Producing Departments
Mixing
Fabricating Finishing
P 233,000
P 266,000
P 320,000
6,450
12,470
13,760
10,320
85,450
22,787
36,079
(85,450)
26,584
Total est. factory overhead
P 268,257
P 315,839
P 356,904
c. Algebraic method
1st step:
a) Gen. Factory Office costs = P 43,000 + 10%ER
b) Employee Relations costs = P 79,000 +
15%GFO 2nd step:
a) Gen. Factory Office costs = P 43,000 + 10% (79,000 + 15%GFO)
= P 43,000 + 7,900 + 0.15GFO
= P 51,675
b) Employee Relations costs = P 79,000 + 15% (51,675)
= P 86,751
3rd
step:
Mixing
Gen. Factory Office costs:
Mixing: 29% x 51,675
Fabricating: 32% x 51,675
Finishing: 24% x 51,675
Employee Relations costs:
Mixing: 24% x 86,751
Fabricating: 38% x 86,751
Finishing: 28% x 86,751
Total allocated service costs
Problem 4-3:
Fabricating
Finishing
P 14,986
P 16,536
P 12,402
20,820
32,965
P 35,806
P 49,501
24,290
P 36,692
A. If Plant wide-rate is used
1) P 486,000 + 564,000 ═ P 35.00 / DLhrs.
30,000
FOH; Dept. 1:
= 5,000 x 1.5 x 35.00
FOH; Dept. 2:
= 5,000 x 0.5 x 35.00
= P 262,500
= P 87,500
2)
Dept. 1
Dept. 2
Total
Direct Materials
Direct Labor costs
Factory Overhead costs
P 175,000 P 50,000
300,000
125,000
262,500
87,500
P 737, 500 P 262,500
P 225,000
425,000
350,000
P 1,000,000
B. If Departmental rate is used
1) Dept. 1: P 486,000 / 27,000 DLH
= P 18.00 / DLhrs.
Dept. 2: P 564,000 / 65,800 MH
= P 8.57 / MH
FOH; Dept. 1:
FOH; Dept.2:
= 5,000 x 1.5 x 18.00
= 5,000 x 1.5 x 8.57
= P 135,000
= P64, 257
2)
Direct Materials
Direct Labor costs
Factory Overhead costs
Dept. 1
P 175,000
300,000
135,000
P 610,000
Dept. 2
P 50,000
125,000
64,275
P 239,275
Total
P 225,000
425,000
199,275
P 849, 275
Test Material 1
Service Departments
Estimated Overhead Costs
Service provided by:
Maitenance
Utilities
Maintenace
Utilities
20 000
10 000
*
10%
20%
*
Cost Formula
Maitenance Cost= 20 000 + 10%U
Utilities Cost= 10 000 + 20%M
New Value of each Service Department
Maintenance Cost = 20 000 + 10% (10 000 + 20%M)
= 20 000 + 1 000 + 0.02M
= 21 000/0.98
= 21 428.57
Producing Department
Department
1
Department
2
40%
30%
40%
60%
Maintenance Cost allocated to Department 1
21 428.57 x 40%
8 571
2. Direct Materials
Direct Labor (950 hrs x 20)
Factory Overhead (950 hrs x 16)
Balance opf Work in Process
28 000
19 000
15 200
62 200
3.Maintenance Cost allocated to Depatment B: (direct method)
160 000 x 320/800
64 000
4.Total Budgeted Overhead
[600 000 + (3 x 300 000MH)]
Divide by: Machine hours
Predetermined OH rate
5.Overhead Component of COS
275 000 MH x 5MH
6.Direct Materials
(20 500lbs x 20) + (11 000lbs x 24)
Direct Labor
(28 000hrs x 48) +_ (2 800hrs 50)
Actual Factory Overhead
(265 000 + 140 000) + (20 600 +20 000)
Total Manufacturing Cost
Divide by: Units produced
Manufacturing cost per unit
7.Budgeted Overhead
(1 149 500 + 590 500)
Divide by: Estimated DLH
(110 000 + 10 000)
Overhead rate
Applied FOH
(28 000hrs + 2 800hrs) x 14.50
Actual Direct Labor
1 500 000
300 000
MH
5/MH
1 375 000
674 000
1 484 000
445 600
2 603 600
14 000
185.97
1 740 000
120 000
14.50/DLH
446 600
(28 000hrs x 48) + (2 800hrs x 50)
Conversion Cost
Divide by: Units produced
Conversion Cost per unit
8. Department 1
Budgeted Overhead
Divide by: Estimated DLH
Overhead rate
Multiply by: Actual DLH
Applied Overhead
Department 2
Budgeted Overhead
Divide by: Estimated MH
Overhead rate
Multiply by: Actual MH
Applied Overhead
1 484 000
1 930 600
14 000
137.9
1 149 500
110 000
10.45/DLH
28 000
292 600
590 500
100 000
5.91/MH
6 800
40 188
Direct Materials
(20 500 x 20)+(11 000 x 24)
Direct Labor
(28 000 x 48)+(2 800 x 50)
Applied Overhead
(292 600 + 40 188)
Total Manufacturing Cost
1 484 000
9. Estimated Production(in units)
Multiply by: Predetermined OH rate
Total Factory OH
Fixed Factory OH
Variable Factory OH
Divide by: Estimated units of prod.
Variable Factory OH rate
200 000
10.4
2 080 000
900 000
1 180 000
200 000
5.90
10. ASSEMBLY Department OH rate:
Budgeted Overhead
Service provided by:
Repair (48 000 x 1/9)
674 000
332 788
2 490 788
204 000
5 333
218 750
428 083
40 000
10.70/DLH
Power (250 000 x 840/960
Total Budgeted OH
Divide by: DLH (20 emp x 2 000hrs)
Assembly Department OH rate
11. ASSEMBLY Department OH
rate: Budgeted Overhead
Service provided by:
Power (250 000 x 840/1200)
Repair (98 000 x 1/9)
Total Budgeted OH
Divide by: DLH (20 emp x 2 000hrs)
Assembly Department OH rate
12
Budgeted Overhead
Labor Hours
KWH
Service provided by:
Repair
Power
204 000
175 000
10 889
389 889
40 000
9.75/DLH
Repair
48 000
Power
250 000
1 000
Assembly
204 000
1 000
840 000
Finishing
320 000
8 000
120 000
10%
*
10%
70%
80%
10%
240 000
*
20%
Cost Formula
Repair Cost = 48 000 +
20%P Power Cost = 250 000
+ 10%R
New Value of each Service Department
Repair Cost = 48 000 + 20% (250 000 + 10%R)
= 48 000 + 50 000 + 0.02R
= 98 000/0.98
= 100 000
Power Cost = 250 000 + 10% (100 000)
= 250 000 + 10 000
= 260 000
ASSEMBLY DEPARTMENT OH rate
Budgeted Overhead
Service provided by:
Repair (100 000 x 10%)
204 000
10 000
Power (260 000 x 70%)
Total Budgeted Overhead
Divide by: DLH (20 emp x 2 000hrs)
Assembly Department OH rate
182 000
396 000
40 000
9.90/DLH
13. Budgeted Annual Variable Overhead
Budgeted Fixed OH
Factory Rent
Factory Plant and Equipment
Total Factory Overhead
Divide by: Estimated MH
FOH rate
1 800 000
50 000
380 000
430 000
2 230 000
80 000
27.875/MH
2 062 750
2 600 000
537 250
Applied Overhead
74 000MH x 27.875
Actual Overhead
Underapplied OH
14. Cost Formula
S1Cost = 200 000 + 20%S2
S2 Cost = 176 000 + 10%S1
New Value of each Service Department
S1 Cost = 200 000 + 20% (176 000 + 10%S1)
= 200 000 + 35 200 + 0.02S1
= 235 200/0.98
= 240 000
S2 Cost = 176 000 + 10% (240 000)
= 176 000 + 24 000
= 200 000
850 000
Budgeted OH of P2
Allocated Service Cost provided by:
S1 240 000 x 50%
S2 200 000 x 30%
Total Budgeted FOH
120 000
60 000
180 000
1 030 000
15. STEP method
Administration
Maintenance
Freight
Passenger
Direct Overhead Cost
Sevices provided by:
Administration
Maintenance 950 000 x 8/89
Freight 950 000 x 30/89
Passenger 950 000x 51/89
Maintenance
Freight 715 393 x 80/280
Passenger 715 393 x 200/280
950 000
(950 000)
630 000
1 800 500
5 260 470
85 393
320 225
544 382
(715 393)
204 398
510 995
16. SIMULTANEOUS method
Maintenance Administration
Freight
630 000
950 000
1 800 500
8 000
9 000
30 000
40
50
80
Direct Overhead Cost
Direct Labor Hours
No.of employees
Service provided by:
Maintenance
Administration
*
9%
15%
*
24%
34%
Passenger
5 260 470
51 000
200
61%
57%
Cost Formula
Maintenance Cost = 630 000 +
+9%A Administration Cost = 950 000
+ 15%M
New Value of each Service Department
Maintenance Cost = 630 000 + 9% (950 000 + 15%M)
= 630 000 + 85 500 +
0.0135M
= 715 500/0.9865
= 725 291
Administration Cost = 950 000 + 15% (725 291)
= 950 000 + 108 794
= 1 058 794
Budgeted OH of Freight Department
Allocated Service Cost provided
by:
Maintenance 725 291 x 24%
Admnistration 1 058 794 x 34%
Total Allocated Service Cost
174 070
359 990
534 060
Test Material 2
1. Applied Overhead
Direct Labor
(14 000 x 76.50) + (800 x 76.50)
Multiply by: OH rate
Actual Overhead
Incurred
Special night premium
(14 000 x 76.50 x 10%)
OT premium
(800 x 76.50 x 30%)
Underapplied OH
3.Raw Material, beg
Purchases
Raw Matertials, end
Indirect Materials
Direct Materials
Direct Labor
14 000hrs x 76.50
800hrs x 76.50
Applied Overhead
1 132 200 x 80%
Total Manufacturing Costs
1 132 200
80%
905 760
2 556 000
107 100
18 360 (2 681 460)
1 775 700
241 200
1 968 120
(450 000)
21 600
1 737 720
1 071 000
61 200
1 132 200
905 760
3 775 680
4. Total Manufacturing Costs
Work in process, beg
Work in process, end
(637 200 + 144 000)
Cost of Goods Manufactured
3 775 680
637 200
2. Total Manufacturing Costs
Work in process, beg
Work in process, end
(637 200 + 144 000)
Cost of Goods Manufactured
Finished Goods, beg
3 775 680
637 200
(781 200)
3 631 680
(781 200)
3 631 680
1 070 280
Finished Goods, end
(1 070 280 - 270 000)
Cost of Goods Sold
Underapplied OH
Adjusted Cost of Goods Sold
(800 280)
3 901 680
1 775 700
5 677 380
5. Budgeted Overhead
Divided by: Budgeted DLH
Predetermined FOH rate
2 953 125
75 000
39.38/DLH
6. Actual DLH used
Multiply by: Predetermined FOH rate
Total Overhead applied
72 000
39.38
2 835 360
7. Estimated OH cost
Divide by Estimated MH usage
OH rate
2 750 000
125 000
22/MH
Applied Overhead, July
(10 000MH x 22/MH)
Remainder
(120 000MH x 22/MH)
Total Applied OH costs
8. Applied OH
Actual OH
July
Remainder
Underapplied OH costs (variance)
9. Budgeted Overhead Costs
Divide by: Estimated MH usage
Overhead rate
220 000
2 640 000
2 860 000
2 860 000
260 000
2 740 000
(3 000 000)
140 000
2 568 000
48 000
53.50/MH
Applied Overhead
3 600MH x 53.50/MH
192 600
Less: Actual Overhead
Underapplied OH (variance)
202 000
9 400
63 000
105 000
192 600
360 600
(252 000)
612 600
9 400
622 000
10. Materials
Direct Labor
Applied FOH
Total Manufacturing Costs
Work in process, beg
Cost of Goods Manufactured/CGS
Underapplied OH (variance)
Adjusted Cost of Goods Sold
11. STEP method
Overhead Costs
Services provided by:
Administration
Maintenance 1 800 000 x 20/120
Cutting 1 800 000 x 80/120
Sewing 1 800 000 x 20/120
Maintenance
Cutting 1 100 000 x 50/75
Sewing 1 100 000 x 25/75
Total Factory Overhead
Divide by
Factory Overhead rate
Administration
1 800 000
Maintenance
800 000
Cutting
5 000 000
Sewing
6 000 000
(1 800 000)
300 000
1 200 000
300 000
(1 100 000)
733 333
366 667
6 933 333 6 666 667
80 000DLH 150 000MH
86.67/DLH 44.44/MH
12. Direct Materials
(950 000 + 210 000 )
Direct Labor Costs
(560 000 + 1 200 000)
Factory OH Applied
Cutting (20 000DLH x 86.67/DLH)
Sewing (30 000MH x 44.44/MH)
Total Manufacturing Costs
*in producing 10 000 units
1 160 000
1 760 000
1 733 400
1 333 200
3 066 600
5 986 600
13. ALGEBRAIC method
Overhead Costs
DL hours
Administration
1 800 000
Maintenance
800 000
20 000
Cutting
5 000 000
80 000
Sewing
6 000 000
20 000
Space occupied Services
provided by:
Administration Maintenance
4 500 sqm
7 000 sqm
50 000
sqm
25 000
sqm
*
6%
17%
*
66%
63%
17%
31%
Cutting
Sewing
Cost Formula
Administration Costs = 1 800 000 +
6%M Maintenance Costs = 800 000
+ 17%A
New value of each service department
Administration Costs = 1 800 000 + 6%(800 000 + 17%)
= 1 800 000 + 48 000 +
0.0102A
= 1 848 000/0.9898
= 1 867 044
Maintenance Costs = 800 000 + 6%M
= 800 000 + 17% (1 867 044)
= 800 000 + 317 397
= 1 117 397
Allocation
Administration
Cutting 1 867 044 x 66%
Sewing 1 867 044 x 17%
Maintenance
Cutting 1 117 397 x 63%
Sewing 1 117 397 x 31%
Total allocated service costs
Add: Overhead Costs
Total Overhead Costs
Divide by
FOH rate
14. Direct Materials
(950 000 + 210 000)
Direct Labor Costs
(560 000 + 1 200 000)
Factory Overhead Applied
Cutting (20 000DLH x 86.67/DLH)
1 232 249
317 397
703 960
1 936 209
5 000 000
6 936 209
80 000DLH
86.70/DLH
346 393
663 790
6 000 000
6 663 790
150 000MH
44.43/MH
1 160 000
1 760 000
1 734 000
Sewing (30 000MH x 44.43/MH)
Total Manufacturing Costs
*in producing 10 000 units
1 332 900
Test Material 3
1. B
Applied OH component of:
Work in process
Cost of Goods Sold
Finished Goods
Total Budgeted Overhead
Divide by: Budgeted MH
Predetermined OH rate
460 000
1 440 000
500 000
2 400 000
50 000
48/MH
2. A
Sales for August
(500 000 x 1.2)
Gross Margin
Cost of Goods Sold
Finished Goods, end
Finished Goods, beg
Cost of Goods Manufactured
Work in process, end
Work in process, beg
Cost of Goods put into process
Prime cost
(48 000 + 294 000)
Applied Overhead
Divide by: Actual DLH usage
Overhead rate
3. C
Budgeted cost after allocation
Producing
Finishing
Total
Divide by: Budgeted DLH
Producing
Finishing
3 066 900
5 986 900
600 000
190 000
410 000
60 000
(81 000)
389 000
85 000
(78 000)
396 000
(342 000)
54 000
45 000
1.20/DLH
1 510 439
1 315 561
2 826 000
35 000
15 000
50 000
56.52/DLH
Factory Overhead rate
4. A
Assembly estimated budgeted cost
Service provided by:
Maintenance cost (300 000 x 500/800)
Personnel cost (400 125 x 50/75)
Finance cost (150 875 x 30/70
Total
Divide by: Budgeted DLH
Factory Overhead rate
5. C
Sewing Department OH rate
(76 000/1 250 MH)
Treating Department
(182 000/5 200 DLH)
Applied Overhead
Sewing Department (80 x 60.80)
Treating Department (380 x 35)
Total
6. C
Sewing Department
Treating Department
Total Budgeted OH
Divide by: Total DLH
Factory Overhead rate
Overhead Applied
480 DLH x 28.04/DLH
1 000 000
187 500
266 750
64 661
518 911
1 518 911
35 000
43.40/DLH
60.80/MH
35/DLH
4 864
13 300
18 164
76 000
182 000
258 000
9 200
28.04/DLH
13 459
7. C
Factory Overhead rate
266 400/18 500 MH
14.4/MH
Applied Overhead
190 050 MH x 14.4/MH
270 320
Actual Overhead
Underapplied Overhead
Cost of Goods Sold adjustment
560 000/1 000 000 x 13 600
(287 920)
13 600
7 616
*DEBIT
8. D
Estimated Factory Overhead
Divide by: Budgeted DLH
[(80 000x2.5) + (20 000 x 4)]
FOH rate
280 000
26.25/DLH
Car Wheels
Direct Labor (190 000hrs x 38.50)
Factory Overhead (190 000hrs x 26.25)
Conversion Cost
Divide by: Units produced
Conversion Cost per unit
7 315 000
5 035 000
12 350 000
75 000
164.67
Trucks
Direct Labor (82 500hrs x 38.50)
Factory Overhead (82 500hrs x 26.25)
Conversion cost
Divide by: Units produced
Conversion cost per unit
3 176 250
2 186 250
5 362 500
18 000
297.92
9. A
Goods put into process
(341 000 + 324 500 + 259 600)
Goods manufactured
Cost of goods still in process
925 100
(825 400)
99 700
Conversion cost still in process
(99 700 - 70 000)
Direct Labor cost still in process
(29 700/1.80)
FOH still in process
Factory Overhead component of goods
7 350 000
29 700
16 500
13 200
259 600
(13 200)
246 400
put into process
FOH still in process
FOH component of goods manufactured
10. B
Budgeted total variable OH
Budgeted fixed OH
Factory rent
Factory equipment
Estimated FOH
Divide by: Estimated MH
FOH rate
180 000
2 15 000
38 000
Applied Overhead
70 000 MH x 5.4125
Actual Overhead
Underapplied Overhead
253 000
433 000
80 000
5.4125/MH
378 875
(387 875)
9 000
11. D
Product
A
Prime cost
A (800 units x 35)
B (8 000 units x 22)
Overhead
Function 1
A (800 units x 2hrs x 10)
B (8 000 units x 1hr x 10)
Function 2
A (800 units x 1hr x 7)
B (8 000 units x 8hrs x 7)
Function 3
A (800 units x 5hrs x 18)
B (8 000 unitsx 1 hr x 18)
Total Factory Costs
12. B
Estimated FOH
B
TOTAL
28 000
176 000
204 000
80 000
96 000
448 000
453 600
144 000
216 000
969 600
16 000
5 600
72 000
255 000
Divide by: Estimated DLH
FOH rate
100 000
2.55/DLH
Applied FOH
(105 000 x 2.55/DLH)
Actual FOH
Overapplied Overhead
*accounted as a deduction to CGS
267 750
(265 500)
2 250
13. C
Assembly Department: (direct method)
Service provided by:
General Factory Administration
(90 000 + 70 000) x 437.5/1000
70 000
14. D
Cost of Goods Sold, June
Finished Goods, end
Finished Goods, beg
Cost of Goods Manufactured, June
84 000
16 000
(11 000)
89 000
15. 258 000
Materials issued
Direct Labor
Applied FOH (420 000/20) x 28
Total Manufacturing Costs
380 000
420 000
588 000
1 388 000
Total Manufacturing Cost
Work in process, beg
Work in process, end
Cost of Goods Manufactured
Finished Goods, beg
Finished Goods, end
Cost of Goods Sold
Overapplied Overhead
Adjusted Cost of Goods Sold
1 388 888
20 000
(468 000)
940 000
10 000
(50 000)
900 000
(68 000*)
832 000
*Applied OH
Actual OH
Depreciation
588 000
40 000
360 000
60 000
40 000
20 000
Rentals
Utilities
Indirect Labor
Indirect Materials
Overapplied FOH
1 090 000
(832 000)
258 000
Sales Revenue
Adjusted Cost of Goods Sold
Gross Profit
16. B
Choco Bar (ABC method)
Budgeted Overhead Cost component
Act. Center 1 (25 000 x 150/250)
Act. Center 2 (65 000 x 800/1000)
Act. Center 3 (90 000 x 1000/3000)
Total
Divide by: Annual production(in units)
Overhead cost per unit
15 000
52 000
30 000
97 000
10 000
9.70/unit
CHAPTER 5 ACTIVITY-BASED COSTING
Summary of Answers
Exercise 5-1
Exercise 5-3
4.A
16.B
4.D
A. Standard P8500000
1.
5.D
17.A
5.A
2.
6.B
18.C
6.E
7.A
19.D
7.D
De Luxe P946 250
(520 000)
68 000
B. Standard P1700000
Exercise 5-4
8.C
20.A
8.B
De Luxe P189 250
1. P1
9.A
21.B
9.D
2. P2
10.B
22.D
10.D
Exercise 5-2
11.B
11.D
A1. 22.25
Test Material 1
12.C
TM 2
12.B
A2. 7.81
1.A
13.A
1.D
13.B
B1. 434.75
2.D
14.A
2.A
14.C
B2. 420.31
3.C
15.B
3.C
15.C
TM 3
1. P110 000
10. P13 800 000
2. P409 293.50
11.
3. P177.16
12.
4.P13 606 000
5. P514.32
6. P13 606 000
7. P5 132 762.80
8.P 946 500/ P443 500
9.31.03/37.60
COMPUTATIONS
Exercise 5-1
Standard
Overhead
P
4,625,000
Direct Materials
3,500,000
Direct Labor
377,000
Total Manufacting Cost
8,500,000
x
20%
Ending inventory
P
1,700,000
Overhead
P
471,250
Deluxe
Direct Materials
400,000
Direct Labor
75,000
Total Manufacting Cost
946,250
x
Ending inventory
P
20%
189,250
Exercise 5-2
ABC
Machine set ups (2000 x 4)
P
8,000
Raw materials (2 x 10000pouds)
20,000
Hazaedous materials (5 x 2000 pounds)
10,000
Inspections (75 x 20)
1,500
Machine hours (10 x 500)
5,000
44,500
/2,000
Overhead applied
P
22.25
Traditional
Machine set ups
P
200,000
Materails hand
100,000
Hazardous waste control
50,000
Quality control
Other overhead cost
75,000
200,000
Total costs
625,000
Nos. of hours
/2,000hrs
31.25
x 500
15,625
Machine hours
/2,000
P
7,81
ABC
Direct Materials (425000/2000)
P
Direct Labor 400000/2000)
212.5
200
Overhead cost (44500/2000)
22.25
Manufacturing cost
P
434.75
P
212.5
Traditional
Direct Materials (425000/2000)
Direct Labor 400000/2000)
200
Overhead cost
7.8125
Manufacturing cost
Test Material 1
P
420.31
1. Serving a party for dinners (33,000÷6,000) × 1
Serving a party (138,000÷15,000) × 4
Serving drinks (24,000÷10,000) × 3
Total cost
5.50
36.80
7.20
49.50
2. Manufacturing cost, De Luxe
Units produced
Cost per unit
217,280
÷ 400
543.20
Manufacturing cost, Standard
Units produced
Cost per unit
166,650
÷ 60
2,776
3. Prime cost (882,000+2,910,000)
Factory overhead, ABC
Setups cost (300,000÷60×30)
Design related cost (900,000÷15,000×12,000)
Other overhead (3,300,000÷3,000,000×2,910,000)
3,792,000
150,000
720,000
3,201,000
4,071,000
Total production cost for Alpha
7,863,000
4. Setups cost (300,000÷60×30)
Design related cost (900,000÷15,000×3,000)
Other overhead (3,300,000÷3,000,000×90,000)
Overhead applied to Job Beta
150,000
180,000
99,000
429,000
5. Prime cost (882,000+2,910,000)
Overhead applied (4,500,000÷3,000,000×2,910,000)
Total production cost
8,157,000
Units produced
Cost per unit of Alpha
3,792,000
4,365,000
6. Direct labor cost
Overhead rate (4,500,000÷3,000,000)
Overhead applied
7. Account inquiry
Inquiry cost (400,000÷10,000)
Inquiry cost assigned to Dept.
A
÷ 73,500
110.98
90,000
× 1.50
135,000
2,000
× 40
80,000
8. Account billing
Billing cost (280,000÷4,000,000)
Billing cost assigned to Dept. B
200,000
× 0.07
14,000
9. Inquiry cost (400,000÷10,000) × 2,000
Billing cost (280,000÷4,000,000) × 400,000
Verification cost (150,000÷40,000) × 10,000
Correspondence cost (50,000÷4,000) × 1,000
Total traceable cost assigned to Dept. A
80,000
28,000
37,500
12,500
158,000
Inquiry cost (400,000÷10,000) × 4,000
Billing cost (280,000÷4,000,000) × 200,000
Verification cost (150,000÷40,000) × 8,000
Correspondence cost (50,000÷4,000) × 1,600
Total traceable cost assigned to Dept. A
160,000
14,000
30,000
20,000
224,000
10. Indirect costs (200×20)
Units produced
Cost per unit
4,000
÷ 1,000
4.00
11. Material handling (2000×2)
Assembly (20×20)
Inspection (30×3)
Indirect cost
Units produced
Cost per unit
4,000
400
90
4,490
÷ 1,000
4.49
12. Prime cost
Factory overhead (1,213,000÷100,000×32,000)
Total factory cost, Product A
80,000
388,160
468,160
Prime cost
Factory overhead (1,213,000÷100,000×18,000)
Total factory cost, Product B
80,000
213,840
298,340
Prime cost
Factory overhead (1,213,000÷100,000×50,000)
Total factory cost, Product C
80,000
606,500
696,500
468,160
× 1.20
561,792
13. Total factory cost, Product A
Markup
Selling price
Total factory cost, Product
B Markup
Selling price
298,340
× 1.20
358,008
Total factory costs, Product
C Markup
Selling price
835,800
696,500
× 1.20
14. Prime cost
Overhead:
Utilities (300,000÷60,000) × 30,000
Scheduling and setup (273,000÷780) × 130
Material handling (640,000÷1,600,000) ×
500,000
395,500
Manufacturing cost
475,500
Units produced
Cost per unit, Product A
Prime cost
Overhead:
Utilities (300,000÷60,000) × 10,000
Scheduling and setup (273,000÷780) × 380
Material handling (640,000÷1,600,000) × 300,000
Manufacturing cost
Units produced
Cost per unit, Product B
Prime cost
Overhead:
Utilities (300,000÷60,000) × 20,000
Scheduling and setup (273,000÷780) × 270
Material handling (640,000÷1,600,000) × 800,000
Manufacturing cost
Units produced
80,000
150,000
45,500
200,000
÷ 40,000
11.89
80,000
50,000
133,000
120,000 303,000
383,000
÷ 20,000
19.15
90,000
100,000
94,500
320,000
514,500
604,500
÷ 60,000
Cost per unit, Product C
10.075
15. Material handling (50,000÷100,000) × 10,000
Painting (200,000÷50,000) × 3,000
Assembly (120,000÷4,000) × 300
Overhead cost assigned to Job 1234
5,000
12,000
9,000
26,000
16. Prime cost
Overhead cost
Manufacturing cost
Units produced
Manufacturing cost per unit
180,000
26,000
206,000
÷ 3,000
68.67
17. Direct material (33×8,000)
Direct labor (32×8,000)
Overhead (1,320,000÷15,000) × 12,000
Total cost of product Regular
264,000
256,000
1,056,000
1,567,000
18. Setup (240,000÷25) × 20
Engineering (180,000÷900) × 450
Machine costs (900,000÷6,000) × 4,000
Total overhead costs assigned to product SuperPro
192,000
90,000
600,000
882,000
19. Direct material (33×8,000)
Direct labor (32×8,000)
Overhead:
Setup (240,000÷25) × 5
Engineering (180,000÷900) × 450
Machine costs (900,000÷6,000) × 2,000
Total cost of product Regular
264,000
256,000
20. Direct material (38×2,200)
Direct labor (44×2,200)
Overhead
Manufacturing cost
Units produced
Manufacturing cost per unit of product SuperPro
21. Overhead costs assigned to roller
blades (160,000÷4,000) × 400
48,000
90,000
300,000
438,000
958,000
83,600
96,800
882,000
1,062,400
÷ 2,200
482.91
16,000
22. Machining center (120,000÷20,000) × 500
Setup center (40,000÷100) × 20
Overhead costs assigned to roller blades using ABC
3,000
8,000
11,000
Test Material 2
1. Materials Handing (30,000÷1,000) × 400
Machine setups (27,000÷450) × 150
9,000
Quality inspection (24,000÷600) × 200
Total overhead costs assigned to product
Instruments
12,000
8,000
29,000
2. Direct cost
54,000
Overhead
29,000
Manufacturing cost of product Instrument
3. Direct cost
85,000
Overhead:
Materials Handing (30,000÷1,000) × 600
Machine setups (27,000÷450) × 300
Quality inspection (24,000÷600) ×
400 Manufacturing cost
137,000
Units produced
Manufacturing cost per unit of product Gauge
4. Overhead:
Widgets (1,920,000÷160,000) × 40,000
Gadgets (1,920,000÷160,000) × 30,000
Targets (1,920,000÷160,000) × 90,000
5. Direct materials (10×160,000)
Direct labor
Overhead (3,528,000÷840,000) × 560,000
Manufacturing cost
Units produced
83,000
18,000
18,000
16,000
52,000
÷ 300
457
480,000
360,000
1,080,000
1,600,000
560,000
2,352,000
4,512,000
÷
160,000
Manufacturing cost per unit of product BB
6. Direct materials (300×2,000)
Direct labor
Overhead:
Set up related (1,350,000÷90) × 45
Design related (1,400,000÷8,000) × 3,000
Others (778,000÷8,400) × 2,800
Manufacturing cost
28.20
1,600,000
280,000
675,000
525,000
259,333
1,459,333
2,339,333
7. Overhead applied (186,200÷12,500) × 10,000
Number of units produced and sold
Overhead applied per unit of product X
8. Direct materials
Direct labor (22×2,500)
Overhead:
Inspection costs (56,200÷100) × 20
Purchasing costs (80,000÷15) × 3
Machine costs (50,000÷4,000) ×
2,400 Manufacturing cost
187,240
Sales (80×3,000)
240,000
Gross profit
52,760
Units produced and sold
Goss profit per unit
17.59
9. Sales (65×11,000) + (80×3,000)
Manufacturing cost:
Direct materials (12.5×11,000) + (25×3,000)
Direct labor (20×10,000) +
(22×2,500) Overhead
653,700
Gross
margin
301,300
Test Material 3
148,960
÷ 110,000
13.54
75,000
55,000
11,240
16,000
30,000
57,240
÷ 3,000
955,000
212,500
255,000
186,200
1. Total store overhead (110,000+138,000+96,000)
Multiply
Overhead allocated to Beverage
344,000
× 275,000/860,000
110,000
2. Ordering (344,000×30%) × 250/1025
Costumer support (344,000×20%) × 350,000/900,000
Stocking shelves (344,000×40%) × 2,950/9,125
Stocking shelves (344,000×10%) × 1,750/5,175
Overhead allocated to Food section
25,141
26,756
44,484
11,633
108,044
3. Total factory overhead (budgeted)
(624,800+232,000+289,200+1,972,000+6,424,000+3,596,000+468,000)
Direct labor hours
Predetermined overhead rate
13,606,000
÷ 76,800
177.16
4. Gears (40,000×177.16)
Shafts (20,000×177.16)
Chassis (16,800×177.16)
Budgeted overhead applied to three jobs
7,086,400
3,543,200
2,976,288
13,605,888
5. Direct materials (20,000×120)
Direct labor (40,000×20)
Overhead (40,000×177.16)
Manufacturing cost
Units produced
Manufacturing cost per unit of Gear
2,400,000
800,000
7,086,400
10,286,400
÷ 20,000
514.32
6. Overhead allocated to Gears:
Materials handling (624,800÷3,320,000) × 2,400,000
Production scheduling (232,000÷140) × 80
Set ups (289,200÷88) × 40
Manual machinery (1,972,000÷76,800) × 40,000
Automated machinery (6,424,000÷95,600) × 60,000
Finishing (3,596,000÷76,800) × 40,000
Packaging and shipping (468,000÷5,140) × 2,000
Materials handling (624,800÷3,320,000) × 640,000
Overhead allocated to Shafts:
Production scheduling (232,000÷140) × 40
451,663
132,571
131,455
1,027,083
4,031,799
1,872,917
182,101
7,829,589
120,443
66,286
Set ups (289,200÷88) × 20
Manual machinery (1,972,000÷76,800) × 20,000
Automated machinery (6,424,000÷95,600) × 30,000
Finishing (3,596,000÷76,800) × 20,000
Packaging and shipping (468,000÷5,140) × 3,000
Overhead allocated to Chassis:
Materials handling (624,800÷3,320,000) × 280,000
Production scheduling (232,000÷140) × 20
Set ups (289,200÷88) × 28
Manual machinery (1,972,000÷76,800) × 16,800
Automated machinery (6,424,000÷95,600) × 5,600
Finishing (3,596,000÷76,800) × 16,800
Packaging and shipping (468,000÷5,140) × 140
Total overhead applied to the three jobs
52,694
33,143
92,018
431,375
376,301
786,625
12,747
1,784,903
640,000
500,000
3,991,508
5,131,508
Accommodation
Administration:
(640,000×30/50)
(640,000×20/50)
Building maintenance:
(750,000×60%/80%)
(750,000×20%/80%)
Total support cost
3,991,508
13,606,000
7. Direct materials (4,000×160)
Direct labor (20,000×25)
Overhead
Manufacturing cost of product Shafts
8.
65,727
513,542
2,015,900
936,458
273,152
Food section
384,000
256,000
562,500
946,500
187,500
443,500
9. Prime cost
820,000
Overhead (2,000,000×280,000/1,000,000)
560,000
Total cost for Camella Prestige
Corporation 1,380,000
10. Selling (45,000×2/900)
100
Alteration (12,000×6/200)
Cleaning and Preparation (60,000×10/750)
General overhead (43,650×2/900)
Total costs assigned to Gerry Punch
360
800
97
1,357
CHAPTER 6- JOB ORDER COSTING
Summary of Answers
Exercise 6-1
(Table)
e. P48 000
FI.a P52 000
b.P88 000
c. P80 000
d. P60 000
e. P24 000
e.P95 500
FI.a.P52 000
b.P88 000
c.P80 000
d.P60 000
e.P24 000
e.-
Exercise 6-3
Exercise 6-2
1.P93 000
1.AD P12
2.P75 000
FD P8
3.P75 000
4. P4 800
2.AD.a P96 000 3.ADa.P165 000 4.ADaP109560 5. P38 400
b. P168 000
c. P108 000
d. P72 000
b.P275 000
c.P197 500
d.P155 000
b.P179 600
C.P130 700
d.-
Test Material 1 9.P1 860 000
Test Material 2
1.P315.6
10/11.P1 216.58 1.P45 500
2.P78 000
P130 000
P90 000
3. 1.6
4.P32 000
5.P60 700
6.P98 600
7.P81 500
8.P777 995
12.entry
13.P3193
14.P642 500
15.P36 000
16.P50
17.P52.65
18.P61 440
19.P128 640
20.P136.32
2.P4 320 000
3.P1 995 000
4.P449 333
5.P2333.33
6.P490 800
7.P98 800
8.P4 130 000
9.P5 114 286
10.P1 184 286
Test Material 3
1.A
2.D
3.A
4.D
5.A
6.B
7.B
8.C
9.B
10.C
COMPUTATIONS
11.A
12.C
13.A
14.D
15.B
16.C
17.E
18.C
19.A
20.E
21.A
22.D
23.A
24.E
25.B
6. P80 800
Exercise 6-4
1. (T-accounts)
11.P9 500
12.P1 932
750
13.P10 180
14.P30/11
15.P281795
P316 440
P378700
16. P31765
P15700
P17860
17.P313650
Test Material
4
1.A
2.B
3.A
4.A
5.A
6.B
7.D
8.D
9.D
10.D
2.a.P1 100 000
b.P1 082 000
c.P1 374 500
d. entries
3. (FS)
Exercises 6-7 to 69
(Entries)
P332140
P396560
18.P448071.43
P474485.71
P566514.29
19-20 Entries
11.A
12.B
13.B
14.B
15.A
16.A
17.A
18.A
19.B
20.C
Exercise 6-2.
Manufacturing Overhead - Assembly
Divided by Direct Labor Hours Assembly
Predetermined Overhead rate - Assembly
Manufacturing Overhead - Finishing
Divided by Machine Hours - Finishing
Predetermined Overhead rate Finishing
/
960,000
80,000
12
/
Overhead applied to production:
Assembly Department
Job Alpha ( 8000 x 12 )
Job Beta ( 14000 x 12 )
Job Charlie ( 9000 x 12 )
Job Delta ( 6000 x 12 )
Job Echo ( 4000 x 12)
600,000
75,000
8
96,000
168,000
108,000
72,000
48,000
Finishing Department
Job Alpha ( 6500 x 8 )
Job Beta ( 11000 x 8 )
Job Charlie ( 10000 x 8 )
Job Delta ( 7500 x 8 )
Job Echo ( 3000 x 8 )
Total
Cost to Manufacture
Each Job
Assembly
Direct Materials
Direct Labor
Alpha ( 8000 x 5.5 )
Beta ( 14000 x 5.5 )
Charlie ( 9000 x 5.5 )
Delta ( 6000 x 5.5 )
Echo ( 4000 x 5.5 )
Factory Overhead
Total
Finishing
52,000
88,000
80,000
60,000
24,000
Job
Alpha
25,000
Job Beta
30,000
Job
Charlie
40,000
492,000
304,000
796,000
Job
Delta
Job
Echo
50,000
25,000
170,000
22,500
48,000
95,500
226,000
492,000
888,000
Total
44,000
77,000
49,500
33,000
96,000
165,000
168,000
275,000
108,000
197,500
72,000
155,000
Direct Materials
Direct Labor
Alpha ( 1800 x 5.5 )
Beta ( 2000 x 5.5 )
Charlie ( 3500 x 5.5 )
Delta ( 3200 x 5.5 )
Echo ( 2800 X 5.5 )
Factory Overhead
Total
12,000
25,000
30,000
2,000
5,000
74,000
15,400
24,000
44,400
73,150
304,000
451,150
9,900
11,000
19,250
17,600
52,000
73,900
88,000
124,000
80,000
129,250
60,000
79,600
Gross Profit assuming the jobs are sold at cost + 40% mark - up :
Job Alpha Job Beta Job Charlie Job Delta Job Echo
Assembly 165,000
275,000 197,500
155,000
95,500
Finishing
73,900
124,000 129,250
79,600
44,400
Total
238,900
399,000 326,750
234,600
139,900
Add:
Beginning
35,000
50,000
Balance
Balance
273,900
449,000 326,750
234,600
139,900
Multiply by x
x
x
x
x
1.4 1.4
Mark-up
1.4
1.4
1.4
Sales Price 383,460
628,600 457,450
328,440
Cost of
273,900
449,000 326,750
Sales
Gross Profit 109,560
179,600 130,700
-
Total
888,000
451,150
1,339,150
1,424,150
419,860
Exercise 6 - 3
1. Work in Process - Obama
Work in Process - Nixon
Work in Process - Bush
Total Work in Process - July
Less: Cost of Jobs Completed
Work in Process, end
2. Work in Process, beginning
Add: Work in Process- Obama
Work in Process- Nixon
Work in Process- GMA
Work in Process- FVR
Total
Less: Job Completed - Obama
(52000 + 44000)
Work in Process, end
52,000
41,000
12,000
105,000
(12,000)
93,000
93,000
44,000
39,000
47,000
39,000
111,000
277,000
(202,000)
75,000
3. Work in Process, beginning
Add: Work in Process - Nixon
Work in Process - GMA
Work in Process - FVR
Total
Less: Jobs Completed
Nixon (41000+39000+30000)
GMA (47000 + 45000)
Work in Process, end
166,000
30,000
45,000
36,000
110,000
92,000
4. Jobs Completed - July
Multiply by Gross Profit Rate
Gross Profit - August
5. Jobs Completed - August
(52000+44000)
Multiply by Gross Profit Rate
Gross Profit - September
6. Jobs Completed - September
Nixon (41000+39000+30000)
GMA (47000+45000)
Multiply by Gross Profit Rate
Gross Profit - October
111,000
277,000
(202,000)
75,000
x
12,000
0.4
4,800
x
96,000
0.4
38,400
x
202,000
0.4
80,800
110,000
92,000
Exercises 6 - 4
Raw Materials
Beg. Bal.- 100,000 500,000 - Issued
Purchases - 650,000
End. Bal. - 250,000
Work in Process
Beg. Bal.- 232,000 1,082,000 Completed
Materials- 475,000
Direct Labor- 250,000
Overhead- 375,000
End. Bal -
250,000
Finished Goods
Beg. Bal. - 720,000 1,374,500 - Jobs
Sold
Completed-1,082,000
End. Bal- 427,500
Cost of Sales
Jobs Sold- 1,374,500
Manufacturing Overhead
Indirect Mat. - 25,000
375,000 Applied OH
Indirect Labor-75,000
Insurance - 30,000
Rent 60,000
Maintenance - 12,000
Electricity - 36,000
Tax&Licenses-12,000
Misc. Cost 20,000
Overapplied - 105,000
Job 500 - Sold
Beginning Balances
Add: Direct Materials (500,000 x 25%)
Direct Labor (250,000 x 25%)
Factory Overhead (62,500 x 150%)
Total
Direct Materials
22,000
125,000
Direct Labor
48,000
Factory
Overhead
72,000
62,500
147,000
110,500
Direct Materials
15,000
150,000
Direct Labor
30,000
93,750
165,750
Job 600 - Completed and in the warehouse
Beginning Balances
Add: Direct Materials (500,000 x 30%)
Direct Labor (250,000 x 30%)
Factory Overhead (75,000 x 150%)
Total
Factory
Overhead
45,000
75,000
165,000
105,000
Direct Materials
125,000
Direct Labor
112,500
157,500
Job 700 - Unfinished
Direct Materials (500,000 x 25%)
Direct Labor (250,000 x 20%)
Factory Overhead (50,000 x 150%)
Factory
Overhead
50,000
75,000
Job 800 - Sold
Direct Materials (500,000 x 15%)
Direct Labor (250,000 x 25%)
Factory Overhead (50,000 x 150%)
2.) (a.) Direct Materials (500,000 x 95%)
Direct Labor
Factory Overhead (250,000 x 150%)
Total Factory Cost
Direct Materials
75,000
Direct Labor
Factory
Overhead
62,500
93,750
475,000
250,000
375,000
1,100,000
(b.) Work in Process,
beginning
Add: Factory Cost
Total cost put into process
Less: Work in process, end
Cost of Goods Completed
(c.)
Balances
Divided by
232,000
1,100,000
1,332,000
(250,000)
1,082,000
Work in Process
250,000
/
Percentage
Cost of Goods Manufactured
Add: Finished Goods,beginning
Cost of Goods Available for Sale
Less: Job Unsold
Cost of Goods Sold
Less: Overapplied overhead
Cost of Sales - Adjusted
(d.) Work in Process,
beginning Add: Direct
Materials
Direct Labor
Factory Overhead
Total
Less: Job Completed
Overapplied Overhead
Work in Process, end
Finished Goods, beginning
Add: Jobs Completed
Total
Less: Jobs Sold
Job 500
Job 400
Job 300
Job 800
Balance
Less: Overapplied Overhead
Finished Goods, end
/
2,052,000 2,052,000
0. 1218
x
Multiply by Overapplied Overhead
Adjusted Amount
Finished
Goods
427,500
105,000
Cost of Sales
1,374,500
/
2,052,000
0.
0.
2083
6698
x
x
105,000
105,000
12,789
21,872
70,329
1,082,000
720,000
1,802,000
(427,500)
1,374,500
(70,329)
1,304,171
475,000
250,000
375,000
232,000
1,100,000
1,332,000
(1,082,000)
(12,789)
237,211
720,000
1,082,000
1,802,000
423,250
320,000
400,000
231,250
(1,374,500)
427,500
(21,872)
405,629
Beginning Balance
Add: Raw Materials Purchased
Total
Less: Materials used in production
Raw Materials, end
100,000
650,000
750,000
(500,000)
250,000
3.)
Manila Manufacturing Company
Statement of Cost Manufactured and Sold
September 30, 2012
Work in Process,beginning
Add: Direct Materials
Direct Labor
Factory Overhead
Total Cost Put into Process
Less: Work in Process,end
Cost of Goods Manufactured
Add: Finished Goods,beginning
Less: Finished Goods,end
Cost of Goods Sold
232,000
475,000
250,000
375,000
1,100,000
1,332,000
(237,211)
1,094,789
720,000
(405,629)
1,409,161
Exercises 6-5
Work in Process,beginning
Less: Direct Materials (6000+8000)
Direct Labor (3000+2500)
Factory Overhead
Divided by Direct Labor
Overhead Rate
Direct Materials issued to production:
Job 101 - 3,000
Job 102 - 2,000
Job 103 - 6,000
Job 104 - 4,500
Add: Raw Materials, end
Less: Raw Materials, beginning
Raw Materials Purchased
Entries:
(1) Raw Materials
Cash
/
22,800
(14,000)
(5,500)
3,300
5,500
0. 6
15,500
18,000
(15,000)
18,500
18,500
18,500
(2) Work in Process
Raw Materials
15,500
15,500
(3) Factory Payroll
Cash
7,500
(4) Work in Process
Factory Payroll
7,500
(5) Finished Goods
Work in Process
32,440
7,500
7,500
32,440
Job 1
Direct Materials
Direct Labor
Manufacturing Overhead
(4400 x 0.6)
(4000 x 0.6)
Total
9,000
4,400
Job 2
10,000
4,000
2,640
16,040
2,400
16,400
Exercise 6-6
CASE A
(a)
Work in Process
Raw Materials
Payroll
Manufacturing Overhead
(b)
Spoiled goods
Manufacturing Overhead
Work in Process
(c)
Finished goods
Work in Process
(d)
(e)
720,000
300,000
180,000
240,000
16,000
32,000
48,000
672,000
672,000
Accounts Receivable
Sales
1,008,000
Cost of goods sold
Finished goods
672,000
COST PER UNIT
CASE B
Total
19,000
8,400
1,008,000
480
672,000
5,040
32,440
(a)
Work in process
Raw Materials
Payroll
Manufacturing Overhead
5,320,000
(b)
Work in process
Raw Materials
Payroll
Manufacturing overhead
100,000
(c)
Finished goods
Work in Process
5,320,000
(d)
Accounts Receivable
Sales
Cost of goods sold
Finished goods
EXERCISE 6-7 (a)
Work in Process
Material
Payroll
MOH
8,512,000
8,512,000
5,320,000
5,320,000
870,000
625,000
120,000
125,000
19,600
Finished Goods
Work in process
889,600
Spoild
20,000
32,000
48,000
5,320,000
Work in Process
Factory payroll
Manufacturing Overhaead
(b)
Work in Process
Material
Direct Labor
MOH
1,320,000
1,600,000
2,400,000
9,600
10,000
889,600
4,840,000
1,320,000
1,600,000
1,920,000
50,000
Work in Process
50,000
Finished Goods(4840000-50000)
Work in Process
4,790,000
Account Receivable
Sales
10,538,000
4,790,000
10,538,000
Cost of Good sold
Finished Goods
4,790,000
4,790,000
EXERCISE6-8
Work in Process
Material
Labor
MOH
158,750
40,000
56,250
62500
Spoild Goods
MOH
Work in Process
4,000
11,875
Finished Goods
Work in process
143,875
Accounts Receivable
Sales
36,000
Cost of Goods Sold
Finished Goods
142,875
15,875
143,875
36,000
142,875
Test Material 1 1.)
MOLDING
PAINTING
FACTORY OVERHEAD
602,000
735,000
Divide By: MACHINE HOURS
70,000
420,000
OVERHEAD RATE
Direct Materials 47,000 63,200 =
+
Direct Labor
9,000 + 68,000 =
Overhead
(1,100 x 8.6) =
(1.75 x 68,000) =
Total Manufacturing
Cost
Divide By: (No. Of
Units)
Unit Product Cost
8.6
110,200
2.) Purchases of Raw Materials
Raw Materials, Beginning
Raw Materials Available
290,000
18,000
308,000
77,000
9,460
119,000
315,600
100
315.60
=======
1.75
Prime Cost
Direct Labor Cost
Direct Materials
Add: Raw Materials Available
Raw Material lost from Fire
410,000
180,000
230,000
308,000
78,000
======
Conversion Cost (180,000/30%)
Less: Direct Labor
Overhead
Add: Prime Cost
Total Manufacturing Cost
Work in Process
Cost of Goods Manufactured
(830,000-65,000)
Work in Process Lost from Fire
600,000
180,000
420,000
410,000
830,000
65,000
(765,000)
130,000
======
Cost of Goods Available for Sale
Less: Cost of Goods Sold
(Sales 1,200,000 x 60%)
Finished Goods Lost from Fire
810,000
720,000
90,000
======
3.)
JOB
#105
20,800
OVERHEAD 13,200
#106
+
+
11,200
7,000
= 1.6
4.)
Direct
Labor
Job#105
Job#106
Job#107
4,000
6,000
10,000
Multiply By
Predetermined OH Rate
Total OH Cost Applied During June
5.) Job # 105
May Costs:
Direct Materials
Direct Labor
Overhead
20,000
1.6
32,000
=====
16,500
13,000
20,800
50,300
Add: June Costs:
Direct Materials
---------Direct Labor
4,000
Overhead (4,000 x 1.6)
6,400
Total Cost of Goods manufactured
10,400
60,700
6.) May Costs:
Direct Materials
Direct Labor
Overhead
Add: June Costs
Direct Materials 8,200
Direct Labor
6,000
Overhead (6000 x 1.6) 9,600
(10,000 x 1.6)
Total May and June Costs
9,300
7,000
11,200
21,300
10,000
23,800
16,000
51,300
47,300
========================
Total May and June Costs of Job#106
51,300
Add: Total may and June Costs of Job#107 47,300
Bal. Of Work in Process for the Period
98,600
=====
7.)
JOB #
105
106
June Costs:
Direct Materials
-------8,200
Direct Labor
4,000
6,000
Overhead
6,400
9,600
Total Amount Debited to Work in Process in June
107
21,300 29,500
10,000 20,000
10,000 32,000
81,500
=====
8.) Costs for Manufacture of 10 Units of Urvan
Escapade: Materials
5,000,000
Labor (31,250hrs x 45)
1,250,000
OH (1,250 x 1.2)
1,500,000
7,750,000
Cost of units Requiring Rework:
Materials
25,000
Labor (50 x 45)
2,250
OH (2,250 x 1.2)
2,700
29,950
Total Cost
7,779,950
Divide By: Number of Units
10
Manufacturing Cost per
777,995
========
Unit
9.)
7,750,000
Cost of Normal Units
Divide By: No. Of Units
10
Cost per Unit
775,000
Multiply
2.4
TOTAL
Billing Price Per Unit
10.)
11.)
1,860,000
========
Cost per Pair of Marikina Shoe Company
Materials
Labor
Overhead (125% of DL)
Manufacturing Cost/Good Unit
200.00
450.00
562.50
1,212.50
=======
1,212.50
10,000
12,125,000
20,000
12,105,000
9,950
1,216.58
=========
Manufacturing Cost per Good Unit
Multiply By: No. Of Good Units
Less: Salvage Value
Divide By: No. Of Good Units
Manufacturing Cost per Unit
12.)
Work in Process
Manufacturing Overhead
Accrued Payroll
30,000
30,000
60,000
13.)
BAKER COMPANY
FABRICATING
Direct Materials
Direct Labor (429/1.5)
Overhead
(15 x 18)
Total Cost of Job # 639
FINISHING
1,590
286
429
14.)
MARGARITA COMPANY
Raw Material, Purchases
Less: Raw Materials increased by
Materials Beginning
Less: Indirect Materials
Direct Materials
Total Changes to Work in Process
Less: Direct Materials
Factory Overhead
Direct Labor Component of Job#500
15.)
Number of Employees
Multiply: No. Of days
TOTAL
570
48
2,160
334
270
699
3,193
=====
135,000
(75,000)
60,000
(20,000)
40,000
960,000
(40,000)
(277,500)
642,500
50
2
100
Multiply:
Amount of Direct Labor Charged
To the Order
16.)
Work in Process
Cost of Goods Sold
Finished Goods
Divided By:
Predetermined Overhead Rate
17.)
45 ========
36,000
=======
460,000
1,440,000
500,000
2,400,000
48,000
50
=======
Work in Process, beg.
Direct Material
Direct Labor
Factory Overhead
Debits to Finished Goods
Work in Process, end.
Factory Overhead
=
80 % x Direct Labor
=
80 % x 20 250
=
16 200
Total Cost
Direct Labor
Factory overhead
Direct Material
18.)
PW 100, Direct Labor
Multiply: Overhead Applied to
Direct Labor Cost
Add: Direct Labor
Cost of Job PW 100, Beg. Of
Month
19.)
Direct Labor
Overhead (42,000 x 60%)
Cost
Add: Cost of Job PW 100, Beg
40 500
243 000
162 000
129 600
( 486 000 )
89 100
89 100
20 250
16 200
52 650
38,400
60%
23,040
38,400
61,440
========
42,000
25,200
67,200
61,440
20.)
Cost of Job PW 100, End of Month
128,640
======
Total Direct Labor Costs for All Jobs
Completion Cost Required for PW100 in DL
Labor Used in PW200
Direct Labor Charged to PW300
Add: Overhead (85,200 x 60%)
Cost of Job PW300
247,200
(42,000)
(120,000)
85,200
51,120
136,320
======
Test Material 2
1.)
2.)
Fixed Overhead
Add: Over applied Overhead
Applied Overhead
Divide By:
Machine Hrs Worked during the
Period
Total Hours
Less: Not Billable to Clients
Number of Hours
Multiply: Amount Billed to Clients
Revenue
3.)
Revenue
Direct Labor (3,600 x 450)
Overhead (450,000/40,000) x 3,600
Gross Profit
Less: Expenses
Net Profit
4.)
Material Cost
Direct Labor Cost (2,500 x 38.5)
Factory Overhead (5 x 25000) + 50,000
Total Cost
Multiply: Sold Swimsuits
Divide: Production
Divide By:
Sales Revenue
320,000
44,000
364,000
8
45,500
======
4,000
400
3,600
1,200
4,320,000
=======
4,320,000
(1,620,000)
(405,000)
2,295,000
(300,000)
1,995,000
========
150,000
96,250
175,000
421,250
20,000
8,425,000,000
25,000
337,000
75%
449,333
=========
5.)
Sales Revenue
Multiply: Gross Profit Rate
Less: (20,000 x 2 + 70,000)
Net Profit
6.)
Total Revenue 1st Quarter
Less: TMC (494,000 x 80%)
Less: Gen. and Admin. Expenses
Net Income for the Quarter
7.)
Total Manufacturing Cost
Multiply By:
Finished Goods Inventory, End
8.)
Total Manufacturing Cost
Add: Work in Process, Beginning
Less: Work in Process, End
Cost of Goods Manufactured
Add: Finished Goods, Beginning
Goods Available for Sale
9.)
Goods Available for Sale
Less: Finished Goods Ending
Cost of Goods Sold
Divide By:
Total Sales for the Period
10.)
Total Sales
Multiply By:
Less: Selling and Admin. Expenses
Net Income for the Period
11.)
12.)
Total Factory Overhead
(Variable OH 60,000 + Fixed PH 20,000)
Divide: Units
Factory Overhead/Unit
Applied Overhead (79,000-3000)
Divide By: FOH/Unit
Number of Units Produced
Work in Process:
449,300
25%
112,333
110,000
2,333.33
=========
1,180,000
395,000
784,000
294,000
490,800
=======
494,000
20%
98,800
========
3,430,000
400,000
150,000
3,680,000
450,000
4,130,000
========
4,130,000
550,000
3,580,000
70%
5,114,286
========
5,114,286
30%
1,534,296
350,000
1,184,286
========
80,000
10,000
8
76,000
8
9,500
========
Beginning Balance
Direct Materials
Direct Labor
Overhead Applied
Less: Jobs Completed
Job Alpha
Job Beta
Job Charlie
Job Delta
Coat of Unfinished Jobs
13.)
660,000
574,000
835,000
715,000
2,784,000
329,750
164,000
270,000
87,500
(851,250)
1,932,750
========
17,750
3,500
4,200
25,450
40%
10,180
======
Direct Materials
Direct Labor
Applied Overhead (3,500 x 120%)
Total Cost
Multiply By:
Gross Profit on Order
14.)
DEPARTMENT 1
DEPARTMENT 2
Overhead
1,560,000
1,760,000
Divide by: Machine Hours
52,000
Direct Labor Hours
16,000
Predetermined Overhead Rate
30
11
=================================
15.)
JOB 100
Direct Materials
237,000
Direct Labor Hours
(450 x 48)
21,600
(230 x 48)
(300 x 48)
258,600
Add: (425 x 55)
23,375
(200 x 55)
(260 x 55)
Prime Cost
281,975
JOB 200
294,400
JOB 300
350,000
11,040
305,440
14,400
364,400
11,000
14,300
378,700
316,440
============================================
16.)
JOB#100
Direct Labor Hrs-Dept.2
Multiply By: Predetermined
425
JOB#200
200
JOB#300
300
Overhead Rate-Dept.2
11
4,675
11
2,200
Add: Machine Hrs.-Dept. 1
x Predetermined OH Rate
(900 x 30)
27,000
(450 x 30)
13,500
(500 x 30)
Overhead Applied to Each
31,675
15,700
Job
17.)
JOB#100
JOB#200
Prime Cost
281,975
316,440
Add: OH Applied
To Each Job 31,675
15,700
Total Cost
313,650
332,140
18.)
Total Cost
Divide By:
Billing Price
19.)
JOB#100
313,650
70%
448,071.43
Work in Process
Labor Rate Variance
Payroll
Labor Efficiency Variance
Direct Labor
Multiply: Cost/Hour
Multiply: Units Produced
Work in Process
15,000
17,860
JOB#300
378,700
17,860
396,560
JOB#200
332,140
70%
474,485.71
24,000
395
STANDARD
.40 Hours
12
4.8
5000
24,000
11
2,860
JOB#300
396,560
70%
566,514.29
24,095
300
ACTUAL
1,975
12.20
Payroll 24,095
20.)
Work in Process (10,000 x 3.25)
Material Quantity Variance
Material Inventory (10,500 x 3.15)
Material Price Variance
Difference in Price
Direct Material Used
Material Price Var.
3.25
3.15
.10
10,500
1050
====
32,500
1,625
33,075
1,050
Units Produced
5,000
Multiply:
2
10,000
Less:
10,500
Multiply:
3.25
Material Quantity Var. 1,625
TEST MATERIAL 3
1.)
Manufacturing Overhead-G101
Divide by: Direct Labor-G101
Predetermined OH Rate
Multiply: Direct Labor-G102
Overhead Charged to G-102
2.)
DEPARTMENT 1
Manufacturing OH
Divide By:
Direct Labor Cost
Add: Direct Materials
MOH
429
1.5
286
1,590
429
DEPARTMENT 2
Machine Time
Multiply:
MOH
Add: Direct Materials
Direct Labor Cost
Total Cost of Job-H200
3.
Raw Materials:
(120,000 x 30%)
(120,000 x 25%)
(120,000 x 25%)
Add: Direct Labor
(2,500 x 8.5)
(3,100 x 8.5)
(4,200 x 8.5)
Prime Cost
255
510
.5
289
A. 144.50
=====
2,305
15
18
270
580
48
A101
898
D. 3,203
=====
B101
6.)
TOTAL
30,000
96,000
36,000
30,000
21,250
26,350
35,700
4.)
B101
Direct Labor Cost
Multiply:
Total Amt. Of OH Apllied to Job B-101
5.)
C101
83,300
A.179,300
======
26,350
120%
D. 31,620
======
Direct Materials
( 120 000 x 80%)
Direct Labor ( 2 500 + 3 100 + 4 200) x
8.50
Prime Costs
JOB 300
96 000
33 300
179 300
Manufacturing Overhead
Divide By:
120%
Direct Labor-Job 300
A. 6,000
=======
7.)
JOB 400
2,000
9,000
10,800
B. 21,800
======
Direct materials
Direct Labor
Manufacturing OH (9,000 x 120%)
Total Cost- Job 400
=======
8.)
Direct Material Used
Direct Labor
Manufacturing OH
Total Manufacturing Cost
Add: Work in Process, Beg
Goods Put into Process
Less: Work in Process, End
Cost of Goods Manufactured
9.)
Cost of Goods Manufactured
Add: Finished Goods, Beg
Cost of Goods Available for Sale
Less: Finished Goods, End
Cost of Goods Sold
10.)
Total Factory Costs
Raw Materials Used
Conversion Costs
divide by:
Direct Labor
11.)
Total Manufacturing Cost
Add: Work in Process, Beg
Goods Put Into Process
Less: Work in Process, End
Cost of Goods Manufactured
12.& 13.
10,400
8,000
8,800
27,200
2,400
29,600
1,800
C. 27,800
=======
27,800
1,200
29,000
1,000
B. 28,000
=====
686 000
386 000
360 000
1.60
C. 225 000
686,000
80,000
766,000
30,000
A. 736,000
======
Raw Materials beg.
Raw Materials purchased
Raw Materials end.
Raw Materials used
Direct Labor
( 39 800 x 42.5)
Overhead
( 1 691 500 x 80%)
Total Factory Cost
WIP, beg.
WIP, end.
( 354 000 + 80 000)
Cost of Goods Manufactured
15.
Office Salaries
Utilities Cost
( 17 400 x 40%)
Depreciation
Rent Expense
(24 000 x 40%)
Period Costs incurred - July
16.
Direct Materials
Direct Labor
Factory Overhead
Indirect Materials
Indirect Labor
Utilities Cost
(17 400 x 60%)
Depreciation
Rent
(24 000 x 60%)
Total Factory Costs
17.
Total Factory Costs
Work in Process, beg.
Work in Process, end.
Cost of Goods Manufactured
Finished Goods, beg.
Finished Goods, end.
`Cost of Goods Sold
Sales - 100%
(203 840 x 2)
Cost of Goods Sold - 50%
Gross Profit - 50%
18.
Raw Materials Requisitioned
Indirect Materials
Direct Materials issued to
production
21. A.
1 093 400
( 250 000)
977 400
1 691 500
1 353 200
A. 4 022 100
354 000
(434 000)
A. 3 942 100
134
000
42 200
6 960
10 000
9000
B. 68 760
42 400
100 000
5 000
14 000
10 440
18 000
14 400
61 840
C. 204 240
204 240
26 000
16 600
213 640
10 000
19 800
203 840
407 680
203 840
E. 203 840
148 500
19 00
C. 129 500
Cost of Sales
Work in Process
4 500
4 500
24..
Job
100:
7 440
108 000
135 000
250 440
x 25%
A. 62 610
Materials used
Direct Labor
( 3 600 x 30)
Overhead
( 3 600 x 37.50)
Total Cost of Job 100
Gross Margin rate
Gross Margin
23.
Materials
Labor
Overhead
Total amount remove from WIP
12 000
1 500
4 500
A. 18
000
TEST MATERIAL 4
1.
Finished goods inventory
Cost of Goods Sold
Cost of Goods Completed
49 500
74 500
(102
000)
A. 22
000
Finished Goods, beginning balance
2. Materials requisitioned
Direct Labor Costs
Overhead costs
Cost of Goods
Manufactured
6.
Raw Materials Inventory,
beg.
Raw Materials purchases
Materials requisitioned
Raw Materials Inventory,
end.
7.
72 400
31 900
22 800
B.127 100
30 000
B.
5 000
(7 300)
27 700
Total Manufacturing costs
Goods Completed
Loss from Spoilage
8.
(37 200 + 35 200)
(14 400 + 17 500)
(360 + 400) x P30
Job B4:
Direct Materials
99
000
93
600
5 400
(99 000 x 52000 / 55
000)
(14 000 + 3 000)
17 000
Direct Labor Costs
(14 400 + 17 500)
Overhead:
Machining
Finishing
31 900
6 617
2 408. 50
9
025.50
Total Manufacturing Costs
No. of Units
Manufacturing cost per unit
Machining:
Manufacturing OH
Machine Hours
OH rate
Actual Machine Hours
OH applied
617
Finishing:
Manufacturing OH
DL costs
OH rate
Actual DL costs
OH applied
27 875.50
÷ 200
A.139.38
11 200 000
÷ 220 000
50.91
x
130
6
7 900 000
4 100 000
1.9268
1 250
2 408.50
10.
From Tanning Dept.
(10 sq .ft. x P3) x 200
From Assembly Dept. (3MH x P9) x 200
From Saddle Dept.
(10 DLH x P4) x 200
Total OH applied to Job 305
6 000
5 400
8 000
D.19 400
11.
Direct Labor
(10 DLH x P8) x 200
OH applied
Conversion Costs
25 000
19 400
12..
Direct Materials (10 sq. ft. x P12.50) x 200
Direct Labor Cost
Prime Costs
25 000
16 000
13..
Direct Materials
Direct Labor Cost
OH applied
Total Manufacturing costs
No. of sets
Manufacturing Costs per set
14.
A.35 400
B.41 000
25 000
16 000
19 400
60 400
200
B. 302
Material cost :
Material related OH
1 280
000
3 200
000
.40
Cost of materials used on jobs
OH rate
Machine Time:
Machine related OH
2 200
000
400 000
5.5
Machine hours
OH rate
Budgeted overhead
(42000 + 16400 + 78 000) x .40
(17000 + 9000 + 5800) x 5.5
Actual Overhead
113600
174900
185600
Total amount of OH variance
(underapplied)
15.
16.
Materials Costs
Direct Labor
Applied Overhead
Total cost of Job
X2
(42 000 x .40) + (17 000 x 5.5)
Direct Labor
Overhead applied - Job 657
17. Total WIP at the end of the mo.
Total costs of other jobs
Less: Direct labor cost - Job 750 (714 x 2)
OH applied - Job 750
Direct Materials included in Job 750
18.
Direct Materials
Direct Labor
Applied Overhead
Total Factory Costs
19.
Direct Labor hours
Direct Labor per
hour
Direct Labor Costs
288 500
118400
304 000
B.15 500
42 000
32 000
110 300
A. 184
300
289
÷ 2
A.144.50
6 800
3 981
2 819
1 428
714
A. 677
(10 000 + 20 000 + 15 000)
(5 000 + 4 000 + 2 500)
(11 500 x 2)
45000
11500
23000
79500
(2 500 + 3 100 + 4 200)
9 800
x 8.50
83 300
Total applied Overhead
120%
B. 99 960
20.
Direct Materials [120 000 x (30% + 25%)]
Direct Labor
(2 500 + 3 100) x 8.50
Applied Overhead
(47 600 x 2)
Work in Process, ending balance
66 000
47 600
57 120
C. 170 720
21.
Actual quantity
Standard price - actual price [ 9.90 - (10 000/1 000)]
Unfavorable Material Price Variance
1 000
x .10
A. 100
22.
Standard Price
Standard quantity - Actual quantity
[( 9.90 x 10 000) 10 000]
Unfavorable Material Price Variance
9.90
23.
Standard Direct Labor Hours
Standard Rate per DLH
Amount of Labor charged to WIP
24.
Units Completed
Standard Cost per Unit ( 4 x 3)
Materials Component of work Completed
26.
Units reworked
Direct Labor + Overhead
(12 + 18)
Charged to Manufacturing Overhead
x 100
C. 990
12 000
x 24
B.228 000
3 000
x 12
A. 36 000
100
x 30/unit
C. 3 000
PROBLEMS
Problem 6-1 JOURNAL ENTRIES
a. Raw Materials
Accounts Payable
826,000
b. Work in Process
Manufacturing Overhead
Raw Materials
755,000
30,000
c. Manufacturing Overhead
Cash
116,000
d. Manufacturing Overhead
Accumulated Depreciation
190,000
e. Marketing and Administrative Expense
Cash
f. Work in Process
Manufacturing Overhead
Factory Payroll
g. Factory Payroll
SSS, PhilHEALTH, Pag-IBIG Payable
Accrued Wages Payable
h. Work in Process
Manufacturing Overhead
i. Expenses
826,000
785,000
116,000
190,000
250,000
1,000,000
250,000
250,000
1,250,000
1,000,000
200,000
800,000
800,000
800,000
56,000
Cash
j. Manufacturing Overhead
Insurance Expenses
Prepaid Insurance
k. Accounts Receivable
Sales
Cost of Sales
Finished Goods
l. Manufacturing Overhead
Miscellaneous Expense
m. Finished Goods
56,000
40,000
10,000
50,000
254,800
254,800
182,000
182,000
500,000
500,000
2,490,000
Work in Process
2,490,000
Accounts Receivable
Sales
254,800
254,800
Cost of Sales
Finished Goods
1,345,000
1,345,000
Cost of Sales
Manufacturing Overhead
76,000
76,000
T – ACCOUNTS
Raw Materials Inventory
Work in Process Inventory
Beg.
210,000
Materials
755,000
Beg.
168,000
Labor
1,000,000
Purchases
826,000
MOH
800,000
Issuance
Balance
785,000
209,000
2,490,000
Balance
209,000
Manufacturing Overhead
Finished Goods Inventory
30,000
116,000
Beg.
190,000
182,000
800,000
182,000
40,000
2,490,000
1,345,000
Balance
1,145,000
Cost of Sales
76,000
Underapplied
Sales
254,800
182,000
1,883,000
1,345,000
Underapplied76,000
Balance
500,000
1,603,000
Bal.2,137,800
JOB COST SHEETS
JOB 101 Completed and in warehouse
Materials
Labor
Overhead
Beginning WIP
Additions
TOTAL
105,000
180,000
150,000
120,000
450,000
Total
555,000
To FG
(555,000)
0
JOB 102 Completed and in warehouse
Materials
Labor
Overhead
Beginning WIP
Additions
TOTAL
105,000
125,000
200,000
160,000
485,000
Total
590,000
To FG
(590,000)
0
JOB 103 Completed and sold
Beginning WIP
Materials
Labor
Overhead
TOTAL
150,000
250,000
200,000
600,000
To FG
(600,000)
0
JOB 104 Completed and Sold
Materials
Labor
Overhead
TOTAL
Incurred
205,000
300,000
240,000
To FG
745,000
(745,000)
0
JOB 105 Unfinished
Incurred
Materials
Labor
Overhead
TOTAL
95,000
100,000
80,000
275,000
Company
Statement of Cost of Goods
Manufactured For the Month Ended
Raw Materials Inventory (Direct)
Beginning Balance
Purchases
Raw Materials Available
Ending Balance
Total Raw Materials Used
Less: Indirect Materials
Total Direct Materials
Used
Direct Labor
Manufacturing Overhead
Total Current Manufacturing Cost
Beginning Balance of WIP Account
Total Cost Put into Process
Ending Balance of WIP
Cost of Goods Manufactured
168,000
826,000
994,000
209,000
785,000
(30,000)
755,000
1,000,000
800,000
2,555,000
210,000
2,765,000
1,895,000
870,000
PROBLEM 6-2
1. Purchases:
Beginning ( 1,596 + 2,775 )
September 4
September 16
September 22
Issued:
September 6
September 23
Ending Raw Materials on hand
Divide by:
Quantity of Raw Materials on hand,
end
2.Peso Value of raw Materials, end
4,371
33,120
28,600
31,920
37,240
42,243
98,011
(79,483)
18,528
4.8
3,860
8,960 x 4.8
18,528
3. Direct materials ( 37,240 + 42,243 )
Direct Labor ( 23,680 + 25,960 )
Overhead ( 49,640 x 1.3 )
Factory Cost
P 79,483
49,640
64,532
P 193,655
4. Factory Cost
Add: Work in Process, beginning
Cost of Goods Put into Process
Less: Work in Process, end
Cost of Goods Manufactured, September 2010
P 193,655
15,112
208,767
208.767
0
5. Job No.
24-A
24-B
24-C
24-D
Direct materials
P 17,492
22,648
23,844
19,870
P 83,854
P
Direct Labor
Overhead
P 11,218
15,790
14,892
12,410
P 54,310
P 14,583.4
20,527
19,359.6
16,133
P 70,603
TOTAL
P 43,293.4
58,965
58,095.6
48,413
P
208,767
Problem 6-3
a. Raw Materials
Accounts Payable
2,500,000
b. Work in Process
Manufacturing Overhead
Raw Materials
2,489,000
36,000
c. Accrued Payroll
Factory Payroll
Administrative Payroll
3,500,000
d. Factory Payroll
Administrative Payroll
Withholding Tax Payable
SSS Payable
PhilHEALTH Payable
Pag-IBIG Payable
Cash / Wages
Payable
e. Work in Process
Manufacturing Overhead
Factory Payroll
f. Employee Benefit Expense
SSS Payable
2,500,000
2,525,000
2,200,000
1,300,000
2,200,000
1,300,000
230,000
83,600
28,000
76,000
3,082,400
1,540,000
660,000
2,200,000
208,500
104,500
PhilHEALTH Payable
Pag-IBIG Payable
28,000
76,000
g. Manufacturing Overhead
Accumulated Depreciation
Prepaid Insurance
Other Expenses
318,000
h. Work in Process
Manufacturing Overhead
924,000
120,000
48,000
150,000
924,000
i. Finished Goods
Work in Process
4,930,000
j. Accounts Receivable
Sales
7,452,000
4,930,000
7,452,000
Cost of Goods Sold
Finished Goods
4,968,000
4,968,000
k. Cost of Goods Sold
Manufacturing Overhead
90,000
90,000
Chapter 7 – Process Costing System
Summary of Answers
TM3
1. B
2. A
3. B
4. B
5. A
6. A
7. E
8. E
9. C
10.E
Exercise 7-1
1.M 25000
L 23400
O 23400
2. 4.07
11. A
12. C
13. A
14. E
15. B
16. A
17. C
TM4
1. 0.6125
2. 3675
3.356280
4. 5000
5.N/A
6.48600
7.203000
8.8.9
11.80000 , 56000
12.95000
13.9600
14.3.42
15.3.99
16.N/A
17.N/A
18.80 800, 85 600, 86
400
19.N/A
20.N/A
9.45320
10.1500
3. 29.97
4. 1 285 000
5.1 075 175
6.A
7.D
8.A
9.C
16.A
TM5
1.71666.67
2.73333.33
3.71000
4.11 700 , 10 000
5. N/A
6. N/A
7. N/A
8.42500 , 45 500
9. N/A
10.N/A
4.B
5.B
Problems 7-1 to 6.E
.Problem 7-4
7.D
3.93610
4. 4700
Exercise 7-4
1. 35 000
2. 32 500
14.B
15.D
16.A
17.A
18.C
19.D
20.D
21.A
22.B
23.C
24.A
Exercise 7-6
1.C
2..D
3.C
4.C
5.B
10.A
11.D
12.B
13.C
14.B
15.C
25.B
26.A
27.D
28.B
29.C
30.B
4.D
5.D
6.D
7.D
8.C
9.D
10.B
11.C
12.C
13.B
14.B
TM2
1.E
2.A
3.A
(table)
TM1
1.B
2.B
3.A
15.C
16.A
17.D
18.B
19.D
8.C
9.C
10.D
11.A
12.A
13.D
5.A
6.D
7.E
8.E
9.C
10.D
11.A
12.D
13.A
14.E
15.B
TM3
1.B
2,A
3.B
4.B
COMPUTATIONS:
EXERCISE 7-1
1
Actual Units
WIP, beg
Started
Units t account
5000
20000
25000
Completed
WIP, beg
Units accounted
23000
2000
25000
2
Total
WIP, beg
Cost added
Total cost
EUP
Materials
Labor
Overhead
23000
2000
25000
23000
400
23400
23000
400
23400
Materials
12000
36000
48000
Labor
6000
16000
22000
Overhead
8000
20200
28200
divided by EUP
Cost/EUP
4.07
93610
4
Materials
direct labor
overhead
WIP, end
Exercise 7-5
25000
1.92
23400
0.94
23400
1.21
3840
376
484
4700
Cost of Production Report
Mantrade Manufacturing Company
Equivalent Units of Production
Units
Materials
CC
500
4000
4500
WIP, beginning
Started
Total Units to Account
WIP, beginning (500x2/3)
333
Units Started & Completed (4000-800)
WIP, ending (800x75%)
Total Units as Accounted
Assignment of Costs
Work in process, beginning cost
Materials (500x10x18)
Conversion
Total Costs
Work in process, end.
Materials (800x10x18)
Conversion (800x75%x80)= 3000/2
Total Costs as Accounted
Work in Process (4000x10x18)
Material Price Variance (20-18)x42000
Material Quantity Variance (42000-40000)x18
Raw Materials (42000x20)
500
3200
800
4500
3200 3200
800 600
4000 4133
P 8325
P
90000
40000
144000
15000
130000
138325
159000
297325
720000
84000
36000
840000
Work in Process (4133x.5x30)
Labor Rate Variance (35-30)x2600
Labor Efficiency Variance (2600-2066.5)x30
Payroll (2600x35)
61995
13000
16005
Work in Process (4133x.5)x20
41330
P91000
Manufacturing Overhead
Manufacturing Overhead
Various Accounts
Exercise 7-6 Multiple Choices
1.D
Unit costs:
Materials
Labor
Factory Overhead
Unit cost in ending inventory
41330
85000
85000
P1
2
3
P6
2.A
Transferred Out
WIP,
end
Total units to be accounted for
3.
7,000
17,000
C
Material
s
CC
Beginning Invty.
Started
Total Units to account for
10,000
10000
Units Transferred
WIP,
end
Total units accounted for
7,000
7,000
7,000
3,000
10,000
3,000
10,000
1,500
8,500
27,000
10,000
39,950
8,500
2.70
4.70
Material
s
CC
Costs
Divide by:
Total costs transferred to 2nd
Department
4.
10,000
7.4
C
WIP,
beg
Started
40,000
240,000
Units to account for
Transferred out
WIP,
end
Units accounted for
280,000
255,000
255,000 255,000
25,000
280,000
25,000 15,000
280,000 270,000
Material
s
5.B
WIP, beg.
Started
Units Account to for
17,000
82,000
99,000
Transferred Out
WIP,
end
Units accounted for
85,000
85,000
14,000
99,000
14,000
99,000
Beginning
Current
Total
Divide by:
Cost per EUP
Cost
12,800
69,700
82,500
99,000
0.833
6.D
CC
WIP, beg.
Started
Units to account for
15,000
42,000
57,000
Transferred out
WIP,
end
Units accounted for
45,000
45,000
12,000
57,000
9,600
54,600
Materials ( 0*100)
CC (4,000*40%*30)
Transferred In (4,000*5)
Costs assigned to WIP, end
0
4,800
20,000
24,800
7. D
8.C
WIP, beg.
Started
Units to account for
less: WIP, end
Transferred out
7,000
32,000
39,000
2,500
36,500
Material
s
CC
7,000
29,500
29,500
4,200
29,500
2,500
39,000
2,500
32,00
625
34,325
36,500
Material
s
36,500
CC
36,500
2,500
39,000
2,500
39,000
625
37,125
Mat. A
Mat. B
CC
700
1,500
1,500
490
1,500
280
1,500
500
2,700
500
2,000
250
2,240
400
2,180
Mat.A
Mat. B
CC
9. B & 10. A
WIP, beg.
Started
Units Account to for
WIP,beg
.
Transferred Out
WIP,
end
Units accounted for
7,000
32,000
39,000
11. D & 12.
B
Transferred Out
WIP,
end
Units accounted for
13. C & 14. B
WIP, beg.
Started
Units Account to for
WIP,beg
.
Transferred Out
WIP,
end
Units accounted for
15. C & 16. A
700
2,000
2,700
Beg.
Current
Divide by: EUP
Cost per EUP
14,270
40,000
2,000
20
96.25
5,950
70,000
2,240
31.25
5,640
98,100
2,180
45
Problem1
Actual
Units
Materials
WA
WIP, beg
Started
Units accounted
for
3600
7800
11400
WIP, beg
S&C
Completed
WIP, end
Units as
accounted
3600
6000
9600
1800
11400
Total
WA
EUP
Labor
FIFO
WA
3000
6000
9600
360
9960
FIFO
WIP, beg
Cost added
Total
EUP
Cost/EUP
38.96
transferred out (9600x38.96)
Mat (1800x22.18)
Labor (600x11.64)
OH (9800x5.14)
WIP, end
cost of manufactured
finished goods, beg( 400x22.18)
40.5
360
9360
Materials
WA
FIFO
9200
211760 211760
220960
9960
9360
22.18
22.62
374016
39924
6984
50372
97280
374016
8872
FIFO
Overhead
WA
2700
6000
9600
600
10200
600
9300
Labor
FIFO
WA
4800
113900 113900
118700
10200
9300
11.64
12.25
FIFO
2400
600
9600
200
9800
200
8600
Overhead
WA
FIFO
2000
48400
48400
50400
9800
8600
5.14
5.63
cost of sales
382888
FIFO method:
WIP, beg
Cost to be done:
Mat (3000x22.62)
Labor( 2700x12.25)
OH (2400x5.63)
started andcompleted
transferred out
16000
67800
33075
13512
243000
373447
Mat
Labor
OH
WIP, end
8143
7350
1126
16619
cost of goods manufactured
finished goods, end
Cost of sales
373447
40500
413947
PROCESS 2
Actual Units
WIP, beg
Started
Units accounted for
1200
9600
10800
WIP, beg
S&C
Completed
WIP, end
Units as accounted
1200
7200
8400
2400
10800
Total
WA
WIP, beg
Materials
WA
FIFO
WA
800
7200
8400
400
8800
FIFO
400
8400
Materials
WA
FIFO
8000
8400
800
9200
WA
16500
EUP
Labor
FIFO
Overhead
WA
FIFO
960
7200
900
7200
800
8960
Labor
FIFO
8400
600
9000
600
8700
Overhead
WA
FIFO
33000
Transferred in
WA
FIFO
47300
Cost added
Total
EUP
Cost/EUP
59500
67500
8800
111.4 103.55 7.67
59500 154560 154560 302380 302380 374016 343447
171060
335380
421316
8400
9200
8960
9000
8700
8800
8400
7.08
18.59 17.25 37.26 34.47 47.88 44.46
WA method:
transferred out (8400x111.4)
935760
Mat (400x7.67)
Labor (800x18.59)
OH (600x37.26)
Transferred in (400x47.88)
WIP, end
3068
14872
22356
19152
59448
cost of goods sold
finished goods, beg( 1000x111.4)
cost of sales
935760
111400
1047160
FIFO method:
WIP, beg
transferred in, beg
Cost to be done:
Mat (800x7.08)
Labor (960x17.25)
OH (980x34.76)
Started and completed cost
transferred out
WIP, end
Mat. (400x7.08)
Labor (800x17.25)
OH( 600x 34.76)
cost of goods manufactured
finished goods, end (1000x 103.55)
cost of sales
57500
47300
5664
16560
31284
53508
74556
232864
2832
13800
20856
37488
232864
103550
336414
Problem 7-4
1.
2.
3.
4.
5.
6.
7.
Quantity of normal spoilage
EUP for Material X
EUP for Material Y
EUP for CC
Quantity of normal units spoiled
Cost of goods manufactured
Cost of abnormal spoilage charged
to expense
8. Cost of units in process at end
Solution:
(1-5)
F&T: IP, beg
Started & Completed
IP, end
Spoiled Units: normal
18 000
55 800
6 000
4500
4 500
44 200
22 100
66 300
3090
1 193 400
25 380
2 521 800
Materials
0
55 800
6000
3 090
CC
4500
55 800
1500
3 090
Abnormal
As accounted
84 300
1 410
66 300
1 410
66 300
(6) 66 300 x P18= P1 193 400
(7) 1 410 x P 18= P 25 380
(8) 73 800 x 18= P 1 328 400
66 300 x 8= P 530 400
66 300 x 10= P 663 000
P 2 521 800
Test Material 1.
1. B
Completed and Transferred
IP, end
EUP
Materials
CC
190,000 190,000
30,000
24,000
220,000
214,000
Costs:
IP, beg.
Current
Total
Divide by: EUP
Cost per EUP
Multiply: Units transferred
Costs associated with
Units transferred
Materials
67,800
579,000
646,800
220,000
2.94
190,000
Costs:
IP, beg.
Current
Total
Divide by: EUP
Cost per EUP
Multiply: Units in Ip, end
Costs associated with
Units transferred
CC
29,300
248,900
278,200
214,000
1.3
24,000
Cost to account for
925,000
558,600
2. B
31,200
3. A
End
Less:DM (40,000*75%*3)
CC (40,000*60%*1.31)
Transferred out
90,000
31,440
803,560
Materials
EUP
(WA)
Less: Beg
EUP (FIFO)
Divide by: IP, beg
Cost per EUP(FIFO)
CC
220,000 214,000
27,000
24,000
193,000 190,000
578,000
248,900
3
1.31
4. A
CC
Beg.
Started
Units to Account for
2,000
8,000
10,000
Beg.
Transferred out
Normal Spoilage
End
EUP
2,000
5,000
500
2,500
10,000
Costs:
Started
Divide: EUP
Cost per EUP
Multiply: units completed
CC transferred to next department
72,250
8,500
8.5
7,000
59,500
5. B
1,000
5,000
500
2,000
8,500
Cloth
WIP, beg.
Started
Units Account to for
500
3,300
3,800
WIP,beg.
Transferred Out
WIP, end
500
2,950
350
100
2,950
245
Units accounted for
3,800
6. E
WIP, beg.
Started
Units to account for
2,000
23,000
25,000
Transferred out
WIP, end
Units accounted for
20,000
5,000
25,000
7. E
Beg.
Current
Total
Divide by: EUP
Cost per EUP
14.72
Beg
Trans. In
Materials
CC
Cost of Units
22500
34000
94000
144000
294500
3,295
Materials
CC
20,000
20,000
20,000
2,000
22,000
Materials
CC
5,450
34,000 104,000
34,000 109,450
20,000 22,000
1.7
4.975
8. B
9. C
Finished and transferred
WIP-End
total
40000
10000
50000
10. D
WIP, beg.
Started
Units Account to for
5,000
24,250
29,250
WIP,beg.
Transferred Out
WIP, end
5,000
21,750
2,500
3,250
21,750
2,000
Transferred
In
17,050
184,000
201,050
25,000
8.04
Units accounted for
Cost per EUP:
DM
(144,000/27,000)
DL (150,000/
27,000)
OH
(40,000/27,000)
21,750*11.26
3,250*4.22
3,250*5.56
3,250*1.48
Total
Cost of goods transferred to Molding Dept.
29,250
27,000
4.22
5.56
1.48
244,905
13,715
18,070
4,810
281,500
16,000
297,500
11. D
2000*4.22
2000*5.56
2000*1.48
Cost of IP, end in
Mixing Dept.
8,440
11,120
2,960
40,000 - 8,000
32,000
43,000 - 11,000
32,000
22,520
12. C
13. D
DM
CC
WIP, beg.
Started
Units Account to for
50,000
150,000
200,000
WIP,beg.
Transferred Out
WIP, end
Units accounted for
50,000 50,000
5,000
125,000 125,000 125,000
25,000
16,250
200,000 175000 146,250
TI
125,000
25,000
150,000
14. B
WIP, beg.
Started
Units to account for
40
80
120
Transferred out
WIP, end
Units accounted for
90
30
120
Cost per EUP:
TI (127,200/120)
1,060
DM (36000/90)
400
CC (67,725/105)
645
DM
CC
TI
90
0
90
90
15
105
90
30
120
Materials
CC
15. D
TI (30*1060)
DM (0*400)
CC (15*645)
TOTAL
31,800
0
9,675
41,475
16. A
WIP, beg.
Started
Units to account for
475,000
475,000
Transferred out
WIP, end
Units accounted for
425,000 425,000 425,000
50,000 50,000 25,000
475,000 475,000 450,000
DM
(895000/475000)
CC
(4225000/450000)
TOTAL
1.88
9.39
11.27
17. A
Materials (50000*1.88)
CC (25000*9.39)
TOTAL
94,000
234,750
328,750
18. C
M
CC
TI
18,000
2,000
20,000
18,000
600
18,600
18,000
2,000
20,000
WIP, beg.
Started
Units to account for
4,000
16,000
20,000
Transferred out
WIP, end
Units accounted for
18,000
2,000
20,000
WIP, beg.
Started
TOTAL
Divide: EUP
Cost per EUP
94,000 44,400
164,000 272,800
258,000 317,200
60,000 52,000
4.3
6.1
Cost of F&T (WA):
50,000*10.4
520,000
Total costs accounted for
(94000+ 44400+ 164000+272800)
End
Costs of units transferred
575,200
53,400
521,800
19. D
20. D
21. A
22. B
23. C
24. A
Transferred Out
EUP
IP, end
DM (10000*4.3)
CC (2000*6.1)
Cost allocated to IP, end
(WA)
DM
50,000
60,000
10,000
43,000
12,200
55,200
CC
50,000
52,000
2,000
10.4
25. B
DM (10000*4.1)
CC (2000*6.2)
Cost allocated tp IP, end
(FIFO)
41,000
12,400
M (2,500*80%*20)
CC (2500*60%*18)
Cost of the 2500 units
40,000
27,000
67,000
53,400
26. A
27. D
WIP, beg.
Started
Units Account to for
2,500
15,000
17,500
WIP,beg.
Transferred Out
WIP, end
Units accounted for
2,500
14,500
500
17,500
Materials
(15125*10)
151,250
28. B
F&T (14500*22)
M (500*10)
CC (1000*12)
Total cost
transferred
319,000
5,000
12,000
67,000
403,000
29. C
DM-ingredients (7,200*100%*0.35)
DM- package (7200*0%*0.05)
DL (7200*30%*0.07)
OH (7200*30%*.13)
IP, beg bal.
2,520
151.2
280.8
2,952
M
CC
500
14,500
125
15125
1,000
14,500
125
15,625
30. B
IP, end
7,200
144,000
151,
200
147,960
3,240
DM- Ing. (3,240*100%*.35)
Dm- Package (3,240 * 0%*
.05)
DL
(3,240*^0%*0.07)
OH (3,240*60%*.13)
1, 134
136.08
252.72
1,522.80
Test Material 2.
1. E
A
Beg-WIP
Started
End-WIP
EUP
7500
2500
10000
B
3500
7500
1250
12250
2. A
EUP
WIP, beg.
Started
Units Account to for
20,000
120,000
140,000
WIP,beg.
Transferred Out
WIP, end
Units accounted for
20,000
90,000 90,000
30,000 30,000
140,000 120,000
Cost per EUP:
372000/ 120000
Material cost in IP,
end:
3.1
(3.1*30,000)
93,000
3. A
EUP
WIP, beg.
Started
Units Account to for
5,000
24,250
29,250
WIP,beg.
Transferred Out
WIP, end
Units accounted for
5,000
21,750
2,500
29,250
Cost per EUP:
Material (114000/25000)
CC
(150000/25000)
OH (40000/25000)
1,250
21,750
2,000
25,000
4.36
6
1.6
Total cost per EUP
12.16
WIP, beg.
Started
Units to account for
18,500
84,400
102,900
Transferred out
WIP, end
Units accounted for
90,100 90,100
12,800
12,800
102,900 102,900
Completed & Transferred:
Beginning
Started
End
13,875
71,600
2,560
4. D
EUP
5. C
88,035
6. D
WIP, beg.
Started
10,000
-
Units to account for
10,000
Transferred out
8,000
DM
CC
8,000
8,000
WIP, end
Units accounted for
Cost per EUP:
DM (33000/10000)
CC (17500/8500)
Cost of transferred out
(8000*5.3)
Cost of IP, end
DM(2000*3.3)
CC(500*2)
TOTAL
2,000
10,000
2,000
10,000
500
8,500
3.3
2
42,400
6,600
1,000
7,600
7. D
Transferred out
Completed & on hand
WIP, end
Units accounted for
71,840 71,840 71,840
4,160
4,160
4,160
24,000 24,000
18,000
100,000 100,000
94,000
8. C
EUP,WIP-beg
Units,WIP-beg
Ratio
12000
20000
60%
Total
Converted
WIP-Beg
100%
60%
40%
9. D
Started & completed
(50000- 20000)
30,000
10. B
Cost assigned to unit transferred out
started & completed (77000*2.50)
Added costs: DM (0*1)
CC (13000*1.50)
Normal spoilage: DM (3,500*1)
CC
(3500*75%*1.50)
192,500
19,500
3,500
3,938
Beg. Costs: DM
CC
Total costs assigned to units transferred out
15,000
10,000
244,438
Abnormal Spoilage:
(5000*100%*1)
(5000*75%*1.50)
cost assigned to abnormal spoilage
5,000
5,625
10,625
11. C
12. C
Cost of IP, end
Material (14,500*1)
CC
(14500*70%*1.5)
Cost of IP, end
13.
B
same solution as in no. 10
14.
B
same solution as in no.11
14,500
15,225
29,725
15.
C
WIP, beg.
Started
Units to account for
2,000
8,000
10,000
Transferred out
Normal spoilage
WIP, end
Units accounted for
7,000
500
2,500
10,000
Cost per EUP:
(85500/9500)
CC (7000*9)
Normal Spoilage (500*9)
CC transferred to next department
16.
A
17.
D
7,000
500
2,000
9,500
9
63,000
4,500
67,500
DM
WIP, beg.
CC
30,000
CC
Started
Units Account to for
80,000
110,000
WIP,beg.
Transferred Out
WIP, end
Normal spoilage (86000*3%)
Abnormal spoilage(110000- 108580)
Units accounted for
30,000
56,000 56,000
20,000 20,000
2,580
2,580
1,420
1,420
110,000 80,000
3,150
56,000
15,000
2,580
1,420
78, 150
160,000 120,000
80,000
78,000
2
1.5355
Cost per eup
18. B
Cost associated with normal spoilage:
DM
(2,580*100%*2)
CC (2,580*100%*1.5355)
TOTAL
5,160
3,962
9,122
19. D
Cost associated With abnormal spoilage
DM (1420*100%*2)
CC (1420*100%*1.5355)
TOTAL
2,840
2,180
5,020
Test Material 3
1. a. Transferred out 50000
WIP, end
8000
Spoiled units
2000
EUP for DM
60000
Divided by:
Multiply by:
56000
60000
8000
b. Transferred out 50000
WIP, end
8000
Spoiled units
3200
EUP for DM
55200
2.
WIP beg.
12000
Added Materials 44000
DM cost
7440
Cost of WIP
7. Cost assigned to Ending Inventory:
= 29 725 / Not given
118200
3. Total Cost per EUP
Multiply by
1.44
52000
Cost of units transferred 74880
4. a. Completed units
Ending inventory
Normal Spoilage
EUP for DM
152000
20000
14000
186000
b. Completed units
Ending inventory
Normal Spoilage
EUP for CC
152000
10000
8400
174000
5. a. Completed units
Multiply by
b. Normal Spoilage
Multiply by
c. Conversion cost
Multiply by
152000
6.9
1048800
4800
4.92
23616
2880
1.98
5702.4
*Cost of goods
manufactured a. 1 048 800
b.
23 616
c.
5 702.4
1078 118.4
8. Cost assigned to Units Transferred out:
= 263 750 / Not given
9. Abnormal spoilage (5000*1)
WIP, ending
(3750*1.5)
EUP for DM and CC 10625
10. Raw Materials
840
Conversion cost
315
Cost of production 1155
Divided by
2100
.55
Multiply by
100
Cost of spoilage to FO 55
11. a. WIP beg
Completed
WIP end
EUP for DM
16000
68000
4000
88000
b. WIP beg
Completed
Spoilage
WIP end
EUP for CC
16000
68000
4000
8000
96000
12. Cost of WIP, beg:
Conversion Cost (16000*60%*5)= 48000
Transferred
in
(16000*
9.75)
=156000 Cost Added:
Transferred in
(80000* 11.7) =
936000 Direct Materials (88000*3.1)
=
272800
Conversion
Cost
(82400*5.4) = 444960 Total Cost to be
6. Completed units (20000*4.92)
End. Inventory (10000*1.98)
13. Cost assigned to units completed
and transferred: 1 661 760
accounted for 1 653760
14. Cost of spoilage charged to Factory Overhead:
Not given
15. Finished and Transferred out 307
500 Normal Spoilage
2 500
IP, ending
45 000
Transferred in units
355000
16. Transferred in units
Multiply by PD cost
Transferred in costs
355000
12
4260000
17. Transferred in cost
4260000
Add: (351000*14.5)
5089500
Total cost charged to WIP 9349500
Divided by EUP
203000
(Test Material 4)- Fill in the
blanks
Solutions:
1.Cost to account 14
700 Divided by 24 000
Cost per unit 0.6125
2.WP, end
6000
Multiply by: 0.6125
Bal. of WIP, end
3675
3.
Transferred in
(3200*8.39) WIP, beg.
(20000*3.19) EUP
(20000*1.20)
Total cost
356280
4.
8000
Beginning Inv.
Units S and C
Current cost
3000
5000
5.
N/A
6.
Work in
process
7000
Direct Materials 16000
Conversion costs 25600
Cost of goodsT-O 48600
7.WIP beg.
15 000
Started and Completed
180000 WIP end
8000
EUP for CC
203000
8.CC units
1806700
Cost per EUP
d for DM: ( 40 000 / 24
000 = 1.67) Cost
incurred for CC:
( 39375 / 22500 = 1.75)
Cost per unit
3.42
8.9
9.Incurred DM Costs 21000
Incur
red
CC
Cost
s
24320
Cost
of
units
F&T
45320
10. EUP for CC : 1
500
50000
11. a. Units
Completed
WIP, ending
EUP for DM
10000
60000
b. Units Completed
WIP, ending
EUP for CC
50000
6000
56000
12. Units Completed
000
Multiply by:
Cost assigned to F&T
50
1.9
95000
13. Transferred units out: 9600
14.
C
o
s
t
i
n
c
u
r
r
e
15. Cost incurred for
DM: ( 50 000 / 24 000
= 2.08) Cost incurred
for CC:
( 42875 / 22500 = 1.91)
Cost per unit
3.99
Completed
16. N/A
17. N/A
18. WIP beg
WIP beg
Completed
WIP end
EUP for DL
WIP end
EUP for DM
3200
9600
72000
4000
85600
( Test Material 5 )- Fill in the
blanks
Solutions:
1. WIP beg
Abnormal loss
Transferred in
WIP ending
EUP for CC
4000
1666.67
60000
6000
71666.67
2. WIP beg
Abnormal loss
Transferred in
WIP ending
EUP for CC
4000
3333.33
60000
6000
73333.33
3. WIP beg
4000
WIP beg
Completed
WIP end
EUP for DL
72000
5600
80800
11200
72000
3200
86400
Abnormal loss 1000
Transferred in 60000
WIP ending 6000
EUP for CC 71000
4. A. Units Completed 9000
WIP, ending
1700
Abnormal Spoilage 1000
EUP for fruits
11700
B. Units Completed 9000
WIP, ending
0
Abnormal Spoilage 1000
EUP for CC
10000
5, 6, & 7. N/A