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Rante, 2019 (Solman)

Bachelor of Science in Accountancy (Polytechnic University of the Philippines)

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Chapter 1 – Cost Concepts, Classifications and Accounting Cycle

Summary of Answers
Exercise 1-1
1. Administrative Expense 11. Selling Expenses
2. Factory Overhead 12. Selling Expenses
3. Factory Overhead 13. Factory Overhead
4. Direct Labor 14. Selling Expenses
5. Factory Overhead 15. Factory Overhead
6. Selling Expenses 16. Selling Expenses
7. Factory Overhead 17. Selling Expenses
8. Factory Overhead 18. Factory Overhead
9. Factory Overhead 19. Selling Expenses
10. Selling Expenses 20. Administrative Expenses
Exercise 1-2
1. Product/Service Costs 11. Product/Service Costs 21. Product/Service Costs
2. Product/Service Costs 12. Product/Service Costs 22. N/A
3. Period Costs 13. Product/Service Costs 23. N/A
4. Period Costs 14. Product/Service Costs 24. Product/Service Costs
5. Period Costs 15. Period Costs 25. N/A
6. Period Costs 16. Product/Service Costs
7. Product/Service Costs 17. Period Costs
8. Period Costs 18. Product/Service Costs
9. Product/Service Costs 19. Product/Service Costs
10. 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 d. P 314711
b. 1. P 140000 e. P 472067
2. P 113205 f. P 157356
3. P 84904
c. P 339615

2. Journal Entries

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a. Raw Materials 240000

Accounts Payable 240000

b. Work in Process 168000

Manufacturing Overhead 12000
Raw Materials 180000

c. Factory Payroll 150000

Accrued Payroll 150000

Work in Process 120000

Manufacturing Overhead 30000
Work in Process 150000

d. Manufacturing Overhead 12000

Accumulated Depreciation 12000

e. Manufacturing Overhead 1500

Taxes Payable 1500

f. Manufacturing Overhead 4320

Prepaid Insurance 4320

Manufacturing Overhead 5 000

Utilities Payable 5000

2. (Financial Statement)
Exercise 1-5 Exercise 1-6 Test Material 1.1 Multiple Choice Theories
a. P 86 500 a. P600 000 1. B 11. D 21. C
b. P 12 500 b. P 252 000 2. B 12. D 22. D
c. P7 500 c. P 682 000 3. C 13. C 23. C
d. P80 500 d. P190 960 4. C 14. D 24. D
e. P24 500 5 A 15. A 25. A
f. P11 000 Exercise 1-7 6. B 16. D 26. C
g. P55 000 (below, Table 1.3) 7. B 17. C 27. D
h. P15 000 8. B 18. C 28. A
i. P148 500 9. B 19 .D 29. C
10. C 20. D 30. D

Exercise 1-7 (Table 1.3)

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Item Number Direct Direct Labor Manufacturing Period Cost

Materials OH
1. P 50 000
2. 20 000
3. P 10 000
4. P 2 500
5. P 15 000
6. 5 000
7. 1 200
8. 28 000
9. 2 800
10. 8 500
11. 3 500
12. 9 000
13. 800
14. 2 400
15. Other Category
16. Other Category
17. Other Category
18. 5 000
19. 1 500
20. 7 500
Total P 103 000 P 15 000 P 37 500 P 17 200

Test Material 1-2 Test Material 1-3 Test Material 1-4

1. True 11. False 1. Direct Material 11. Factory Overhead 1. P2
2. True 12. True 2. Direct Material 12. Factory Overhead 2. P19171.84
3. False 13. False 3. Factory Overhead 13. Factory Overhead 3. P3432000
4. False 14. True 4. Period Costs 14. Factory Overhead 4. P60000
5. False 15. True 5. Direct Labor 15. Period Costs 5. P9000
6. True 16. False 6. Period Costs 6. P12000
7. False 17. False 7. Period Costs 7. P215000
8. False 18. False 8. Direct Material 8. P475000
9. False 19. True 9. Factory Overhead 9. P3110000
10. False 20. False 10. Period Costs 10. P3450000

Test Material 1-5 Test Material 1-6

11. P 930000 1. C 11. A 1. C 11. B 21. B
12. P 127000 2. D 12. D 2. A 12. C 22. C
13. P 4500 3. D 13. C 3. B 13. A 23. D
14. P 88500 4. C 14. C 4. B 14. B 24. C
15 P 742500 5. A 15. B 5. C 15. A
16. P 1049000 6. A 16. D 6. B 16. C
17. P 1108500 7. B 17. B 7. D 17. B

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18. P 156200 8. B 18. B 8. B 18. B

19. P 41700 9. C 19. A 9. B 19 B
20. P 3432000 10. A 20. C 10.A 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.

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DM DL FOH AD SE
Wages of company officials other the plant
1 supervisor. ∕

2 Wages of raw material inventory clerk. ∕

3 Wages of finished goods inventory clerk. ∕

4 Wages of ironworker in a construction company. ∕

Transportation and representation allowance of
5 plant managers and supervisors. ∕
Transportation and representation allowance of
6 sales managers. ∕
Wood glue and other related adhesives used by
7 furniture factories. ∕
Buttons, threads and zippers used by ready to
8 wear manufacturing company. ∕
Lubricating oil used by factories in their
9 operations. ∕

10 Gas and oil used by the company president. ∕

11 Gas and oil used by trucking company. ∕

Electric and power consumption of the
12 administrative office. ∕
Electric and power consumption of factory
13 companies. ∕
Depreciation of delivery truck of a manufacturing
company used un delivering finished goods to
14 customers. ∕

15 Cloth used by a ready to wear factory. ∕

Cloth used by advertising companies in making
16 billboards. ∕
Cost of daily advertisements in local newspaper
17 regarding new product line. ∕
Overtime pay of the employee who repairs the
18 company’s copier. ∕
Cost of renting a private helicopter to fly along
the grandstand pulling a banner advertising a
19 new product. ∕

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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 Period
Cost Cost

1 Depreciation of plant and machineries. ∕

Depreciation of sports equipment used by sports and fitness
2 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
13 hospital. ∕
Transportation expenses of a resident doctor in attending
14 seminar abroad. ∕
Costs of goods served to the visitors of the company
15 president. ∕

16 Costs of food served by restaurant owners to their customers ∕

17 Gas and oil consumed by sales manager. ∕

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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
21 company. ∕
Cost of newspaper ads to the announcement of new office
22 location. ∕
Salaries and compensation and other benefits paid to Human
23 Resource Manager. ∕
Salaries and compensations and other benefits paid to
24 workers of a factory. ∕
Maintenance costs for the family vehicle of the company
25 executive officer. ∕

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.

Machine Cost Miles Traveled

Highest 18750 30000
Lowest -16500 12000
Difference 2250 18000

2. Variable Cost per Unit: 2250 / 18000 = 0.125

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3. Compute Variable Cost at Highest and Lowest Level of Activity

Highest Level 30000 * 0.125 = 3750
Lowest Level 12000 * 0.125 = 1500

4. Determining Fixed Cost at each level of activity

Highest Level 18750 - 3750 = 15000
Lowest Level 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

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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 P 80000

Add: Purchases 240000
Raw Materials Available P 320000
Less: RM inventory, July 31
(80000+240000-180000) -140000
Indirect Material -12000
Raw Materials P 168000
Direct Labor 120000
Manufacturing Overhead 64820
Total Manufacturing Cost P 352820

b. 1. RM inventory, July 1 P 80000

Add: Purchases 240000
Materials Used -180000
RM inventory, July 31 P 140000

2. WIP, July 1 P 100000

Direct Material 168000
Direct Labor 120000
Manufacturing Overhead 64820
Total Cost of Work put into Process P 452820
Multiply by 25%
WIP, July 31 P 113205

3. Cost of Goods Manufactured P 339615

Multiply by 25%
Finished Goods P 84904

c. Total Cost of Work put into Process P 452820

Multiply by 75%
Cost of Goods Manufactured P 339615

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d. Finished Goods, July 1 P 60000

CGM
(339615*75%) 254711
Cost of Goods P 314711
Sold

e. (Journal Entries)
f.
Bubbles Manufacturing Company
Statement of Cost of Goods Sold
July 31, 2012
Raw Materials Used:
RM iventory, July 1 P 80000
Add: Purchases 240000
Raw Materials P 320000
Less: Inventory, July 31 P 140000
Indirect Materials Used 12000 152000 P 168000
Direct Labor 120000
Manufacturing Overhead
Indirect Materials Used P 12000
Indirect Labor 30000
Depreciation 12000
Insurance 4320
others 6500 64820
Total Manufacturing Costs P 352820
Add: Work in Process, July 1 100000
Total Cost of work put into Process P 452820
Less: Work in Process, July 31 -113205
Cost of Goods Manufactured P 339615
Add: Finished Goods, July 1 60000
Goods Available for sale P 399615
Less: Finished Goods, July 31 84904
Cost of Goods Sold P 314711

EXERCISE 1-5

a.) Direct Materials Used P 41 500

Direct Labor 15 000
Manufacturing Overhead 30 000
Total Manufacturing Cost P 86 500

b.) Total Manufacturing Cost P 86 500

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Add: Work in Process, Beginning 5 000

Total Cost of Goods placed into process P 91 500
Less: Cost of Goods Manufactured (79 000)
Work in Process, Ending Inventory P 12 500

c.) Cost of Goods Available for Sale P 86 500

Less: Cost of Goods Manufactured (79 000)
Finished Goods, Beginning P 7 500

d.) Cost of Goods Available for Sale P 86 500

Less: Finished Goods, Ending Inventory (6 000)
Cost of Goods Sold P 80 500

e.) Sales P 112 500

Less: Sales Discount (7 500)
Net Sales P 105 000
Less: Cost of Goods Sold 80 500
Gross Profit P 24 500

f.) Gross Profit P 24 500

Less: Operating Expenses (13 500)
Net Income P 11 000

g.) Total Manufacturing Cost P 100 000

Less: Direct Labor (20 000)
Manufacturing Overhead (25 000)
Direct Materials Used P 55 000

h.) Cost of Goods Manufactured P 105 000

Add: Work in Process, Ending Inventory 10 000
Total Cost of Goods placed Into process P 115 000
Less: Total Manufacturing Cost (100 000)
Work in Process, Beginning P 15 000

i.) Gross Profit P 30 000

Add: Cost of Goods Sold 112 000
Sales Discount 6 000
Sales P 148 500

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j.) Cost of Goods Manufactured P 105 000

Finished Goods, Beginning 20 000
Cost of Goods Available for Sale P 125 000

k.) Cost of Goods Available for Sale P 125 000

Less: Finished Goods, Ending Inventory 12 500
Cost of Goods Sold P 112 500

l.) Gross Profit P 30 000

Less: Operating Expenses (16 000)
Net Income P 14 000

EXERCISE 1-6

a.) Direct Materials Issued to Production P 480 000

Direct Labor (150 000 x 80%) 120 000
Total Prime Cost for the Period P 600 000

b.) Indirect Materials Issued P 4 500

Indirect Labor (150 000 x 20%) 30 000
Depreciation of Sewing and Comp. equipment 8 000
Utilities Paid 22 000
Factory Insurance Expired 7 500
Factory Rent (Net of 10 000 deposit & 5000 adv. rental) 60 000
Total Manufacturing Overhead P 132 000
Add: Direct Labor (50 000 x 80%) 120 000
Total Conversion Cost for the Period P 252 000

c.) Direct Materials Issued to Production P 480 000

Direct Labor (150 000 x 80%) 120 000
Manufacturing Overhead 132 000
Total Manufacturing Cost P 732 000
Less: Work in Process, Ending Inventory (50 000)
Cost of Goods Manufactured for the year P 682 000

d.) Cost of Goods Manufactured for the year P 682 000

Multiply by: Percentage of units sold 80%
Cost of Goods Sold P 545 600

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Multiply by: Percentage of Gross profit 35%

Gross Profit for the Period P 190 960

EXERCISE 1-7

Item Number Direct Materials Direct Labor Manufacturing Period Cost

OH
21. P 50 000
22. 20 000
23. P 10 000
24. P 2 500
25. P 15 000
26. 5 000
27. 1 200
28. 28 000
29. 2 800
30. 8 500
31. 3 500
32. 9 000
33. 800
34. 2 400
35. Other Category
36. Other Category
37. Other Category
38. 5 000
39. 1 500
40. 7 500
Total P 103 000 P 15 000 P 37 500 P 17 200

Test Material 4
1. Machine hours Power costs
Highest 1200 14400
Lowest 400 12800
Difference 800 1600

VC/unit = 1600/800 = P 2

2. Hrs. worked Utility costs

Highest 3360 21440
Lowest 2600 18060
Difference 760 3380

VC/unit = 3380/760
= P4.447368421

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Fixed cost:
(highest) = 3360 x 4.447368421
= P 14943.16

(lowest) = 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 P 768000

Cost of goods manufactured 2720000
Increase in finished goods (56000)
Total sales P3432000

4. Cost of fabric used in dresses P 60000

5. Wages of dressmakers P 5000

Wages of dress designers 4000
Direct labor P 9000

6. Wages of the maintenance employee P 2000

Cost of electricity in the shop 3500
Cost of space rental 6500

Overhead P12000

7. Office depreciation P28000

Freight costs for goods delivered to customers 12000
Janitor’s wages for cleaning the office 10000
Total selling, general & administrative expenses 165000
Period costs P215000

8. Materials P264000
Direct labor 143000

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Factory depreciation 50000

Freight costs for materials purchased 8000
Janitor’s wages for cleaning the production area 10000
Product costs P475000

9. Direct material [1640000-(1640000x10%)+540000-570000] P1446000

Direct labor 840000
MOH (164000+180000+360000+120000) 824000

Total factory costs P3110000

10. Total factory costs P3110000

Work in process-beg. 600000
Work in process-end. (440000)
Cost of goods manufactured P3270000
Finished goods-beg. 580000
Finished goods-end. (400000)
Cost of goods sold P34500000

11. Gross Profit [(3450000/75%) x 25%] P1150000

Office salaries (140000)
Sales salaries ( 80000)
Net Income P 930000

12. Total factory costs (P12500+45000+90000) (P 147500)

Cost of goods manufactured 237000
WIP, end. 37500
WIP, beg. P 127000
13. Cost of goods available for sale P 259500
Goods produced (237000)
FG, end ( 18000)
Increase in FG P 4500

14. Sales (337500-7500) P 330000

Cost of goods available for sale (259500)
FG, end 18000
Gross Profit P 88500

15. Gross Profit P150000

Sales Discount 30000
Cost of goods sold 562500
Sales P742500

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16. Direct labor P 350000

Direct materials 460000
MOH (110000+50000+31000+8000+5000) 239000
Total factory costs P1049000

17. Total factory costs P1049000

WIP, beg. 220000
WIP, end. (160500)
Cost of goods manufactured P1108500

18. Total Factory costs (P62400 +32000+ 64000) P 158400

WIP, beg. 14700
WIP, end (16900)
Cost of goods manufactured P 156200

19. Sales P 200000

Cost of goods sold (156200 +12600 -10500) (158300)
Gross Profit P 41700

20. Same answer and solution in number 3.

Test Material 5

1. Direct Materials (174000-132000+1500000) P 1542000

Direct labor [(21000x45) + (1000x45)] 990000
Prime costs P 2532000 c.

2. Direct labor (21000x45) P 945000

MOH [(300000 +175000 + (1.5 x 45)] 542500
Conversion costs P 1487500 d.

3. d.
Materials (3200000-180000) P 3020000
Labor [6900000+(2040000-320000)-2040000=6580000]
[6580000+(800000 x 90%)-800000=6500000-3020000 / 160%] P 1275000
Overhead (2175000 x 60%) P1305000

4. Prime Costs P 6750000

Direct labor (4500000/150%) (3000000)
Decrease in raw materials ( 250000)
Raw material purchases P 3500000 c.

5. Direct material (4400000+9000000-2800000-850000) P 9750000

Conversion costs [6500000+1250000+560000+(1200000x60%)
+(600000x60%)+(1500000x60%)+850000] 11400000
WIP, beg. 3000000

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WIP, end. (2400000)

Cost of goods manufactured P21490000 a.

6. Cost of goods manufactured P 21490000

FG, beg. 2400000
FG, end. (2950000)
Cost of goods sold P 20940000
Divided by: 75 %
Total sales 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 %) P 200000

Gross profit (25000+25000) ( 50000)
Cost of goods sold P150000 b.

9. Beginning:
Materials (50000+30000) P 80000
Labor (80000+60000) 140000
OH (120000+90000) 210000
Cost added:
Materials (80000+50000+75000) P 205000
Labor (100000+80000+110000) 290000
OH (290000 x (120000/80000) 435000
Finished goods, end P1010000 c.

10. Overhead applied P 435000

Overhead actual (420000)
Over applied P 15000 a.

11. Total manufacturing cost:

P 975000-600000+55000-40000+15000-35000 = P 370000 a.

12. Total raw materials purchased:

P 370000-(520000-400000)-(120000/75%)+10000-5000 = P 95000 d.

13. FG, end:

P 85000+970000-110000 + (48000 x 20) + (48000 x 20 x 60%) + 90000 – 271000
+180000-(1050000/60%) = 730000 c.

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14. Sales revenue:

P 1050000/60% = P 1750000 x 160% = P 2800000 b.

15. Direct labor (30101.80/ 50%) P 60203.6

MOH 30101.8
CC P 90305.40 / 50% = P180610.80

P 180610.80 + 590 = P 181200.80 b.

16. RM available for used P 47500

RM issued to production (30000)
RM, beg. (47500-37500) (10000)
Increase in RM P 7500 d.

17. b.
Direct material (P 15000+ 33000 – 19000 – 1000) P 28000
MC (P 12000+30000-40000) P 110000
FG, June 30 (P 190000-140000) P 50000
18. Materials (P 380000-20000) P 360000
Direct labor (P 420000-40000) 380000
Prime costs P740000 b.

19. MOH (P 380000 / 20 =P 19000 x 28) P 532000

Prime costs 740000
WIP, beg. 20000
Cost of goods manufactured 940000
WIP, end 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 541000
Accounts payable 510000

2. Work in Process 344250

Manufacturing Overhead 38250
Raw materials Inventory 382500

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3. Raw Materials Inventory 5900

Work in Process 5100
Manufacturing Overhead 800

4. Accounts payable 4000

Raw Materials inventory 4000

5. Work in process 50000

Accounts payable 50000

6. Raw materials Inventory 107000

Accounts payable 107000

7. Work in Process 120824

Manufacturing Overhead 30200
Raw Materials Inventory 151030

Raw Materials Inventory

510000 382500
5900 4000
107000 150000
86400

Exercise 2-2 Exercise 2-4

1. (36 000) units; (P 82 850) 1. 2 598.1
2. 12 000 units; P 28 300 2. 11.1
3. 4 687.6
Exercise 2-3 4. 3 897.6
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 200 000
Accounts Payable 200 000

Cost of goods sold 280 000

Payroll 130 000
Various Accounts 150 000

Finished goods 210 000

Raw and in Process 210 000

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2. Cost of goods sold 195 000

Finished goods 195 000

3. Cost of goods sold 20 000

Raw and in Process 15 000
Finished goods 5 000

4. Raw materials 200 000

Accounts Payable 200 000

Work in process 200 000

Raw materials 200 000

Work in process Payroll 130 000

Manufacturing overhead 130 000

Manufacturing overhead 150 000

Various Accounts 150 000

Test Material 2-1 Supply the Test Material 2-1 MC Test material 2-3
Answer Problems
1. 1,294,000 11. P 600,000 1. B 1. B 1. C
2. 1,292,000 12. P 200,100 2. D 2. 129700 2. C 11. B
3. 4,640,000 13. P 131,400 3. C 3. A 3. D 12. B
4. 301,429 14. P 4. D 4. C 4. D 13. D
5. 285,000 1,160,000 5. D 5. C 5. A 14. D
6. 708,750 15. P 6. D 6. B 6. B 15. A
7. 156,200 1,637,000 7. A 7. A 7. B 16. C
8. 41,700 16. P 8. B 8. D 8. C 17. C
9. 423,100 1,629,000 9. A 9. C 9. A 18. C
10. 1,625,000 17. P(1000) 10. A 10.36000 10. B
11.B

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Exercise 2-2 Units Unit cost Amount

Inventory, August 5 000 P 2.00 10 000
Purchases: August 7 6 000 2.50 15 000
12 8 000 2.30 18 400
15 9 000 2.25 20 250
22 10 000 2.40 24 000
29 10 000 2.35 23 500
Raw materials available 48 000 111 150
Less issuance: August 7 (9 000) (20 000)
14 (9 000) (21 100)
21 (9 000) (20 300)
28 (9 000) (21 450)
Raw materials issued (36 000) (82 850)
Raw materials inventory, end 12 000 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 *Computation for 32.48 = 84 375

32.48 2 598

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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 200 000
Accounts Payable 200 000

Cost of goods sold 280 000

Payroll 130 000
Various Accounts 150 000

Finished goods 210 000

Raw and in Process 210 000

*Materials in RiP (75 000 - 45 000) 30 000

Add: Purchases 200 000
Less: Materials in RiP (50 000 - 30 000) 20 000
Amount backflush RiP to FG 210 000

2. Cost of goods sold 195 000

Finished goods 195 000

*Materials in Finished goods, beg. (80 000 - 35 000) 45 000

Add: Backflush 210 000
Less: Materials in FG, end. (90 000 - 30 000) 60 000
Amount backflush FG to CGS 195 000

3. Conversion cost in Raw and in Process, beg. 45 000

Conversion cost in Raw and in Process, end. 30 000
(15 000)
Conversion cost in finished goods, beg. 35 000
Conversion cost in finished goods, end. 30 000
(5 000)

Cost of goods sold 20 000

Raw and in Process 15 000
Finished goods 5 000

4. Raw materials 200 000

Accounts Payable 200 000

Work in process 200 000

Raw materials 200 000

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Work in process Payroll 130 000

Manufacturing overhead 130 000

Manufacturing overhead 150 000

Various Accounts 150 000

Test Material 2-6

CHAPTER 1 – TEST MATERIAL 6

MULTIPLE CHOICE PROBLEMS

1. Direct Materials 977,400

Direct Labor 1,691,500
Manufacturing Overhead 1,353,200
Total Factory Costs 4,022,100

2. Total Factory Costs 4,022,100

Add : Work in Process, beginning 354,000
Less : Work in Process, ending (434,000)
Costs of Goods Manufactured 3,942,100

3. Work in Process

4. Direct Materials 42,200

Utilities 6,960
Office Depreciation 10,000
Rent paid 9,600
Period Costs 68,760

5. Direct Materials 42,400

Direct Labor 100,000
Overhead 61,840
Total Factory Costs 204,240

6. Gross Profit 203,840

7. Cost of Goods Sold 345,000

(3,000)

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Costs of Goods Manufactured 348,000

(4,000)
Total Factory Costs 344,000

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 Test Material 1 Test Material 2

(Journal Entries) 1. P1, 039, 000 1. A
2. P13, 340 2. C
Exercise 3-2 3.P11,280 3. A
1P13,936.26 4..P2,150 4. B
2P13,208 5.P3530.34 5. B 1.
3P1,107.82 6.P170.4 2. 6.A
4 (entries) 7.P3,600,000 7.B
8.P1,000,000 8. C
Exercise 3-3 9.P5,500,000 9. A
1. .P5,295.97 10.18,900 10. D
2..P2,549.7 11. 2,250 11. B
3..P900 12. 225,000
4.. P75,953.73 13. 270,000
5.. P6,396.30
6..(entries)

Exercise 1

Factory payroll 106000

Withholding tax payable 9000
SSS payable 5000
Pag-ibig payable 2000
Cash 90000

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Work in process 95400

Manufacturing overhead 10600
Factory Payroll 106000

Exercise 3-2

Shift Night
No.of Reg Basic OT Prem.
Prem Prem Total WHT Net Pay
hrs Rate Pay (10%)
(5%) (10%)
6am-2pm
Tibo, (S) 40 52 2080 2080 129.38 1950.6
Jason, (ME) 47 52 2444 36.4 2480.4 197.94 2282.5
2pm-10pm
Rica, (Z) 40 52 2080 104 2184 310.26 1873.7
Princess,
(S1) 43 52 2236 16.38 111.8 2364.2 99.86 2264.3
10pm-6am
Bianca, (S) 40 52 2080 208 2288 160.58 2127.4
Toni, (M) 44 52 2288 22.88 228.8 2539.7 209.8 2329.9
Total 13208 75.66 215.8 436.8 P13,936.26 1107.82 12828.44

1. Total Payroll, P13,936.26

2. Direct Labor, P13,208
3. Total WHT, P1,107.82

Tibo (S) Princess (S1)

Gross Pay – P2,080 Gross Pay – P2364.18
Tax Due on P1,538 P48.08 Tax Due on P2019 P48.08
Add: 15% of 542 81.3 Add: 15% of 345.18 51.78
Total P129.38 Total P99.86

Jason (ME) Bianca (S)

Gross Pay – P2,480.4 Gross Pay – P2288

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Tax Due on P2308 P163.46 Tax Due on 1538 P48.08

Add: 20% of 172.4 34.48 Add: 15% of 750 112.5
Total P197.94 Total P160.58

Rica (Z) Toni (M)

Gross Pay – P2080 Gross Pay – P2539.68
Tax Due on P1346 P163.46 Tax Due on 2308 P163.46
Add: 20% of 734 146.8 Add: 20% of 231.68 46.34
Total P310.26 Total P209.80

4. Journal Entries:
Factory Payroll 13,936.26
WHT Payable 1107.82
Cash 12,828.44

Work in Process 13,208

Manufacturing Overhead 728.26
Factory Payroll 13,936.26

Exercise 3-3

1st week 2nd Week 3rd Week *4th week Total

6am-2pm
Tibo, (M1) 2280 2280 2300 2080 8940
Jason, (S) 2250 2150 2150 2480.4 9030.4
Willie, (ME) 2300 2250 2190 2308.8 9048.8
2pm-10pm
Rica, (S1) 2500 2400 2380 2184 9464
Princess, (M1) 2480 2450 2280 2364.18 9574.18
Kathy, (S) 2300 2300 2300 2544.36 9444.36
10pm-6am
Bianca, (S) 2600 2570 2580 2288 10038
Toni, (S1) 2750 2400 2450 2539.68 10139.7
Yeng, (Zero) 2600 2300 2480 2539.68 9919.68
Total 22060 21100 21110 21329.1 85599.1

*4th week

1st Shift

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Tibo, (M1) (52php*40hrs) 2,080

Jason (S)
Basic Pay (52*47) 2,444
OT Prem (5.2*7) 36.4
Total 2,480.8

Willie, (ME)
Basic Pay (52*44) 2,288
OT Prem (5.2*4) 20.8
Total 2,308.8

2nd Shift with 5% Shift Premium

Rica (S1) (52*1.05*40) 2,184

Princess (M1)
Basic Pay (54.6*43) 2,347.8
OT Prem (5.46*3) 16.38
Total 2,364.18

Kathy (S)
Basic Pay (54.6*46) 2,511.6
OT Prem (5.46*6) 32.73
Total 2,544.36

3rd Shift with 10% Night Premium

Bianca (S) (52*1.1*40) 2,288

Toni (S1)
Basic Pay (57.2*44) 2516.8
OT Prem (5.72*4) 22.88
Total 2539.68

Yeng, (Zero)
Basic Pay (57.2*44) 2516.8
OT Prem (5.72*4) 22.88
Total 2539.68

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Gross
Total
Payroll for WHT SSS PhilHealth Pag-ibig Net Payroll
Deductions
the month

Tibo, (M1) 8940 236.83 283.3 100 100 720.13 8219.87

Jason, (S) 9030.4 562.78 283.3 100 100 1046.08 7984.32
Willie, (ME) 9048.8 565.63 283.3 100 100 1048.93 8000.07
Rica, (S1) 9464 315.43 283.3 100 100 798.73 8665.27
Princess, (M1) 9574.18 331.93 283.3 100 100 815.23 8758.77
Kathy, (S) 9444.36 624.88 283.3 100 100 1108.18 8335.82
Bianca, (S) 10038 715.93 283.3 100 100 1199.23 8838.77
Toni, (S1) 10139.7 416.83 283.3 100 100 900.13 9239.87
Yeng, (Zero) 9919.68 1525.73 283.3 100 100 2009.03 7910.97
Total 85599.12 5295.97 2549.7 900 900 9645.67 75953.73

With Holding Taxes:

Tibo (M1) Princess (M1)

Gross Pay – P8,940 Gross Pay – P9574
Tax Due on P8,750 P208.33 Tax Due on P8750 P208.33
Add: 15% of 190 28.5 Add: 15% of 824 123.6
Total P236.83 Total P331.93

Jason (S) Kathy (S)

Gross Pay – P9,030 Gross Pay – P9444
Tax Due on P6,667 P208.33 Tax Due on 6667 P208.33
Add: 15% of 2,363 354.45 Add: 15% of 2777 416.55
Total P562.78 Total P624.88

Willie (ME) Bianca (S)

Gross Pay – P9,049 Gross Pay – P10,038
Tax Due on P6,667 P208.33 Tax Due on 10,000 P708.33
Add: 15% of 2382 357.3 Add: 20% of 38 7.6
Total P565.63 Total P715.93

Rica (S1) Toni (S1)

Gross Pay – P9,464 Gross Pay – P10,140
Tax Due on P8750 P208.33 Tax Due on 8750 P208.33

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Add: 15% of 714 107.1 Add: 15% of 1390 208.5

Total P315.43 Total P416.83
Yeng, (zero)
Gross Pay – P9920
Tax Due on 5833 P708.33
Add:20% of 4087 817.4
Total P1,525.73

1. Total Tax Withheld P5,295.97

2. Total SSS Deductions P2,549.7

3. Total Philhealth Deductions P900

4. Total Net Payable P75,953.73

5. Employer’s Share in SSS, Philhealth Medicare Payable P6,396.30

Basic Pay of Employee, Monthly (52*8hrs*20) 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 P100.00
If Personal Share P100.00

SSS ER (610.70*9) P5,496.3

Philhealth ER (100*9) 900.00
Total Employer’s Share P6,396.30

6. Factory Payroll 85,599.12

WHT Payable 5,295.97
SSS Payable 2,549.70
Pag-ibig Payable 900.00
Philhealth Payable 900.00
Cash 75,593.73

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Manufactuing Overhead 7,296.30

SSS Payable 5,496.30
Pag-ibig Payable 900.00
Philhealth Payable 900.00

Work in Process 20,176

Manufacturing Overhead 1,153
Factory Payroll 21329.10

Test Material 1 Supply the answer.

1. Purchases of Raw Materials P600, 000

Add: Decrease in Raw Materials 80, 000
Raw Materials used 680, 000
Multiply by: Percentage of material charged to job 80%
Direct Material charged to the job 544, 000
Add: Direct Labor
Labor Cost 550, 000
Less: Indirect Labor (550, 000*10%) (55, 000) 495, 000
Prime Cost P1, 039, 000

2. Direct Laborers
Basic Pay – No. of worked hours 268
Multiply by: Rate/hr. 40 P10,720

OT Premium – OT hours (268-240) 28

Multiply by: Rate/hr. (P40*50%) 20 560

Supervisor
Basic Pay – No. of worked hours 42
Multiply by: Rate/hr. 50 P2, 100

OT Premium – OT hours (42-40) 2

Multiply by: Rate/hr. (P50*50%) 25 50
Gross Payroll P13, 430

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3. Basic Pay – No. of worked hours 268

Multiply by: Rate/hr. 40 P10, 720

OT Premium – OT hours (268-240) 28

Multiply by: Rate/hr. (P40*50%) 20 560
Amount charged to Work in Process P11, 280

4. Basic Pay – No. of worked hours 42

Multiply by: Rate/hr. 50 P2, 100

OT Premium – OT hours (42-40) 2

Multiply by: Rate/hr. (P50*50%) 25 50
Amount charged to Factory Overhead P2, 150

5. Regular Shift 8am- 5pm P48

Ordinary Overtime Hours 5pm - 10pm
OT premium (P48*10%) = P4.80 + P48 P52.80
OT Hour with Night Premium 10pm - 11pm
Night Premium (P48*10%) = P4.80
OT Premium (P52.80*20%) = P5.28
Regular Rate P48 P58.08

Rate/hr. * No. of hours worked Total

Regular Shift 48 * 8 P384
Ordinary OT 52.80 * 5 264
OT with Night Premium 58.08 * 1 58.08
Total Earnings of 1 worker that day P706.08
Multiply by: No. of workers
*5
Total Earnings of 5 workers that day P3, 530.34

6. Net Pay P706.08

Less:Basic Pay (14hrs*48) (672)

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Labor Premiums of 1worker 34.08

Multiply by: No.of workers *5
Total amount of Manufacturing Overhead P170.4

7. Overhead Applied (P10,000,000*27%) P2,700,000

Divide by: Overhead Rate 75%
Direct Labor P3,600,000

8. Cost of Goods Manufactured P10,250,000

Less: Manufacturing Cost (10,000,000
Net Effect in Work in Process 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 P1,250,000

Multiply by: 80%
WIP, Ending P1,000,000

9. Direct Materials, Beginning P450,000

Add: Purchases 2,650,000
Direct Materials Available P3,100,000
Less: Direct Materials, Ending (600,000)
Direct Materials Used P2,500,000

Cost of Goods Manufactured P6,800,000

Add: WIP, Ending 760,000
Less: WIP, Beginning (560,000)
Total Manufacturing Cost P7,000,000
Less: Direct Materials Used (2,500,000)
Conversion Cost P4,500,000

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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 P2,500,000

Add: Direct Labor 3,000,000
Prime Cost P5,500,000

10. OT Premium
No. of hours worked 300
Multiply by: OT premium rate (P18*50%) 9 P2,700

Night Shift Premium

No. of hours worked 6000
Multiply by: OT premium rate (P18*15%) 2.7 16,200
Labor charged to FOH P18,900

11. No. of hours worked (including OT hours) 50

Multiply by: Rate per hour *45
Amount debited too WIP P2, 250

12. Let X = CGM Let X = TMC

.20X = FG, end .10X = WIP, End

CGM – FG, end = CGS TMC – WIP, End = CGM

X - .20X = 540,000 X - .10X = 675,000
.80X = 540,000 .90X = 675,000
.80 .80 .90 .90
X (CGM) = 675,000 X (TMC) = 750,000

Total Manufacturing Cost P750,000

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Multiply by: Percentage allocable to DL *30%

Direct Labor P225,000

13. Cost of Goods Manufactured P450,000

Less: Decrease in WIP (30,000)
Manufacturing Cost 420,000
Less: Factory Overhead (150,000)
Prime Cost P270,000

Test Material 2 Multiple Choice

1. Purchases of Raw Materials P42,000
Add: Decrease in Raw Materials 3,000
Direct Materials Used 45,000
Add: Direct Labor 30,000
Prime Cost P75,000 A
2. Direct Labor P30,000
Add: Factory Overhead
No. of DLH (P30,000/P7.50) 4000
Multiply by: OH rate/DLH 10 40,000
Conversion Cost P70,000 C

3. Raw Materials Available P410,000

Less: RM, end (60,000)
Indirect Materials (10,000)
Direct Materials Used P340,000
Direct Labor 300,000
Factory Overhead 337,500
Manufacturing Cost P977,500
Add: WIP, Beginning 150,000
Cost of Goods placed into process 1,127,500
Less: Cost of Goods Manufactured (975,000)
Wip, Ending P152,500 A

4. OT Premium (1000hrs.*50%*P35) P17,500

10% Pay Premium - 2nd Shift (5000hrs*10%*P35) 17,500
20% Pay Premium - 3rd Shift (5000hrs*20%*P35) 35,000
Labor Premiums P70,000
B
5. Basic Pay
Shift 1 (5000hrs*P35) P175,000

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Shift 2 (5000hrs*P35*1.10%) 192,500

Shift 3 (5000hrs*P35*1.20%) 210,000

Add: OT Basic
OT hours 1000
Rate/hr. 35 35,000

Add: OT Premium
OT hours 1000
Rate/hr. (P35*50%) 17.5 17,500
Total Payroll P630,000 B

6. Basic Pay (800hrs*P30) 24,000

Add: OT Premium (800hrs*P30*50%) 12,000
Direct Labor P36,000 A

7. Sales (2500u*20) P50,000

Less: Cost of Sales
Direct Material (2500u*P3) 7,500
Direct Labor 36,500
Factory Overhead (800hrs*P18) 14,400 (57,900)
Gross Margin (P7,900) B

8. Basic Pay (44hrs*P48) P2,112

Add: OT Premium (4hrs*24) 96
Weekly Earnings P2,208 C

CHAPTER 4 ACCOUNTING FOR MANUFACTURING OVERHEAD

Summary of Answers
Exercise 4-1 Exercise 4-3 Exercise 4-6 Exercise 4-9
a. P10/DLH 1. SD- 60.8 AA2 A. P130 000 1. P237 500
TD- 35 Budg OH B. P390 000 2.P465000
P1800000 3.P309 266
b. P5450 2. SD –P4864 Actual OH C. P310 000 4.P50742
TD- P13300 P1717200 D. P288 000
c. P44875 3. P18 164 Test Material 1
d. P58337.5 4. SD- 28.04 AA3 Exercise 4-7 1.P8 571
TD-13 459.2 App OH 1.P596 000 2.P62 200
P1550000 2.P1015000 3.P64 000
Budg LOA 3.P6100 4.P5/MH
P600000 4. P1029500 5.P1 375 000

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Exercise 4-2 Exercise 4-4 6.P185.97/unit

a.P550,000 AA1 Co. Exercise 4-5 Exercise 4-8 7.P137.90/unit
b. P2.20 ALOA P536000 1. P2 664 900 1.P2860000 8.P2 490 788
c. P30,000 Over P29000 P 2, 199,120 2.P140000 9.P5.90/unit
d.P50,000 2. P4 763 700 10.10.70/DLH

11.9.75/DLH 4.P3 631 380 44.43/DLH 8.D Test Material 4

12.9.90/DLH 5.P39.38/DLH 14.P5 869 900 9.A 1.D
13.P537 250 6.P2 835 360 10.B 2.A
14.P1 030 000 7.P2 860 000 Test Material 3 11.D 3.C
15.P204 398 8.P140 000 1.B 12.B 4.C
16.P534 060 9.P192 600 2.A 13.C 5.A
10.P622 000 3.C 14.D 6.D
Test Material 2 11.86.67/DLH 4.A 15.P258 000 7.A
1.P1 775 700 44.44/MH 5.C 16.B 8.C
2.P5 677 380 12.P5 986 600 6.C 9.D
3.P3 775 680 13.86.70/PLH 7.C 10.A

11.D Problem 4-1 C. MI P35 806 B1 Dep1 P135 000

12.A Dep1 P858 743.92 FA 49 501 Dep2 P64 257
13.A Dep2 P1 001 256.32 FI P36 692
14.A B2 Dep1 P610 000
15.E Problem 4-2 Problem 4-3 Dep2 P239 275
16.B A. MI P268 738 A1. Dep1 P262 500
17.A FA P315 544 Dep 2 P87 500
18.D FI P356 718
19.D B. MI P268 257 A2. Dep1 P737 500
20.B FA P315 839 Dep2 262 500
FI P356 904

______________________________________________________________________________
COMPUTATIONS:
Exercise. 4-1
(a) Total estimated overhead (110000+84000+6000) P 200000
Divided by: Total estimated DLH (4000+14000+2000) 20000
Overhead application rate P 10DLH

(b)Direct Labor hours

Design 25
Sewing 320
Beading 200
545
Multiplied by: overhead rate P 10
Total overhead applied to the job P 5450

(c)Direct Materials P 30000

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Direct Labor hours

Design (25hrs x P25) 625
Sewing (320hrs x P15) 4800
Beading (200hrs x P20) 4000
9425
Overhead applied to the job 5450
Total cost of the job P 44875

(d)
Total cost of the job P 44875
Multiply by: 130%
Billing price P 58337.50

Exercise. 4-2
(a) Manufacturing overhead for the year P 550000

(b) Overhead cost P 550000

Estimated hours 250000
Overhead rate P 2.20

Actual overhead, January 1 P 52000

Applied overhead, January 1 (10000hrs x P2.20) 22000
Under applied overhead, January 1 P 30000

(c) Actual overhead, December 31 P 548000

Applied overhead, December 31 (240000hrs x P2.20) (528000)
Under applied overhead, P 20000
Under applied overhead, January 1 30000
Under applied overhead, December 31 P50000

Exercise 4-3

(1) Sewing department

Total budgeted overhead P 76000
Divided by: estimated total machine hours 1250
Overhead rate P 60.80

Treating department
Total budgeted overhead P 182000
Divided by: direct labor hours 5200
Overhead rate P 35

(2) Machine hours on job no.4 (sewing) 80

Overhead rate P 60.80
OH applied P 4864

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Direct labor hours on Job no.4 (treating) 380

Overhead rate P 35
OH applied P13300

OH applied (sewing) P 4864

OH applied (treating) 13300
Total OH applied P18164

(3) Total budgeted overhead P 258000

Divided by: Total DLH 9200
Plant wide rate P 28.04

(4) Direct labor hours 480

Plant wide rate P 28.04
OH applied to Job No.4 P 13459.20

Exercise 4-4
AA1 Co.
Budgeted manufacturing OH P1600000
Budgeted level of activity 500000
OH rate P 3.20

Applied OH P 1715200
Divided by: OH rate 3.20
Actual level of activity P 536000DLH

Actual OH P1744000
Applied OH 1715200
Under applied P 28800

AA2 Co.
Applied OH P 1764000
Divided by: actual level of activity 392000DLH
Multiplied by: budgeted level of activity 400000DLH
Budgeted OH P 1800000

Applied OH P 1764000
Over applied OH 46800
Actual OH P 1717200

AA3 Co.
Actual OH P 1486000
Over applied OH 64000
Applied OH P 1550000

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Applied OH P 1550000
Divided by: actual level of activity 620000DLH
OH rate P 2.50

Budgeted OH P 1500000
Divided by: OH rate 2.50
Budgeted level of activity 600000DLH

Exercise 4-5

(1) Using departmental rates

Department 1
Overhead cost (budgeted data) 2 700 000
Direct labor hours (budgeted data) / 80 000
Total 33.75
Units produced * 9 400
Total 317 250
Direct labor hours per unit (79 000/9 400) * 8.40
Overhead applied 2 664 900

Department 2
Overhead cost (budgeted data) 2 040 000
Machine labor hours (budgeted data) / 40 000
Total 51
Units produced * 56 000
Total 2 856 000
Machine hours per unit (43 000/56 000) * .77
Overhead applied 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 85 000

Purchases 150 000
Total 235 000
Direct materials ending - 105 000
Direct materials used 130 000

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(B)Direct materials 130 000

Direct labor 90 000
Factory overhead 72 000
Total manufacturing cost 292 000
Work in process beginning 98 000
Cost of goods put into process 390 000

(C) Cost of goods put into process 390 000

Work in process ending - 80 000
Cost of goods manufactured 310 000

(D)Actual overhead 75 000

Applied overhead -72 000
Under applied overhead 3 000

Cost of goods manufactured 310 000

Finished goods beginning 50 000
Cost of goods available for sale 360 000
Finished goods ending - 75 000
Cost of goods sold 285 000
Under applied overhead 3 000
Adjusted cost of goods sold 288 000

Exercise 4-7

(1) Direct labor 350 000

Indirect labor 35 000
Indirect materials 200 000
Depreciation 11 000
Maintenance 50 000
Miscellaneous 31 000
Conversion cost 596 000

(2) Conversion cost 596 000

Direct materials 360 000
Total manufacturing cost 956 000
Work in process beginning 220 000
Cost of goods put into process 1 176 000
Work in process ending - 160 500
Cost of goods manufactured 1 015 500

(3) Factory overhead (10.40*25 000) 260 000

Direct labor cost 350 000
Conversion cost 610 000

(4) Conversion cost 610 000

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Direct materials 360 000

Total manufacturing cost 970 000
Work in process beginning 220 000
Cost of goods put into process 1 290 000
Work in process ending - 160 500
Cost of goods manufactured 1 029 500

Exercise 4-8
(1) Overhead 2 750 000
Machine hours (budgeted) / 125 000
Overhead rate 22
Machine hours worked (10 000 + 120 0000 * 130 000
Overhead applied to production 2 860 000

(2) Actual overhead (260 000 + 2 740 000) 3 000 000

Applied overhead - 2 860 000
Under applied overhead 140 000
Exercise 4-9
1. Total Service Cost allocated to ASSEMBLY: (direct method)
Personnel Cost (200 000 x 100/400) 50 000
Assembly (500 000 x 1800/4800) 187 500
Total 237 500

2. Total Service Cost allocated to FINISHING: (step method)

Service Departments Producing Department
Administration Personnel Assembly Finishing
Estimated Overhead Costs 500 000 200 000 1 800 000 3 000 000
Service Provided by:
Administration (500 000)
Personnel (500 000 x 2/50) 20 000
Assembly (500 000 x 18/50) 180 000
Finishing (500 000 x 30/50) 300 000
Personnel (220 000)
Assembly (220 000 x 10/40) 55 000
Finishing (220 000 x 30/40) 165 000
Total Service Cost 235 000 465 000

Service Departments Producing Department

Administration Personnel Assembly Finishing
Estimated Overhead Costs 200 000 500 000 1 800 000 3 000 000
No. of employees 10 30 100 300

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Service provided by:

Personnel * 3/43=7% 10/43=23% 30/43=70%
Administration 2/50=4% * 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% 309 266
4. Personnel Cost allocated to ASSEMBLY Department
220 618 x 23% 50 742

Problem 4-1:
1st step:
a) Repairs and Maintenance costs = P 870,000 + 20%HR
b) Human Resource costs = P 990,000 + 16%RM
2nd step:
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
rd
3 step:

Department 1 Department 2
Repairs & Maintenance costs:
Dept. 1: 44% x 1,103,306 P 485,454.64
Dept. 2: 40% x 1,103,306 P 441,322.40
Human Resource costs:
Dept. 1: 32% x 1,166,529 373,289. 28
Dept. 2: 48% x 1,166,529 559,933.92

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Total allocated service costs P 858,743.92 P 1,001,256.32

Problem 4-2:
a. Direct method
Service Departments Producing Departments
Gen. Factory Employee Mixing Fabricating Finishing
Office Relations
Est. Dept. OH costs P 43,000 P 79,000 P 233,000 P 266,000 P 320,000
Gen. Factory Office costs: (43,000)
Mixing: (23,200 / 68,000) x 14,671
43,000
Fabricating: (25,600 / 16,188
68,000) x 43,000
Finishing: (19,200 / 68,000) 12,141
x 43,000
Employee Relations costs: (79,000)
Mixing: (144 / 540) x 79,000 21,067
Fabricating: (228 / 540) x 33,356
79,000
Finishing: (168 / 540) x 24,577
79,000
Total est. factory overhead P 268,738 P 315,544 P 356,718

b. Step method
Service Departments Producing Departments
Gen. Factory Employee Mixing Fabricating Finishing
Office Relations
Est. Dept. OH costs P 43,000 P 79,000 P 233,000 P 266,000 P 320,000
Gen. Factory Office costs: (43,000)
Employee Relations: 6,450
(12,000 / 80,000) x 43,000
Mixing: (23,200 / 80,000) 12,470
x 43,000
Fabricating: (25,600 / 13,760
80,000) x 43,000
Finishing: (19,200 / 10,320
80,000) x 43,000
Employee Relations costs: 85,450
Mixing: (144 / 540) 22,787
x 85,450
Fabricating: (228 / 540) 36,079
x 85,450
Finishing: (168 / 540) (85,450) 26,584
x 85,450

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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 Fabricating Finishing

Gen. Factory Office costs:
Mixing: 29% x 51,675 P 14,986
Fabricating: 32% x 51,675 P 16,536
Finishing: 24% x 51,675 P 12,402
Employee Relations costs:
Mixing: 24% x 86,751 20,820
Fabricating: 38% x 86,751 32,965
Finishing: 28% x 86,751 24,290
Total allocated service costs P 35,806 P 49,501 P 36,692
Problem 4-3:

A. If Plant wide-rate is used

1) P 486,000 + 564,000 ═ P 35.00 / DLhrs.
30,000

FOH; Dept. 1: FOH; Dept. 2:

= 5,000 x 1.5 x 35.00 = 5,000 x 0.5 x 35.00

= P 262,500 = P 87,500

2)

Dept. 1 Dept. 2 Total

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Direct Materials P 175,000 P 50,000 P 225,000

Direct Labor costs 300,000 125,000 425,000
Factory Overhead costs 262,500 87,500 350,000
P 737, 500 P 262,500 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)
Dept. 1 Dept. 2 Total
Direct Materials P 175,000 P 50,000 P 225,000
Direct Labor costs 300,000 125,000 425,000
Factory Overhead costs 135,000 64,275 199,275
P 610,000 P 239,275 P 849, 275

Test Material 1
Service Departments Producing Department
Department Department
Maintenace Utilities
1 2
Estimated Overhead Costs 20 000 10 000

Service provided by:

Maitenance * 20% 40% 40%
Utilities 10% * 30% 60%

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

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Maintenance Cost allocated to Department 1

21 428.57 x 40% 8 571

2. Direct Materials 28 000

Direct Labor (950 hrs x 20) 19 000
Factory Overhead (950 hrs x 16) 15 200
Balance opf Work in Process 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)] 1 500 000
300 000
Divide by: Machine hours MH
Predetermined OH rate 5/MH

5. Overhead Component of COS

275 000 MH x 5MH 1 375 000
6. Direct Materials
(20 500lbs x 20) + (11 000lbs x 24) 674 000
Direct Labor
(28 000hrs x 48) +_ (2 800hrs 50) 1 484 000
Actual Factory Overhead
(265 000 + 140 000) + (20 600 +20 000) 445 600
Total Manufacturing Cost 2 603 600
Divide by: Units produced 14 000
Manufacturing cost per unit 185.97

7. Budgeted Overhead
(1 149 500 + 590 500) 1 740 000
Divide by: Estimated DLH
(110 000 + 10 000) 120 000
Overhead rate 14.50/DLH

Applied FOH
(28 000hrs + 2 800hrs) x 14.50 446 600
Actual Direct Labor

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(28 000hrs x 48) + (2 800hrs x 50) 1 484 000

Conversion Cost 1 930 600
Divide by: Units produced 14 000
Conversion Cost per unit 137.9

8. Department 1
Budgeted Overhead 1 149 500
Divide by: Estimated DLH 110 000
Overhead rate 10.45/DLH
Multiply by: Actual DLH 28 000
Applied Overhead 292 600

Department 2
Budgeted Overhead 590 500
Divide by: Estimated MH 100 000
Overhead rate 5.91/MH
Multiply by: Actual MH 6 800
Applied Overhead 40 188

Direct Materials
(20 500 x 20)+(11 000 x 24) 674 000
Direct Labor
(28 000 x 48)+(2 800 x 50) 1 484 000
Applied Overhead
(292 600 + 40 188) 332 788
Total Manufacturing Cost 2 490 788

9. Estimated Production(in units) 200 000

Multiply by: Predetermined OH rate 10.4
Total Factory OH 2 080 000
Fixed Factory OH 900 000
Variable Factory OH 1 180 000
Divide by: Estimated units of prod. 200 000
Variable Factory OH rate 5.90

10. ASSEMBLY Department OH rate:

Budgeted Overhead 204 000
Service provided by:
Repair (48 000 x 1/9) 5 333

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Power (250 000 x 840/960 218 750

Total Budgeted OH 428 083
Divide by: DLH (20 emp x 2 000hrs) 40 000
Assembly Department OH rate 10.70/DLH

11. ASSEMBLY Department OH rate:

Budgeted Overhead 204 000
Service provided by:
Power (250 000 x 840/1200) 175 000
Repair (98 000 x 1/9) 10 889
Total Budgeted OH 389 889
Divide by: DLH (20 emp x 2 000hrs) 40 000
Assembly Department OH rate 9.75/DLH

12 Repair Power Assembly Finishing

Budgeted Overhead 48 000 250 000 204 000 320 000
Labor Hours 1 000 1 000 8 000
KWH 240 000 840 000 120 000
Service provided by:
Repair * 10% 10% 80%
Power 20% * 70% 10%

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 204 000
Service provided by:
Repair (100 000 x 10%) 10 000

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Power (260 000 x 70%) 182 000

Total Budgeted Overhead 396 000
Divide by: DLH (20 emp x 2 000hrs) 40 000
Assembly Department OH rate 9.90/DLH

13. Budgeted Annual Variable Overhead 1 800 000

Budgeted Fixed OH
Factory Rent 50 000
Factory Plant and Equipment 380 000 430 000
Total Factory Overhead 2 230 000
Divide by: Estimated MH 80 000
FOH rate 27.875/MH

Applied Overhead 2 062 750

74 000MH x 27.875 2 600 000
Actual Overhead 537 250
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

Budgeted OH of P2 850 000

Allocated Service Cost provided by:
S1 240 000 x 50% 120 000
S2 200 000 x 30% 60 000 180 000
Total Budgeted FOH 1 030 000

15. STEP method

Administration Maintenance Freight Passenger

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Direct Overhead Cost 950 000 630 000 1 800 500 5 260 470
Sevices provided by: (950 000)
Administration
Maintenance 950 000 x 8/89 85 393
Freight 950 000 x 30/89 320 225
Passenger 950 000x 51/89 544 382
Maintenance (715 393)
Freight 715 393 x 80/280 204 398
Passenger 715 393 x 200/280 510 995

16. SIMULTANEOUS method

Maintenance Administration Freight Passenger
Direct Overhead Cost 630 000 950 000 1 800 500 5 260 470
Direct Labor Hours 8 000 9 000 30 000 51 000
No.of employees 40 50 80 200
Service provided by:
Maintenance * 15% 24% 61%
Administration 9% * 34% 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% 174 070
Admnistration 1 058 794 x 34% 359 990
Total Allocated Service Cost 534 060

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Test Material 2

1. Applied Overhead
Direct Labor
(14 000 x 76.50) + (800 x 76.50) 1 132 200
Multiply by: OH rate 80% 905 760
Actual Overhead
Incurred 2 556 000
Special night premium
(14 000 x 76.50 x 10%) 107 100
OT premium
(800 x 76.50 x 30%) 18 360 (2 681 460)
Underapplied OH 1 775 700

3.Raw Material, beg 241 200

Purchases 1 968 120
Raw Matertials, end (450 000)
Indirect Materials 21 600
Direct Materials 1 737 720

Direct Labor
14 000hrs x 76.50 1 071 000
800hrs x 76.50 61 200 1 132 200

Applied Overhead
1 132 200 x 80% 905 760
Total Manufacturing Costs 3 775 680

4. Total Manufacturing Costs 3 775 680

Work in process, beg 637 200
Work in process, end
(637 200 + 144 000) (781 200)
Cost of Goods Manufactured 3 631 680

2. Total Manufacturing Costs 3 775 680

Work in process, beg 637 200
Work in process, end
(637 200 + 144 000) (781 200)
Cost of Goods Manufactured 3 631 680
Finished Goods, beg 1 070 280

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Finished Goods, end

(1 070 280 - 270 000) (800 280)
Cost of Goods Sold 3 901 680
Underapplied OH 1 775 700
Adjusted Cost of Goods Sold 5 677 380

5. Budgeted Overhead 2 953 125

Divided by: Budgeted DLH 75 000
Predetermined FOH rate 39.38/DLH

6. Actual DLH used 72 000

Multiply by: Predetermined FOH rate 39.38
Total Overhead applied 2 835 360

7. Estimated OH cost 2 750 000

Divide by Estimated MH usage 125 000
OH rate 22/MH

Applied Overhead, July

(10 000MH x 22/MH) 220 000
Remainder
(120 000MH x 22/MH) 2 640 000
Total Applied OH costs 2 860 000

8. Applied OH 2 860 000

Actual OH
July 260 000
Remainder 2 740 000 (3 000 000)
Underapplied OH costs (variance) 140 000

9. Budgeted Overhead Costs 2 568 000

Divide by: Estimated MH usage 48 000
Overhead rate 53.50/MH

Applied Overhead
3 600MH x 53.50/MH 192 600

Less: Actual Overhead 202 000

Underapplied OH (variance) 9 400

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10. Materials 63 000

Direct Labor 105 000
Applied FOH 192 600
Total Manufacturing Costs 360 600
Work in process, beg (252 000)
Cost of Goods Manufactured/CGS 612 600
Underapplied OH (variance) 9 400
Adjusted Cost of Goods Sold 622 000

11. STEP method

Administration Maintenance Cutting Sewing
Overhead Costs 1 800 000 800 000 5 000 000 6 000 000
Services provided by:
Administration (1 800 000)
Maintenance 1 800 000 x 20/120 300 000
Cutting 1 800 000 x 80/120 1 200 000
Sewing 1 800 000 x 20/120 300 000
Maintenance (1 100 000)
Cutting 1 100 000 x 50/75 733 333
Sewing 1 100 000 x 25/75 366 667
Total Factory Overhead 6 933 333 6 666 667
Divide by 80 000DLH 150 000MH
Factory Overhead rate 86.67/DLH 44.44/MH

12. Direct Materials

(950 000 + 210 000 ) 1 160 000
Direct Labor Costs
(560 000 + 1 200 000) 1 760 000
Factory OH Applied
Cutting (20 000DLH x 86.67/DLH) 1 733 400
Sewing (30 000MH x 44.44/MH) 1 333 200 3 066 600
Total Manufacturing Costs 5 986 600
*in producing 10 000 units

13. ALGEBRAIC method

Administration Maintenance Cutting Sewing
Overhead Costs 1 800 000 800 000 5 000 000 6 000 000
DL hours 20 000 80 000 20 000

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50 000 25 000
Space occupied 4 500 sqm 7 000 sqm sqm sqm
Services provided by:
Administration * 17% 66% 17%
Maintenance 6% * 63% 31%

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 Cutting Sewing

Administration
Cutting 1 867 044 x 66% 1 232 249
Sewing 1 867 044 x 17% 317 397
Maintenance
Cutting 1 117 397 x 63% 703 960
Sewing 1 117 397 x 31% 346 393
Total allocated service costs 1 936 209 663 790
Add: Overhead Costs 5 000 000 6 000 000
Total Overhead Costs 6 936 209 6 663 790
Divide by 80 000DLH 150 000MH
FOH rate 86.70/DLH 44.43/MH

14. Direct Materials

(950 000 + 210 000) 1 160 000
Direct Labor Costs
(560 000 + 1 200 000) 1 760 000
Factory Overhead Applied
Cutting (20 000DLH x 86.67/DLH) 1 734 000

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Sewing (30 000MH x 44.43/MH) 1 332 900 3 066 900

Total Manufacturing Costs 5 986 900
*in producing 10 000 units

Test Material 3
1. B
Applied OH component of:
Work in process 460 000
Cost of Goods Sold 1 440 000
Finished Goods 500 000
Total Budgeted Overhead 2 400 000
Divide by: Budgeted MH 50 000
Predetermined OH rate 48/MH

2. A
Sales for August
(500 000 x 1.2) 600 000
Gross Margin 190 000
Cost of Goods Sold 410 000
Finished Goods, end 60 000
Finished Goods, beg (81 000)
Cost of Goods Manufactured 389 000
Work in process, end 85 000
Work in process, beg (78 000)
Cost of Goods put into process 396 000
Prime cost
(48 000 + 294 000) (342 000)
Applied Overhead 54 000
Divide by: Actual DLH usage 45 000
Overhead rate 1.20/DLH

3. C
Budgeted cost after allocation
Producing 1 510 439
Finishing 1 315 561
Total 2 826 000
Divide by: Budgeted DLH
Producing 35 000
Finishing 15 000 50 000

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Factory Overhead rate 56.52/DLH

4. A
Assembly estimated budgeted cost 1 000 000
Service provided by:
Maintenance cost (300 000 x 500/800) 187 500
Personnel cost (400 125 x 50/75) 266 750
Finance cost (150 875 x 30/70 64 661 518 911
Total 1 518 911
Divide by: Budgeted DLH 35 000
Factory Overhead rate 43.40/DLH

5. C
Sewing Department OH rate
(76 000/1 250 MH) 60.80/MH
Treating Department
(182 000/5 200 DLH) 35/DLH

Applied Overhead
Sewing Department (80 x 60.80) 4 864
Treating Department (380 x 35) 13 300
Total 18 164

6. C
Sewing Department 76 000
Treating Department 182 000
Total Budgeted OH 258 000
Divide by: Total DLH 9 200
Factory Overhead rate 28.04/DLH

Overhead Applied
480 DLH x 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

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Actual Overhead (287 920)

Underapplied Overhead 13 600

Cost of Goods Sold adjustment

560 000/1 000 000 x 13 600 7 616
*DEBIT

8. D
Estimated Factory Overhead 7 350 000
Divide by: Budgeted DLH
[(80 000x2.5) + (20 000 x 4)] 280 000
FOH rate 26.25/DLH

Car Wheels
Direct Labor (190 000hrs x 38.50) 7 315 000
Factory Overhead (190 000hrs x 26.25) 5 035 000
Conversion Cost 12 350 000
Divide by: Units produced 75 000
Conversion Cost per unit 164.67

Trucks
Direct Labor (82 500hrs x 38.50) 3 176 250
Factory Overhead (82 500hrs x 26.25) 2 186 250
Conversion cost 5 362 500
Divide by: Units produced 18 000
Conversion cost per unit 297.92

9. A
Goods put into process
(341 000 + 324 500 + 259 600) 925 100
Goods manufactured (825 400)
Cost of goods still in process 99 700

Conversion cost still in process

(99 700 - 70 000) 29 700
Direct Labor cost still in process
(29 700/1.80) 16 500
FOH still in process 13 200

Factory Overhead component of goods

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put into process 259 600

FOH still in process (13 200)
FOH component of goods manufactured 246 400

10. B
Budgeted total variable OH 180 000
Budgeted fixed OH
Factory rent 2 15 000
Factory equipment 38 000 253 000
Estimated FOH 433 000
Divide by: Estimated MH 80 000
FOH rate 5.4125/MH

Applied Overhead
70 000 MH x 5.4125 378 875
Actual Overhead (387 875)
Underapplied Overhead 9 000

11. D
Product
A B TOTAL
Prime cost
A (800 units x 35) 28 000
B (8 000 units x 22) 176 000 204 000
Overhead
Function 1
A (800 units x 2hrs x 10) 16 000
B (8 000 units x 1hr x 10) 80 000 96 000
Function 2
A (800 units x 1hr x 7) 5 600
B (8 000 units x 8hrs x 7) 448 000 453 600
Function 3
A (800 units x 5hrs x 18) 72 000
B (8 000 unitsx 1 hr x 18) 144 000 216 000
Total Factory Costs 969 600

12. B
Estimated FOH 255 000

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Divide by: Estimated DLH 100 000

FOH rate 2.55/DLH

Applied FOH
(105 000 x 2.55/DLH) 267 750
Actual FOH (265 500)
Overapplied Overhead 2 250
*accounted as a deduction to CGS

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 84 000
Finished Goods, end 16 000
Finished Goods, beg (11 000)
Cost of Goods Manufactured, June 89 000

15. 258 000

Materials issued 380 000
Direct Labor 420 000
Applied FOH (420 000/20) x 28 588 000
Total Manufacturing Costs 1 388 000

Total Manufacturing Cost 1 388 888

Work in process, beg 20 000
Work in process, end (468 000)
Cost of Goods Manufactured 940 000
Finished Goods, beg 10 000
Finished Goods, end (50 000)
Cost of Goods Sold 900 000
Overapplied Overhead (68 000*)
Adjusted Cost of Goods Sold 832 000

*Applied OH 588 000

Actual OH
Depreciation 40 000

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Rentals 360 000

Utilities 60 000
Indirect Labor 40 000
Indirect Materials 20 000 (520 000)
Overapplied FOH 68 000

Sales Revenue 1 090 000

Adjusted Cost of Goods Sold (832 000)
Gross Profit 258 000

16. B
Choco Bar (ABC method)
Budgeted Overhead Cost component
Act. Center 1 (25 000 x 150/250) 15 000
Act. Center 2 (65 000 x 800/1000) 52 000
Act. Center 3 (90 000 x 1000/3000) 30 000
Total 97 000
Divide by: Annual production(in units) 10 000
Overhead cost per unit 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

De Luxe P946 250 2. 6.B 18.C 6.E

7.A 19.D 7.D

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

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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

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x 20%

Ending inventory P 1,700,000

Deluxe

Overhead P 471,250

Direct Materials 400,000

Direct Labor 75,000

Total Manufacting Cost 946,250

x 20%

Ending inventory P 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

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Materails hand 100,000

Hazardous waste control 50,000

Quality control 75,000

Other overhead cost 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 212.5

Direct Labor 400000/2000) 200

Overhead cost (44500/2000) 22.25

Manufacturing cost P 434.75

Traditional

Direct Materials (425000/2000) P 212.5

Direct Labor 400000/2000) 200

Overhead cost 7.8125

Manufacturing cost P 420.31

Test Material 1

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1. Serving a party for dinners (33,000÷6,000) × 1 5.50

Serving a party (138,000÷15,000) × 4 36.80
Serving drinks (24,000÷10,000) × 3 7.20
Total cost 49.50

2. Manufacturing cost, De Luxe 217,280

Units produced ÷ 400
Cost per unit 543.20

Manufacturing cost, Standard 166,650

Units produced ÷ 60
Cost per unit 2,776

3. Prime cost (882,000+2,910,000) 3,792,000

Factory overhead, ABC
Setups cost (300,000÷60×30) 150,000
Design related cost (900,000÷15,000×12,000) 720,000
Other overhead (3,300,000÷3,000,000×2,910,000) 3,201,000
4,071,000
Total production cost for Alpha 7,863,000

4. Setups cost (300,000÷60×30) 150,000

Design related cost (900,000÷15,000×3,000) 180,000
Other overhead (3,300,000÷3,000,000×90,000) 99,000
Overhead applied to Job Beta 429,000

5. Prime cost (882,000+2,910,000) 3,792,000

Overhead applied (4,500,000÷3,000,000×2,910,000) 4,365,000
Total production cost
8,157,000
Units produced ÷ 73,500
Cost per unit of Alpha 110.98

6. Direct labor cost 90,000

Overhead rate (4,500,000÷3,000,000) × 1.50
Overhead applied 135,000

7. Account inquiry 2,000

Inquiry cost (400,000÷10,000) × 40
Inquiry cost assigned to Dept. A 80,000

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8. Account billing 200,000

Billing cost (280,000÷4,000,000) × 0.07
Billing cost assigned to Dept. B 14,000

9. Inquiry cost (400,000÷10,000) × 2,000 80,000

Billing cost (280,000÷4,000,000) × 400,000 28,000
Verification cost (150,000÷40,000) × 10,000 37,500
Correspondence cost (50,000÷4,000) × 1,000 12,500
Total traceable cost assigned to Dept. A 158,000

Inquiry cost (400,000÷10,000) × 4,000 160,000

Billing cost (280,000÷4,000,000) × 200,000 14,000
Verification cost (150,000÷40,000) × 8,000 30,000
Correspondence cost (50,000÷4,000) × 1,600 20,000
Total traceable cost assigned to Dept. A 224,000

10. Indirect costs (200×20) 4,000

Units produced ÷ 1,000
Cost per unit 4.00

11. Material handling (2000×2) 4,000

Assembly (20×20) 400
Inspection (30×3) 90
Indirect cost 4,490
Units produced ÷ 1,000
Cost per unit 4.49

12. Prime cost 80,000

Factory overhead (1,213,000÷100,000×32,000) 388,160
Total factory cost, Product A 468,160

Prime cost 80,000

Factory overhead (1,213,000÷100,000×18,000) 213,840
Total factory cost, Product B 298,340

Prime cost 80,000

Factory overhead (1,213,000÷100,000×50,000) 606,500
Total factory cost, Product C 696,500

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13. Total factory cost, Product A 468,160

Markup × 1.20
Selling price 561,792

Total factory cost, Product B 298,340

Markup × 1.20
Selling price 358,008

Total factory costs, Product C 696,500

Markup × 1.20
Selling price
835,800

14. Prime cost 80,000

Overhead:
Utilities (300,000÷60,000) × 30,000 150,000
Scheduling and setup (273,000÷780) × 130 45,500
Material handling (640,000÷1,600,000) × 500,000 200,000
395,500
Manufacturing cost
475,500
Units produced ÷ 40,000
Cost per unit, Product A 11.89

Prime cost 80,000

Overhead:
Utilities (300,000÷60,000) × 10,000 50,000
Scheduling and setup (273,000÷780) × 380 133,000
Material handling (640,000÷1,600,000) × 300,000 120,000 303,000
Manufacturing cost 383,000
Units produced ÷ 20,000
Cost per unit, Product B 19.15

Prime cost 90,000

Overhead:
Utilities (300,000÷60,000) × 20,000 100,000
Scheduling and setup (273,000÷780) × 270 94,500
Material handling (640,000÷1,600,000) × 800,000 320,000 514,500
Manufacturing cost 604,500
Units produced ÷ 60,000

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Cost per unit, Product C 10.075

15. Material handling (50,000÷100,000) × 10,000 5,000

Painting (200,000÷50,000) × 3,000 12,000
Assembly (120,000÷4,000) × 300 9,000
Overhead cost assigned to Job 1234 26,000

16. Prime cost 180,000

Overhead cost 26,000
Manufacturing cost 206,000
Units produced ÷ 3,000
Manufacturing cost per unit 68.67

17. Direct material (33×8,000) 264,000

Direct labor (32×8,000) 256,000
Overhead (1,320,000÷15,000) × 12,000 1,056,000
Total cost of product Regular 1,567,000

18. Setup (240,000÷25) × 20 192,000

Engineering (180,000÷900) × 450 90,000
Machine costs (900,000÷6,000) × 4,000 600,000
Total overhead costs assigned to product SuperPro 882,000

19. Direct material (33×8,000) 264,000

Direct labor (32×8,000) 256,000
Overhead:
Setup (240,000÷25) × 5 48,000
Engineering (180,000÷900) × 450 90,000
Machine costs (900,000÷6,000) × 2,000 300,000 438,000
Total cost of product Regular 958,000

20. Direct material (38×2,200) 83,600

Direct labor (44×2,200) 96,800
Overhead 882,000
Manufacturing cost 1,062,400
Units produced ÷ 2,200
Manufacturing cost per unit of product SuperPro 482.91

21. Overhead costs assigned to roller blades

(160,000÷4,000) × 400 16,000

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22. Machining center (120,000÷20,000) × 500 3,000

Setup center (40,000÷100) × 20 8,000
Overhead costs assigned to roller blades using ABC 11,000

Test Material 2

1. Materials Handing (30,000÷1,000) × 400 12,000

Machine setups (27,000÷450) × 150
9,000
Quality inspection (24,000÷600) × 200 8,000
Total overhead costs assigned to product Instruments 29,000

2. Direct cost
54,000
Overhead
29,000
Manufacturing cost of product Instrument 83,000

3. Direct cost
85,000
Overhead:
Materials Handing (30,000÷1,000) × 600 18,000
Machine setups (27,000÷450) × 300 18,000
Quality inspection (24,000÷600) × 400 16,000 52,000
Manufacturing cost
137,000
Units produced ÷ 300
Manufacturing cost per unit of product Gauge 457

4. Overhead:
Widgets (1,920,000÷160,000) × 40,000 480,000
Gadgets (1,920,000÷160,000) × 30,000 360,000
Targets (1,920,000÷160,000) × 90,000 1,080,000

5. Direct materials (10×160,000) 1,600,000

Direct labor 560,000
Overhead (3,528,000÷840,000) × 560,000 2,352,000
Manufacturing cost 4,512,000
Units produced ÷ 160,000

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Manufacturing cost per unit of product BB 28.20

6. Direct materials (300×2,000) 1,600,000

Direct labor 280,000
Overhead:
Set up related (1,350,000÷90) × 45 675,000
Design related (1,400,000÷8,000) × 3,000 525,000
Others (778,000÷8,400) × 2,800 259,333 1,459,333
Manufacturing cost 2,339,333

7. Overhead applied (186,200÷12,500) × 10,000 148,960

Number of units produced and sold ÷ 110,000
Overhead applied per unit of product X 13.54

8. Direct materials 75,000

Direct labor (22×2,500) 55,000
Overhead:
Inspection costs (56,200÷100) × 20 11,240
Purchasing costs (80,000÷15) × 3 16,000
Machine costs (50,000÷4,000) × 2,400 30,000 57,240
Manufacturing cost
187,240
Sales (80×3,000)
240,000
Gross profit
52,760
Units produced and sold ÷ 3,000
Goss profit per unit
17.59

9. Sales (65×11,000) + (80×3,000) 955,000

Manufacturing cost:
Direct materials (12.5×11,000) + (25×3,000) 212,500
Direct labor (20×10,000) + (22×2,500) 255,000
Overhead 186,200
653,700
Gross margin
301,300

Test Material 3

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1. Total store overhead (110,000+138,000+96,000) 344,000

Multiply × 275,000/860,000
Overhead allocated to Beverage 110,000

2. Ordering (344,000×30%) × 250/1025 25,141

Costumer support (344,000×20%) × 350,000/900,000 26,756
Stocking shelves (344,000×40%) × 2,950/9,125 44,484
Stocking shelves (344,000×10%) × 1,750/5,175 11,633
Overhead allocated to Food section 108,044

3. Total factory overhead (budgeted)

(624,800+232,000+289,200+1,972,000+6,424,000+3,596,000+468,000) 13,606,000
Direct labor hours ÷ 76,800
Predetermined overhead rate 177.16

4. Gears (40,000×177.16) 7,086,400

Shafts (20,000×177.16) 3,543,200
Chassis (16,800×177.16) 2,976,288
Budgeted overhead applied to three jobs 13,605,888

5. Direct materials (20,000×120) 2,400,000

Direct labor (40,000×20) 800,000
Overhead (40,000×177.16) 7,086,400
Manufacturing cost 10,286,400
Units produced ÷ 20,000
Manufacturing cost per unit of Gear 514.32

6. Overhead allocated to Gears:

Materials handling (624,800÷3,320,000) × 2,400,000 451,663
Production scheduling (232,000÷140) × 80 132,571
Set ups (289,200÷88) × 40 131,455
Manual machinery (1,972,000÷76,800) × 40,000 1,027,083
Automated machinery (6,424,000÷95,600) × 60,000 4,031,799
Finishing (3,596,000÷76,800) × 40,000 1,872,917
Packaging and shipping (468,000÷5,140) × 2,000 182,101
7,829,589

Materials handling (624,800÷3,320,000) × 640,000 120,443

Overhead allocated to Shafts:
Production scheduling (232,000÷140) × 40 66,286

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Set ups (289,200÷88) × 20 65,727

Manual machinery (1,972,000÷76,800) × 20,000 513,542
Automated machinery (6,424,000÷95,600) × 30,000 2,015,900
Finishing (3,596,000÷76,800) × 20,000 936,458
Packaging and shipping (468,000÷5,140) × 3,000 273,152 3,991,508

Overhead allocated to Chassis:

Materials handling (624,800÷3,320,000) × 280,000 52,694
Production scheduling (232,000÷140) × 20 33,143
Set ups (289,200÷88) × 28 92,018
Manual machinery (1,972,000÷76,800) × 16,800 431,375
Automated machinery (6,424,000÷95,600) × 5,600 376,301
Finishing (3,596,000÷76,800) × 16,800 786,625
Packaging and shipping (468,000÷5,140) × 140 12,747 1,784,903

Total overhead applied to the three jobs 13,606,000

7. Direct materials (4,000×160) 640,000

Direct labor (20,000×25) 500,000
Overhead 3,991,508
Manufacturing cost of product Shafts 5,131,508

8. Accommodation Food section

Administration:
(640,000×30/50) 384,000
(640,000×20/50) 256,000
Building maintenance:
(750,000×60%/80%) 562,500
(750,000×20%/80%) 187,500
Total support cost 946,500 443,500

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

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Alteration (12,000×6/200) 360

Cleaning and Preparation (60,000×10/750) 800
General overhead (43,650×2/900) 97
Total costs assigned to Gerry Punch 1,357

CHAPTER 6- JOB ORDER COSTING

Summary of Answers
Exercise 6-1 e. P48 000 e.P95 500 e.- 2.a.P1 100 000
(Table) FI.a P52 000 FI.a.P52 000 b.P1 082 000
b.P88 000 b.P88 000 Exercise 6-3 c.P1 374 500
Exercise 6-2 c. P80 000 c.P80 000 1.P93 000 d. entries
1.AD P12 d. P60 000 d.P60 000 2.P75 000
FD P8 e. P24 000 e.P24 000 3.P75 000 3. (FS)
4. P4 800
2.AD.a P96 000 3.ADa.P165 000 4.ADaP109560 5. P38 400 Exercises 6-7 to 6-9
b. P168 000 b.P275 000 b.P179 600 6. P80 800 (Entries)
c. P108 000 c.P197 500 C.P130 700 Exercise 6-4
d. P72 000 d.P155 000 d.- 1. (T-accounts)

Test Material 1 9.P1 860 000 Test Material 2 11.P9 500 P332140
1.P315.6 10/11.P1 216.58 1.P45 500 12.P1 932 750 P396560
2.P78 000 12.entry 2.P4 320 000 13.P10 180 18.P448071.43
P130 000 13.P3193 3.P1 995 000 14.P30/11 P474485.71
P90 000 14.P642 500 4.P449 333 15.P281795 P566514.29
3. 1.6 15.P36 000 5.P2333.33 P316 440 19-20 Entries
4.P32 000 16.P50 6.P490 800 P378700
5.P60 700 17.P52.65 7.P98 800 16. P31765
6.P98 600 18.P61 440 8.P4 130 000 P15700
7.P81 500 19.P128 640 9.P5 114 286 P17860
8.P777 995 20.P136.32 10.P1 184 286 17.P313650

Test Material 3 Test Material 4

1.A 11.A 21.A 1.A 11.A
2.D 12.C 22.D 2.B 12.B
3.A 13.A 23.A 3.A 13.B
4.D 14.D 24.E 4.A 14.B
5.A 15.B 25.B 5.A 15.A
6.B 16.C 6.B 16.A
7.B 17.E 7.D 17.A
8.C 18.C 8.D 18.A
9.B 19.A 9.D 19.B
10.C 20.E 10.D 20.C
______________________________________________________________________________
COMPUTATIONS

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Exercise 6-2.

Manufacturing Overhead - Assembly 960,000

Divided by Direct Labor Hours - Assembly / 80,000
Predetermined Overhead rate - Assembly 12

Manufacturing Overhead - Finishing 600,000

Divided by Machine Hours - Finishing / 75,000
Predetermined Overhead rate - Finishing 8

Overhead applied to production:

Assembly Department
Job Alpha ( 8000 x 12 ) 96,000
Job Beta ( 14000 x 12 ) 168,000
Job Charlie ( 9000 x 12 ) 108,000
Job Delta ( 6000 x 12 ) 72,000
Job Echo ( 4000 x 12) 48,000 492,000

Finishing Department
Job Alpha ( 6500 x 8 ) 52,000
Job Beta ( 11000 x 8 ) 88,000
Job Charlie ( 10000 x 8 ) 80,000
Job Delta ( 7500 x 8 ) 60,000
Job Echo ( 3000 x 8 ) 24,000 304,000
Total 796,000

Cost to Manufacture Each Job Job Job Job

Job Alpha Job Beta Charlie Delta Echo Total
Assembly
Direct Materials 25,000 30,000 40,000 50,000 25,000 170,000
Direct Labor
Alpha ( 8000 x 5.5 ) 44,000
Beta ( 14000 x 5.5 ) 77,000
Charlie ( 9000 x 5.5 ) 49,500
Delta ( 6000 x 5.5 ) 33,000
Echo ( 4000 x 5.5 ) 22,500 226,000
Factory Overhead 96,000 168,000 108,000 72,000 48,000 492,000
Total 165,000 275,000 197,500 155,000 95,500 888,000

Finishing

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Direct Materials 12,000 25,000 30,000 2,000 5,000 74,000

Direct Labor
Alpha ( 1800 x 5.5 ) 9,900
Beta ( 2000 x 5.5 ) 11,000
Charlie ( 3500 x 5.5 ) 19,250
Delta ( 3200 x 5.5 ) 17,600
Echo ( 2800 X 5.5 ) 15,400 73,150
Factory Overhead 52,000 88,000 80,000 60,000 24,000 304,000
Total 73,900 124,000 129,250 79,600 44,400 451,150

Gross Profit assuming the jobs are sold at cost + 40% mark - up :
Job Alpha Job Beta Job Charlie Job Delta Job Echo Total
Assembly 165,000 275,000 197,500 155,000 95,500 888,000
Finishing 73,900 124,000 129,250 79,600 44,400 451,150
Total 238,900 399,000 326,750 234,600 139,900 1,339,150
Add:
Beginning
Balance 35,000 50,000 - - -
Balance 273,900 449,000 326,750 234,600 139,900 1,424,150
Multiply by x x x x
Mark-up 1.4 1.4 x 1.4 1.4 1.4
Sales Price 383,460 628,600 457,450 328,440 -
Cost of
Sales 273,900 449,000 326,750 -
Gross Profit 109,560 179,600 130,700 - - 419,860

Exercise 6 - 3

1. Work in Process - Obama 52,000

Work in Process - Nixon 41,000
Work in Process - Bush 12,000
Total Work in Process - July 105,000
Less: Cost of Jobs Completed (12,000)
Work in Process, end 93,000

2. Work in Process, beginning 93,000

Add: Work in Process- Obama 44,000
Work in Process- Nixon 39,000
Work in Process- GMA 47,000
Work in Process- FVR 39,000 111,000
Total 277,000
Less: Job Completed - Obama
(52000 + 44000) (202,000)
Work in Process, end 75,000

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3. Work in Process, beginning 166,000

Add: Work in Process - Nixon 30,000
Work in Process - GMA 45,000
Work in Process - FVR 36,000 111,000
Total 277,000
Less: Jobs Completed
Nixon (41000+39000+30000) 110,000
GMA (47000 + 45000) 92,000 (202,000)
Work in Process, end 75,000

4. Jobs Completed - July 12,000

Multiply by Gross Profit Rate x 0.4
Gross Profit - August 4,800

5. Jobs Completed - August

(52000+44000) 96,000
Multiply by Gross Profit Rate x 0.4
Gross Profit - September 38,400

6. Jobs Completed - September

Nixon (41000+39000+30000) 110,000
GMA (47000+45000) 92,000 202,000
Multiply by Gross Profit Rate x 0.4
Gross Profit - October 80,800

Exercises 6 - 4

End. Bal - 250,000

Raw Materials
Beg. Bal.- 100,000 500,000 - Issued
Purchases - 650,000 Finished Goods
End. Bal. - 250,000
Beg. Bal. - 720,000 1,374,500 - Jobs Sold
Completed-1,082,000
End. Bal- 427,500

Cost of Sales
Work in Process Jobs Sold- 1,374,500
Beg. Bal.- 232,000 1,082,000 - Completed
Materials- 475,000
Direct Labor- 250,000
Overhead- 375,000

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Manufacturing Overhead Electricity - 36,000

Indirect Mat. - 25,000 375,000 - Applied OH Tax&Licenses-12,000
Indirect Labor-75,000 Misc. Cost - 20,000
Insurance - 30,000 Overapplied - 105,000
Rent - 60,000
Maintenance - 12,000

Job 500 - Sold

Factory
Direct Materials Direct Labor Overhead
Beginning Balances 22,000 48,000 72,000
Add: Direct Materials (500,000 x 25%) 125,000
Direct Labor (250,000 x 25%) 62,500
Factory Overhead (62,500 x 150%) 93,750
Total 147,000 110,500 165,750

Job 600 - Completed and in the warehouse

Factory
Direct Materials Direct Labor Overhead
Beginning Balances 15,000 30,000 45,000
Add: Direct Materials (500,000 x 30%) 150,000
Direct Labor (250,000 x 30%) 75,000
Factory Overhead (75,000 x 150%) 112,500
Total 165,000 105,000 157,500

Job 700 - Unfinished

Factory
Direct Materials Direct Labor Overhead
Direct Materials (500,000 x 25%) 125,000
Direct Labor (250,000 x 20%) 50,000
Factory Overhead (50,000 x 150%) 75,000

Job 800 - Sold

Factory
Direct Materials Direct Labor Overhead
Direct Materials (500,000 x 15%) 75,000
Direct Labor (250,000 x 25%) 62,500
Factory Overhead (50,000 x 150%) 93,750

2.) (a.) Direct Materials (500,000 x 95%) 475,000

Direct Labor 250,000
Factory Overhead (250,000 x 150%) 375,000
Total Factory Cost 1,100,000

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(b.) Work in Process, beginning 232,000

Add: Factory Cost 1,100,000
Total cost put into process 1,332,000
Less: Work in process, end (250,000)
Cost of Goods Completed 1,082,000

Finished
(c.) Work in Process Goods Cost of Sales
Balances 250,000 427,500 1,374,500
/ /
Divided by / 2,052,000 2,052,000 2,052,000
0. 0.
Percentage 0. 1218 2083 6698
x x x
Multiply by Overapplied Overhead 105,000 105,000 105,000
Adjusted Amount 12,789 21,872 70,329

Cost of Goods Manufactured 1,082,000

Add: Finished Goods,beginning 720,000
Cost of Goods Available for Sale 1,802,000
Less: Job Unsold (427,500)
Cost of Goods Sold 1,374,500
Less: Overapplied overhead (70,329)
Cost of Sales - Adjusted 1,304,171

(d.) Work in Process, beginning 232,000

Add: Direct Materials 475,000
Direct Labor 250,000
Factory Overhead 375,000 1,100,000
Total 1,332,000
Less: Job Completed (1,082,000)
Overapplied Overhead (12,789)
Work in Process, end 237,211

Finished Goods, beginning 720,000

Add: Jobs Completed 1,082,000
Total 1,802,000
Less: Jobs Sold
Job 500 423,250
Job 400 320,000
Job 300 400,000
Job 800 231,250 (1,374,500)
Balance 427,500
Less: Overapplied Overhead (21,872)
Finished Goods, end 405,629

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Beginning Balance 100,000

Add: Raw Materials Purchased 650,000
Total 750,000
Less: Materials used in production (500,000)
Raw Materials, end 250,000

3.)
Manila Manufacturing Company
Statement of Cost Manufactured and Sold
September 30, 2012

Work in Process,beginning 232,000

Add: Direct Materials 475,000
Direct Labor 250,000
Factory Overhead 375,000 1,100,000
Total Cost Put into Process 1,332,000
Less: Work in Process,end (237,211)
Cost of Goods Manufactured 1,094,789
Add: Finished Goods,beginning 720,000
Less: Finished Goods,end (405,629)
Cost of Goods Sold 1,409,161

Exercises 6-5

Work in Process,beginning 22,800

Less: Direct Materials (6000+8000) (14,000)
Direct Labor (3000+2500) (5,500)
Factory Overhead 3,300
Divided by Direct Labor / 5,500
Overhead Rate 0. 6

Direct Materials issued to production:

Job 101 - 3,000
Job 102 - 2,000
Job 103 - 6,000
Job 104 - 4,500 15,500
Add: Raw Materials, end 18,000
Less: Raw Materials, beginning (15,000)
Raw Materials Purchased 18,500

Entries:
(1) Raw Materials 18,500
Cash 18,500

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(2) Work in Process 15,500

Raw Materials 15,500

(3) Factory Payroll 7,500

Cash 7,500

(4) Work in Process 7,500

Factory Payroll 7,500

(5) Finished Goods 32,440

Work in Process 32,440

Job 1 Job 2 Total

Direct Materials 9,000 10,000 19,000
Direct Labor 4,400 4,000 8,400
Manufacturing Overhead
(4400 x 0.6) 2,640
(4000 x 0.6) 2,400 5,040
Total 16,040 16,400 32,440

Exercise 6-6
CASE A
(a) Work in Process 720,000
Raw Materials 300,000
Payroll 180,000
Manufacturing Overhead 240,000

(b) Spoiled goods 16,000

Manufacturing Overhead 32,000
Work in Process 48,000
(c) Finished goods 672,000
Work in Process 672,000

(d) Accounts Receivable 1,008,000

Sales 1,008,000

(e) Cost of goods sold 672,000

Finished goods 672,000

COST PER UNIT 480

CASE B

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(a) Work in process 5,320,000

Raw Materials 1,320,000
Payroll 1,600,000
Manufacturing Overhead 2,400,000

(b) Work in process 100,000

Raw Materials 20,000
Payroll 32,000
Manufacturing overhead 48,000

(c) Finished goods 5,320,000

Work in Process 5,320,000

(d) Accounts Receivable 8,512,000

Sales 8,512,000
Cost of goods sold 5,320,000
Finished goods 5,320,000

EXERCISE 6-7 (a)

Work in Process 870,000
Material 625,000
Payroll 120,000
MOH 125,000

Work in Process 19,600

Factory payroll 9,600
Manufacturing Overhaead 10,000

Finished Goods 889,600

Work in process 889,600

(b)
Work in Process 4,840,000
Material 1,320,000
Direct Labor 1,600,000
MOH 1,920,000

Spoild 50,000
Work in Process 50,000

Finished Goods(4840000-50000) 4,790,000

Work in Process 4,790,000

Account Receivable 10,538,000

Sales 10,538,000

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Cost of Good sold 4,790,000

Finished Goods 4,790,000

EXERCISE6-8
Work in Process 158,750
Material 40,000
Labor 56,250
MOH 62500

Spoild Goods 4,000

MOH 11,875
Work in Process 15,875

Finished Goods 143,875

Work in process 143,875

Accounts Receivable 36,000

Sales 36,000

Cost of Goods Sold 142,875

Finished Goods 142,875

Test Material 1 1.)

MOLDING PAINTING

FACTORY OVERHEAD 602,000 735,000

Divide By: MACHINE HOURS 70,000 420,000

OVERHEAD RATE 8.6 1.75

Direct Materials 47,000 + 63,200 = 110,200
Direct Labor 9,000 + 68,000 = 77,000
Overhead (1,100 x 8.6) = 9,460
(1.75 x 68,000) = 119,000
Total Manufacturing Cost 315,600
Divide By: (No. Of Units) 100
Unit Product Cost 315.60
=======

2.) Purchases of Raw Materials 290,000

Raw Materials, Beginning 18,000
Raw Materials Available 308,000

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Prime Cost 410,000

Direct Labor Cost 180,000
Direct Materials 230,000
Add: Raw Materials Available 308,000
Raw Material lost from Fire 78,000
======

Conversion Cost (180,000/30%) 600,000

Less: Direct Labor 180,000
Overhead 420,000
Add: Prime Cost 410,000
Total Manufacturing Cost 830,000
Work in Process 65,000
Cost of Goods Manufactured
(830,000-65,000) (765,000)
Work in Process Lost from Fire 130,000
======

Cost of Goods Available for Sale 810,000

Less: Cost of Goods Sold
(Sales 1,200,000 x 60%) 720,000
Finished Goods Lost from Fire 90,000
======
3.)
JOB
#105 #106

20,800 + 11,200
OVERHEAD 13,200 + 7,000

= 1.6

4.) Direct Labor

Job#105 4,000
Job#106 6,000
Job#107 10,000 20,000
Multiply By
Predetermined OH Rate 1.6
Total OH Cost Applied During June 32,000
=====
5.) Job # 105
May Costs:
Direct Materials 16,500
Direct Labor 13,000
Overhead 20,800 50,300

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Add: June Costs:

Direct Materials ----------
Direct Labor 4,000
Overhead (4,000 x 1.6) 6,400 10,400
Total Cost of Goods manufactured 60,700

6.) May Costs:

Direct Materials 9,300
Direct Labor 7,000
Overhead 11,200
Add: June Costs
Direct Materials 8,200 21,300
Direct Labor 6,000 10,000
Overhead (6000 x 1.6) 9,600 23,800
(10,000 x 1.6) 16,000
Total May and June Costs 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 #
105 106 107 TOTAL
June Costs:
Direct Materials -------- 8,200 21,300 29,500
Direct Labor 4,000 6,000 10,000 20,000
Overhead 6,400 9,600 10,000 32,000
Total Amount Debited to Work in Process in June 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 Unit 777,995
========
9.) Cost of Normal Units 7,750,000
Divide By: No. Of Units 10
Cost per Unit 775,000
Multiply 2.4

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Billing Price Per Unit 1,860,000

========
10.) Cost per Pair of Marikina Shoe Company
Materials 200.00
Labor 450.00
Overhead (125% of DL) 562.50
Manufacturing Cost/Good Unit 1,212.50
=======
11.) Manufacturing Cost per Good Unit 1,212.50
Multiply By: No. Of Good Units 10,000
12,125,000
Less: Salvage Value 20,000
12,105,000
Divide By: No. Of Good Units 9,950
Manufacturing Cost per Unit 1,216.58
=========

12.) Work in Process 30,000

Manufacturing Overhead 30,000
Accrued Payroll 60,000

13.)

BAKER COMPANY

FABRICATING FINISHING TOTAL

Direct Materials 1,590 570 2,160

Direct Labor (429/1.5) 286 48 334
Overhead 429
(15 x 18) 270 699
Total Cost of Job # 639 3,193
=====
14.) MARGARITA COMPANY
Raw Material, Purchases 135,000
Less: Raw Materials increased by (75,000)
Materials Beginning 60,000
Less: Indirect Materials (20,000)
Direct Materials 40,000
Total Changes to Work in Process 960,000
Less: Direct Materials (40,000)
Factory Overhead (277,500)
Direct Labor Component of Job#500 642,500

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========

15.) Number of Employees 50

Multiply: No. Of days 2
100
Multiply: No. of Hrs Worked 8
800
Multiply: 45
Amount of Direct Labor Charged
To the Order 36,000
=======
16.) Work in Process 460,000
Cost of Goods Sold 1,440,000
Finished Goods 500,000
2,400,000
Divided By: 48,000
Predetermined Overhead Rate 50
=======

17.) Work in Process, beg. 40 500

Direct Material 243 000
Direct Labor 162 000
Factory Overhead 129 600
Debits to Finished Goods ( 486 000 )
Work in Process, end. 89 100
Factory Overhead = 80 % x Direct Labor
= 80 % x 20 250
= 16 200
Total Cost 89 100
Direct Labor 20 250
Factory overhead 16 200
Direct Material 52 650

18.) PW 100, Direct Labor 38,400

Multiply: Overhead Applied to
Direct Labor Cost 60%
23,040
Add: Direct Labor 38,400
Cost of Job PW 100, Beg. Of Month 61,440
========

19.) Direct Labor 42,000

Overhead (42,000 x 60%) 25,200
Cost 67,200
Add: Cost of Job PW 100, Beg 61,440

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Cost of Job PW 100, End of Month 128,640

======

20.) Total Direct Labor Costs for All Jobs 247,200

Completion Cost Required for PW100 in DL (42,000)
Labor Used in PW200 (120,000)
Direct Labor Charged to PW300 85,200
Add: Overhead (85,200 x 60%) 51,120
Cost of Job PW300 136,320
======

Test Material 2

1.)
Fixed Overhead 320,000
Add: Over applied Overhead 44,000
Applied Overhead 364,000
Divide By: 8
Machine Hrs Worked during the Period 45,500
======
2.) Total Hours 4,000
Less: Not Billable to Clients 400
Number of Hours 3,600
Multiply: Amount Billed to Clients 1,200
Revenue 4,320,000
=======

3.) Revenue 4,320,000

Direct Labor (3,600 x 450) (1,620,000)
Overhead (450,000/40,000) x 3,600 (405,000)
Gross Profit 2,295,000
Less: Expenses (300,000)
Net Profit 1,995,000
========

4.) Material Cost 150,000

Direct Labor Cost (2,500 x 38.5) 96,250
Factory Overhead (5 x 25000) + 50,000 175,000
Total Cost 421,250
Multiply: Sold Swimsuits 20,000
8,425,000,000
Divide: Production 25,000
337,000
Divide By: 75%
Sales Revenue 449,333
=========

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5.) Sales Revenue 449,300

Multiply: Gross Profit Rate 25%
112,333
Less: (20,000 x 2 + 70,000) 110,000
Net Profit 2,333.33
=========

6.) Total Revenue 1st Quarter 1,180,000

Less: TMC (494,000 x 80%) 395,000
784,000
Less: Gen. and Admin. Expenses 294,000
Net Income for the Quarter 490,800
=======

7.) Total Manufacturing Cost 494,000

Multiply By: 20%
Finished Goods Inventory, End 98,800
========
8.) Total Manufacturing Cost 3,430,000
Add: Work in Process, Beginning 400,000
Less: Work in Process, End 150,000
Cost of Goods Manufactured 3,680,000
Add: Finished Goods, Beginning 450,000
Goods Available for Sale 4,130,000
========
9.) Goods Available for Sale 4,130,000
Less: Finished Goods Ending 550,000
Cost of Goods Sold 3,580,000
Divide By: 70%
Total Sales for the Period 5,114,286
========
10.) Total Sales 5,114,286
Multiply By: 30%
1,534,296
Less: Selling and Admin. Expenses 350,000
Net Income for the Period 1,184,286
========
11.) Total Factory Overhead 80,000
(Variable OH 60,000 + Fixed PH 20,000)
Divide: Units 10,000
Factory Overhead/Unit 8
Applied Overhead (79,000-3000) 76,000
Divide By: FOH/Unit 8
Number of Units Produced 9,500
========
12.) Work in Process:

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Beginning Balance 660,000

Direct Materials 574,000
Direct Labor 835,000
Overhead Applied 715,000
2,784,000
Less: Jobs Completed
Job Alpha 329,750
Job Beta 164,000
Job Charlie 270,000
Job Delta 87,500 (851,250)
Coat of Unfinished Jobs 1,932,750
========
13.) Direct Materials 17,750
Direct Labor 3,500
Applied Overhead (3,500 x 120%) 4,200
Total Cost 25,450
Multiply By: 40%
Gross Profit on Order 10,180
======
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 JOB 200 JOB 300
Direct Materials 237,000 294,400 350,000
Direct Labor Hours
(450 x 48) 21,600
(230 x 48) 11,040
(300 x 48) 14,400
258,600 305,440 364,400
Add: (425 x 55) 23,375
(200 x 55) 11,000
(260 x 55) 14,300
Prime Cost 281,975 316,440 378,700

============================================

16.)
JOB#100 JOB#200 JOB#300

Direct Labor Hrs-Dept.2 425 200 300

Multiply By: Predetermined

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Overhead Rate-Dept.2 11 11 11
4,675 2,200 2,860
Add: Machine Hrs.-Dept. 1
x Predetermined OH Rate
(900 x 30) 27,000
(450 x 30) 13,500
(500 x 30) 15,000
Overhead Applied to Each Job 31,675 15,700 17,860

17.)
JOB#100 JOB#200 JOB#300
Prime Cost 281,975 316,440 378,700
Add: OH Applied
To Each Job 31,675 15,700 17,860
Total Cost 313,650 332,140 396,560

18.) JOB#100 JOB#200 JOB#300

Total Cost 313,650 332,140 396,560
Divide By: 70% 70% 70%
Billing Price 448,071.43 474,485.71 566,514.29

19.) Work in Process 24,000

Labor Rate Variance 395
Payroll 24,095
Labor Efficiency Variance 300

STANDARD ACTUAL
Direct Labor .40 Hours 1,975
Multiply: Cost/Hour 12 12.20
4.8 Payroll 24,095
Multiply: Units Produced 5000
Work in Process 24,000

20.)
Work in Process (10,000 x 3.25) 32,500
Material Quantity Variance 1,625
Material Inventory (10,500 x 3.15) 33,075
Material Price Variance 1,050

Difference in Price 3.25 Units Produced 5,000

3.15 Multiply: 2
.10 10,000
Direct Material Used 10,500 Less: 10,500
Material Price Var. 1050 Multiply: 3.25
==== Material Quantity Var. 1,625

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TEST MATERIAL 3

1.) Manufacturing Overhead-G101 255

Divide by: Direct Labor-G101 510
Predetermined OH Rate .5
Multiply: Direct Labor-G102 289
Overhead Charged to G-102 A. 144.50
=====

2.) DEPARTMENT 1
Manufacturing OH 429
Divide By: 1.5
Direct Labor Cost 286
Add: Direct Materials 1,590
MOH 429 2,305

DEPARTMENT 2
Machine Time 15
Multiply: 18
MOH 270
Add: Direct Materials 580
Direct Labor Cost 48 898
Total Cost of Job-H200 D. 3,203
=====

3. A101 B101 C101 TOTAL

Raw Materials:
(120,000 x 30%) 36,000
(120,000 x 25%) 30,000
(120,000 x 25%) 30,000 96,000
Add: Direct Labor
(2,500 x 8.5) 21,250
(3,100 x 8.5) 26,350
(4,200 x 8.5) 35,700 83,300
Prime Cost A.179,300
======

4.) B101
Direct Labor Cost 26,350
Multiply: 120%
Total Amt. Of OH Apllied to Job B-101 D. 31,620
======
5.) Direct Materials ( 120 000 x 80%) 96 000
Direct Labor ( 2 500 + 3 100 + 4 200) x 8.50 33 300
Prime Costs 179 300

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=======
6.) JOB 300
Manufacturing Overhead 7,200
Divide By: 120%
Direct Labor-Job 300 A. 6,000
=======

7.) JOB 400

Direct materials 2,000
Direct Labor 9,000
Manufacturing OH (9,000 x 120%) 10,800
Total Cost- Job 400 B. 21,800
======
8.)
Direct Material Used 10,400
Direct Labor 8,000
Manufacturing OH 8,800
Total Manufacturing Cost 27,200
Add: Work in Process, Beg 2,400
Goods Put into Process 29,600
Less: Work in Process, End 1,800
Cost of Goods Manufactured C. 27,800
=======

9.) Cost of Goods Manufactured 27,800

Add: Finished Goods, Beg 1,200
Cost of Goods Available for Sale 29,000
Less: Finished Goods, End 1,000
Cost of Goods Sold B. 28,000
=====

10.) Total Factory Costs 686 000

Raw Materials Used 386 000
Conversion Costs 360 000
divide by: 1.60
Direct Labor C. 225 000

11.) Total Manufacturing Cost 686,000

Add: Work in Process, Beg 80,000
Goods Put Into Process 766,000
Less: Work in Process, End 30,000
Cost of Goods Manufactured A. 736,000
======
12.& 13.

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Raw Materials beg. 134 000

Raw Materials purchased 1 093 400
Raw Materials end. ( 250 000)
Raw Materials used 977 400
Direct Labor ( 39 800 x 42.5) 1 691 500
Overhead ( 1 691 500 x 80%) 1 353 200
Total Factory Cost A. 4 022 100
WIP, beg. 354 000
WIP, end. ( 354 000 + 80 000) (434 000)
Cost of Goods Manufactured A. 3 942 100

15.
Office Salaries 42 200
Utilities Cost ( 17 400 x 40%) 6 960
Depreciation 10 000
Rent Expense (24 000 x 40%) 9000
Period Costs incurred - July B. 68 760
16.
Direct Materials 42 400
Direct Labor 100 000
Factory Overhead
Indirect Materials 5 000
Indirect Labor 14 000
Utilities Cost (17 400 x 60%) 10 440
Depreciation 18 000
Rent (24 000 x 60%) 14 400 61 840
Total Factory Costs C. 204 240
17. Total Factory Costs 204 240
Work in Process, beg. 26 000
Work in Process, end. 16 600
Cost of Goods Manufactured 213 640
Finished Goods, beg. 10 000
Finished Goods, end. 19 800
`Cost of Goods Sold 203 840

Sales - 100% (203 840 x 2) 407 680

Cost of Goods Sold - 50% 203 840
Gross Profit - 50% E. 203 840

18.
Raw Materials Requisitioned 148 500
Indirect Materials 19 00
Direct Materials issued to production C. 129 500

21. A.

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Cost of Sales 4 500

Work in Process 4 500

24..
Job 100:
Materials used 7 440
Direct Labor ( 3 600 x 30) 108 000
Overhead ( 3 600 x 37.50) 135 000
Total Cost of Job 100 250 440
Gross Margin rate x 25%
Gross Margin A. 62 610

23. Materials 12 000

Labor 1 500
Overhead 4 500
Total amount remove from WIP A. 18 000

TEST MATERIAL 4

1. Finished goods inventory 49 500

Cost of Goods Sold 74 500
Cost of Goods Completed (102 000)
Finished Goods, beginning balance A. 22 000

2. Materials requisitioned (37 200 + 35 200) 72 400

Direct Labor Costs (14 400 + 17 500) 31 900
Overhead costs (360 + 400) x P30 22 800
Cost of Goods Manufactured B.127 100
6. Raw Materials Inventory, beg. 30 000
Raw Materials purchases 5 000
Materials requisitioned (7 300)
Raw Materials Inventory, end. B. 27 700

7. Total Manufacturing costs 99 000

Goods Completed (99 000 x 52000 / 55 000) 93 600
Loss from Spoilage 5 400

8. Job B4:
Direct Materials (14 000 + 3 000) 17 000
Direct Labor Costs (14 400 + 17 500) 31 900
Overhead: Machining 6 617
Finishing 2 408. 50 9 025.50

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Total Manufacturing Costs 27 875.50

No. of Units ÷ 200
Manufacturing cost per unit A.139.38

Machining:
Manufacturing OH 11 200 000
Machine Hours ÷ 220 000
OH rate 50.91
Actual Machine Hours x 130
OH applied 6 617

Finishing:
Manufacturing OH 7 900 000
DL costs 4 100 000
OH rate 1.9268
Actual DL costs 1 250
OH applied 2 408.50

10.
From Tanning Dept. (10 sq .ft. x P3) x 200 6 000
From Assembly Dept. (3MH x P9) x 200 5 400
From Saddle Dept. (10 DLH x P4) x 200 8 000
Total OH applied to Job 305 D.19 400

11.
Direct Labor (10 DLH x P8) x 200 25 000
OH applied 19 400
Conversion Costs A.35 400

12..
Direct Materials (10 sq. ft. x P12.50) x 200 25 000
Direct Labor Cost 16 000
Prime Costs B.41 000

13..
Direct Materials 25 000
Direct Labor Cost 16 000
OH applied 19 400
Total Manufacturing costs 60 400
No. of sets 200
Manufacturing Costs per set B. 302

14.

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Material cost :
Material related OH 1 280 000
Cost of materials used on jobs 3 200 000
OH rate .40
Machine Time:
Machine related OH 2 200 000
Machine hours 400 000
OH rate 5.5

Budgeted overhead
(42000 + 16400 + 78 000) x .40 113600
(17000 + 9000 + 5800) x 5.5 174900 288 500
Actual Overhead 118400
185600 304 000
Total amount of OH variance (underapplied) B.15 500

15. Materials Costs 42 000

Direct Labor 32 000
Applied Overhead (42 000 x .40) + (17 000 x 5.5) 110 300
Total cost of Job X2 A. 184 300

16. Direct Labor 289

÷ 2
Overhead applied - Job 657 A.144.50

17. Total WIP at the end of the mo. 6 800

Total costs of other jobs 3 981
2 819
Less: Direct labor cost - Job 750 (714 x 2) 1 428
OH applied - Job 750 714
Direct Materials included in Job 750 A. 677

18.
Direct Materials (10 000 + 20 000 + 15 000) 45000
Direct Labor (5 000 + 4 000 + 2 500) 11500
Applied Overhead (11 500 x 2) 23000
Total Factory Costs 79500

19. Direct Labor hours (2 500 + 3 100 + 4 200) 9 800

Direct Labor per hour x 8.50
Direct Labor Costs 83 300

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120%
Total applied Overhead B. 99 960

20. Direct Materials [120 000 x (30% + 25%)] 66 000

Direct Labor (2 500 + 3 100) x 8.50 47 600
Applied Overhead (47 600 x 2) 57 120
Work in Process, ending balance C. 170 720

21. Actual quantity 1 000

Standard price - actual price [ 9.90 - (10 000/1 000)] x .10
Unfavorable Material Price Variance A. 100

22. Standard Price 9.90

Standard quantity - Actual quantity
[( 9.90 x 10 000) 10 000] x 100
Unfavorable Material Price Variance C. 990

23. Standard Direct Labor Hours 12 000

Standard Rate per DLH x 24
Amount of Labor charged to WIP B.228 000

24. Units Completed 3 000

Standard Cost per Unit ( 4 x 3) x 12
Materials Component of work Completed A. 36 000

26. Units reworked 100

Direct Labor + Overhead (12 + 18) x 30/unit
Charged to Manufacturing Overhead C. 3 000

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PROBLEMS
Problem 6-1 JOURNAL ENTRIES
a. Raw Materials 826,000
Accounts Payable 826,000

b. Work in Process 755,000

Manufacturing Overhead 30,000
Raw Materials 785,000

c. Manufacturing Overhead 116,000

Cash 116,000

d. Manufacturing Overhead 190,000

Accumulated Depreciation 190,000

e. Marketing and Administrative Expense 250,000

Cash 250,000
f. Work in Process 1,000,000
Manufacturing Overhead 250,000
Factory Payroll 1,250,000

g. Factory Payroll 1,000,000

SSS, PhilHEALTH, Pag-IBIG Payable 200,000
Accrued Wages Payable 800,000

h. Work in Process 800,000

Manufacturing Overhead 800,000

i. Expenses 56,000
Cash 56,000

j. Manufacturing Overhead 40,000

Insurance Expenses 10,000
Prepaid Insurance 50,000

k. Accounts Receivable 254,800

Sales 254,800

Cost of Sales 182,000

Finished Goods 182,000

l. Manufacturing Overhead 500,000

Miscellaneous Expense 500,000

m. Finished Goods 2,490,000

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Work in Process 2,490,000

Accounts Receivable 254,800

Sales 254,800

Cost of Sales 1,345,000

Finished Goods 1,345,000

Cost of Sales 76,000

Manufacturing Overhead 76,000

T – ACCOUNTS
Raw Materials Inventory Work in Process Inventory

Beg. 168,000 Beg. 210,000

Purchases 826,000 Materials 755,000

Issuance 785,000 Labor 1,000,000

Balance 209,000 MOH 800,000

2,490,000

Balance 209,000

Finished Goods Inventory Manufacturing Overhead

Beg. 182,000 30,000

182,000 116,000

2,490,000 190,000

1,345,000 800,000
Balance 1,145,000
40,000

500,000

Underapplied 76,000

Cost of Sales Sales

182,000 254,800

1,345,000 1,883,000

Underapplied 76,000 Bal. 2,137,800

Balance 1,603,000 Downloaded by Gil Sam (gilsamgaming@gmail.com)

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JOB COST SHEETS

JOB 101 Completed and in warehouse

Materials Labor Overhead TOTAL

Beginning WIP 105,000

Additions 180,000 150,000 120,000 450,000

Total 555,000

To FG (555,000)

JOB 102 Completed and in warehouse

Materials Labor Overhead TOTAL

Beginning WIP 105,000

Additions 125,000 200,000 160,000 485,000

Total 590,000

To FG (590,000)

JOB 103 Completed and sold

Materials Labor Overhead TOTAL

Beginning WIP 150,000 250,000 200,000 600,000

To FG (600,000)

JOB 104 Completed and Sold

Materials Labor Overhead TOTAL

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Incurred 205,000 300,000 240,000 745,000

To FG (745,000)

JOB 105 Unfinished

Materials Labor Overhead TOTAL

Incurred 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 168,000
Purchases 826,000
Raw Materials Available 994,000
Ending Balance 209,000
Total Raw Materials Used 785,000
Less: Indirect Materials (30,000)
Total Direct Materials Used 755,000
Direct Labor 1,000,000
Manufacturing Overhead 800,000
Total Current Manufacturing Cost 2,555,000
Beginning Balance of WIP Account 210,000
Total Cost Put into Process 2,765,000
Ending Balance of WIP 1,895,000
Cost of Goods Manufactured 870,000
PROBLEM 6-2
1. Purchases:
Beginning ( 1,596 + 2,775 ) 4,371
September 4 33,120
September 16 28,600
September 22 31,920 98,011
Issued:
September 6 37,240
September 23 42,243 (79,483)
Ending Raw Materials on hand 18,528
Divide by: 4.8
Quantity of Raw Materials on hand, end 3,860
2. Peso Value of raw Materials, end

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8,960 x 4.8 18,528

3. Direct materials ( 37,240 + 42,243 ) P 79,483
Direct Labor ( 23,680 + 25,960 ) 49,640
Overhead ( 49,640 x 1.3 ) 64,532
Factory Cost P 193,655
4. Factory Cost P 193,655
Add: Work in Process, beginning 15,112
Cost of Goods Put into Process 208,767
Less: Work in Process, end 208.767
Cost of Goods Manufactured, September 2010 P 0

5. Job No. Direct materials Direct Labor Overhead TOTAL

24-A P 17,492 P 11,218 P 14,583.4 P 43,293.4
24-B 22,648 15,790 20,527 58,965
24-C 23,844 14,892 19,359.6 58,095.6
24-D 19,870 12,410 16,133 48,413
P 83,854 P 54,310 P 70,603 P 208,767
Problem 6-3
a. Raw Materials 2,500,000
Accounts Payable 2,500,000
b. Work in Process 2,489,000
Manufacturing Overhead 36,000
Raw Materials 2,525,000
c. Accrued Payroll 3,500,000
Factory Payroll 2,200,000
Administrative Payroll 1,300,000
d. Factory Payroll 2,200,000
Administrative Payroll 1,300,000
Withholding Tax Payable 230,000
SSS Payable 83,600
PhilHEALTH Payable 28,000
Pag-IBIG Payable 76,000
Cash / Wages Payable 3,082,400
e. Work in Process 1,540,000
Manufacturing Overhead 660,000
Factory Payroll 2,200,000
f. Employee Benefit Expense 208,500
SSS Payable 104,500

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PhilHEALTH Payable 28,000

Pag-IBIG Payable 76,000
g. Manufacturing Overhead 318,000
Accumulated Depreciation 120,000
Prepaid Insurance 48,000
Other Expenses 150,000
h. Work in Process 924,000
Manufacturing Overhead 924,000
i. Finished Goods 4,930,000
Work in Process 4,930,000
j. Accounts Receivable 7,452,000
Sales 7,452,000
Cost of Goods Sold 4,968,000
Finished Goods 4,968,000
k. Cost of Goods Sold 90,000
Manufacturing Overhead 90,000

Chapter 7 – Process Costing System

Summary of Answers
TM3 TM4 TM5
1. B 11. A 1. 0.6125 11.80000 , 56000 1.71666.67
2. A 12. C 2. 3675 12.95000 2.73333.33
3. B 13. A 3.356280 13.9600 3.71000
4. B 14. E 4. 5000 14.3.42 4.11 700 , 10 000
5. A 15. B 5.N/A 15.3.99 5. N/A
6. A 16. A 6.48600 16.N/A 6. N/A
7. E 17. C 7.203000 17.N/A 7. N/A
8. E 8.8.9 18.80 800, 85 600, 86 400 8.42500 , 45 500
9. C 9.45320 19.N/A 9. N/A
10.E 10.1500 20.N/A 10.N/A

Exercise 7-1
1.M 25000 3. 29.97 6.A 16.A 4.B
L 23400 4. 1 285 000 7.D 5.B
O 23400 5.1 075 175 8.A Problems 7-1 to 6.E
2. 4.07 9.C .Problem 7-4 7.D

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3.93610 Exercise 7-6 10.A (table) 8.C

4. 4700 1.C 11.D 9.C
2..D 12.B TM1 10.D
Exercise 7-4 3.C 13.C 1.B 11.A
1. 35 000 4.C 14.B 2.B 12.A
2. 32 500 5.B 15.C 3.A 13.D

14.B 25.B 4.D 15.C 5.A

15.D 26.A 5.D 16.A 6.D
16.A 27.D 6.D 17.D 7.E
17.A 28.B 7.D 18.B 8.E
18.C 29.C 8.C 19.D 9.C
19.D 30.B 9.D 10.D
20.D 10.B TM3 11.A
21.A TM2 11.C 1.B 12.D
22.B 1.E 12.C 2,A 13.A
23.C 2.A 13.B 3.B 14.E
24.A 3.A 14.B 4.B 15.B

______________________________________________________________________________
COMPUTATIONS:

EXERCISE 7-1

EUP
1 Actual Units Materials Labor Overhead

WIP, beg 5000

Started 20000
Units t account 25000

Completed 23000 23000 23000 23000

WIP, beg 2000 2000 400 400
Units accounted 25000 25000 23400 23400

2 Total Materials Labor Overhead

WIP, beg 12000 6000 8000

Cost added 36000 16000 20200
Total cost 48000 22000 28200

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divided by EUP 25000 23400 23400

Cost/EUP 4.07 1.92 0.94 1.21
93610
4
Materials 3840
direct labor 376
overhead 484
WIP, end 4700
Exercise 7-5

Cost of Production Report

Mantrade Manufacturing Company

Equivalent Units of Production

Units Materials CC
WIP, beginning 500
Started 4000
Total Units to Account 4500

WIP, beginning (500x2/3) 500

333
Units Started & Completed (4000-800) 3200 3200 3200
WIP, ending (800x75%) 800 800 600
Total Units as Accounted 4500 4000 4133

Assignment of Costs
Work in process, beginning cost P 8325
Materials (500x10x18) P 90000
Conversion 40000 130000
Total Costs 138325
Work in process, end.
Materials (800x10x18) 144000
Conversion (800x75%x80)= 3000/2 15000 159000
Total Costs as Accounted 297325

Work in Process (4000x10x18) 720000

Material Price Variance (20-18)x42000 84000
Material Quantity Variance (42000-40000)x18 36000
Raw Materials (42000x20) 840000

Work in Process (4133x.5x30) 61995

Labor Rate Variance (35-30)x2600 13000
Labor Efficiency Variance (2600-2066.5)x30 16005
Payroll (2600x35) P91000

Work in Process (4133x.5)x20 41330

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Manufacturing Overhead 41330

Manufacturing Overhead 85000

Various Accounts 85000

Exercise 7-6 Multiple Choices

1. D
Unit costs:
Materials P1
Labor 2
Factory Overhead 3
Unit cost in ending inventory P6

2. A
Transferred Out 10,000
WIP,
end 7,000
Total units to be accounted for 17,000

Material
3. C s CC
Beginning Invty. -
Started 10,000
Total Units to account for 10000

Units Transferred 7,000 7,000 7,000

WIP,
end 3,000 3,000 1,500
Total units accounted for 10,000 10,000 8,500

Costs 27,000 39,950

Divide by: 10,000 8,500
Total costs transferred to 2nd
Department 7.4 2.70 4.70

Material
4. C s CC
WIP,
beg 40,000
Started 240,000

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Units to account for 280,000

Transferred out 255,000 255,000 255,000

WIP,
end 25,000 25,000 15,000
Units accounted for 280,000 280,000 270,000

Material
5. B s
WIP, beg. 17,000
Started 82,000
Units Account to for 99,000

Transferred Out 85,000 85,000

WIP,
end 14,000 14,000
Units accounted for 99,000 99,000

Cost
Beginning 12,800
Current 69,700
Total 82,500
Divide by: 99,000
Cost per EUP 0.833

6. D CC
WIP, beg. 15,000
Started 42,000
Units to account for 57,000

Transferred out 45,000 45,000

WIP,
end 12,000 9,600
Units accounted for 57,000 54,600

7. D
Materials ( 0*100) 0
CC (4,000*40%*30) 4,800
Transferred In (4,000*5) 20,000
Costs assigned to WIP, end 24,800

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8.C
WIP, beg. 7,000
Started 32,000
Units to account for 39,000
less: WIP, end 2,500
Transferred out 36,500

Material
9. B & 10. A s CC
WIP, beg. 7,000
Started 32,000
Units Account to for 39,000

WIP,beg
. 7,000 - 4,200
Transferred Out 29,500 29,500 29,500
WIP,
end 2,500 2,500 625
Units accounted for 39,000 32,00 34,325

11. D & 12. Material

B s CC
Transferred Out 36,500 36,500 36,500
WIP,
end 2,500 2,500 625
Units accounted for 39,000 39,000 37,125

13. C & 14. B Mat. A Mat. B CC

WIP, beg. 700
Started 2,000
Units Account to for 2,700

WIP,beg
. 700 - 490 280
Transferred Out 1,500 1,500 1,500 1,500
WIP,
end 500 500 250 400
Units accounted for 2,700 2,000 2,240 2,180

15. C & 16. A Mat.A Mat. B CC

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Beg. 14,270 5,950 5,640

Current 40,000 70,000 98,100
Divide by: EUP 2,000 2,240 2,180
Cost per EUP 96.25 20 31.25 45

Problem1

EUP
Actual Units Materials Labor Overhead
WA FIFO WA FIFO WA FIFO
WIP, beg 3600
Started 7800
Units accounted for 11400

WIP, beg 3600 3000 2700 2400

S&C 6000 6000 6000 600
Completed 9600 9600 9600 9600
WIP, end 1800 360 360 600 600 200 200
Units as accounted 11400 9960 9360 10200 9300 9800 8600

Total Materials Labor Overhead

WA FIFO WA FIFO WA FIFO WA FIFO
WIP, beg 9200 4800 2000
Cost added 211760 211760 113900 113900 48400 48400
Total 220960 118700 50400
EUP 9960 9360 10200 9300 9800 8600
Cost/EUP 38.96 40.5 22.18 22.62 11.64 12.25 5.14 5.63

transferred out (9600x38.96) 374016

Mat (1800x22.18) 39924
Labor (600x11.64) 6984
OH (9800x5.14) 50372
WIP, end 97280

cost of manufactured 374016

finished goods, beg( 400x22.18) 8872

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cost of sales 382888

FIFO method:

WIP, beg 16000

Cost to be done:
Mat (3000x22.62) 67800
Labor( 2700x12.25) 33075
OH (2400x5.63) 13512
started andcompleted 243000
transferred out 373447

Mat 8143
Labor 7350
OH 1126
WIP, end 16619

cost of goods manufactured 373447

finished goods, end 40500
Cost of sales 413947

PROCESS 2
EUP
Actual Units Materials Labor Overhead
WA FIFO WA FIFO WA FIFO
WIP, beg 1200
Started 9600
Units accounted for 10800

WIP, beg 1200 800 960 900

S&C 7200 7200 7200 7200
Completed 8400 8400 8400 8400
WIP, end 2400 400 400 800 800 600 600
Units as accounted 10800 8800 8400 9200 8960 9000 8700

Total Materials Labor Overhead Transferred in

WA FIFO WA FIFO WA FIFO WA FIFO WA FIFO
WIP, beg 8000 16500 33000 47300

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Cost added 59500 59500 154560 154560 302380 302380 374016 343447
Total 67500 171060 335380 421316
EUP 8800 8400 9200 8960 9000 8700 8800 8400
Cost/EUP 111.4 103.55 7.67 7.08 18.59 17.25 37.26 34.47 47.88 44.46

WA method:

transferred out (8400x111.4) 935760

Mat (400x7.67) 3068

Labor (800x18.59) 14872
OH (600x37.26) 22356
Transferred in (400x47.88) 19152
WIP, end 59448

cost of goods sold 935760

finished goods, beg( 1000x111.4) 111400
cost of sales 1047160

FIFO method:

WIP, beg 57500

transferred in, beg 47300
Cost to be done:
Mat (800x7.08) 5664
Labor (960x17.25) 16560
OH (980x34.76) 31284 53508
Started and completed cost 74556
transferred out 232864

WIP, end
Mat. (400x7.08) 2832
Labor (800x17.25) 13800
OH( 600x 34.76) 20856
37488

cost of goods manufactured 232864

finished goods, end (1000x 103.55) 103550
cost of sales 336414

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Problem 7-4

1. Quantity of normal spoilage 4 500

2. EUP for Material X 44 200
3. EUP for Material Y 22 100
4. EUP for CC 66 300
5. Quantity of normal units spoiled 3090
6. Cost of goods manufactured 1 193 400
7. Cost of abnormal spoilage charged to 25 380
expense
8. Cost of units in process at end 2 521 800

Solution:
(1-5)
Materials CC
F&T: IP, beg 18 000 0 4500
Started & Completed 55 800 55 800 55 800
IP, end 6 000 6000 1500
Spoiled Units: normal 4500 3 090 3 090

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Abnormal 1 410 1 410

As accounted 84 300 66 300 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 Materials CC
Completed and Transferred 190,000 190,000
IP, end 30,000 24,000
EUP 220,000 214,000

Costs: Materials
IP, beg. 67,800
Current 579,000
Total 646,800
Divide by: EUP 220,000
Cost per EUP 2.94
Multiply: Units transferred 190,000
Costs associated with Units
transferred 558,600

2. B
Costs: CC
IP, beg. 29,300
Current 248,900
Total 278,200
Divide by: EUP 214,000
Cost per EUP 1.3
Multiply: Units in Ip, end 24,000
Costs associated with Units
transferred 31,200

3. A
Cost to account for 925,000

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End
Less:DM (40,000*75%*3) 90,000
CC (40,000*60%*1.31) 31,440
Transferred out 803,560

Materials CC
EUP
(WA) 220,000 214,000
Less: Beg 27,000 24,000
EUP (FIFO) 193,000 190,000
Divide by: IP, beg 578,000 248,900
Cost per EUP(FIFO) 3 1.31

4. A CC
Beg. 2,000
Started 8,000
Units to Account for 10,000

Beg. 2,000 1,000

Transferred out 5,000 5,000
Normal Spoilage 500 500
End 2,500 2,000
EUP 10,000 8,500

Costs:
Started 72,250
Divide: EUP 8,500
Cost per EUP 8.5
Multiply: units completed 7,000
CC transferred to next department 59,500

5. B Cloth
WIP, beg. 500
Started 3,300
Units Account to for 3,800

WIP,beg. 500 100

Transferred Out 2,950 2,950
WIP, end 350 245

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Units accounted for 3,800 3,295

6. E Materials CC
WIP, beg. 2,000
Started 23,000
Units to account for 25,000

Transferred out 20,000 20,000 20,000

WIP, end 5,000 - 2,000
Units accounted for 25,000 20,000 22,000

Transferred
7. E Materials CC In
Beg. - 5,450 17,050
Current 34,000 104,000 184,000
Total 34,000 109,450 201,050
Divide by: EUP 20,000 22,000 25,000
Cost per EUP 14.72 1.7 4.975 8.04

8. B
Beg 22500
Trans. In 34000
Materials 94000
CC 144000
Cost of Units 294500

9. C
Finished and transferred 40000
WIP-End 10000
total 50000

10. D
WIP, beg. 5,000
Started 24,250
Units Account to for 29,250

WIP,beg. 5,000 3,250

Transferred Out 21,750 21,750
WIP, end 2,500 2,000

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Units accounted for 29,250 27,000

Cost per EUP:

DM
(144,000/27,000) 4.22
DL (150,000/
27,000) 5.56
OH
(40,000/27,000) 1.48

21,750*11.26 244,905
3,250*4.22 13,715
3,250*5.56 18,070
3,250*1.48 4,810
Total 281,500
16,000
Cost of goods transferred to Molding Dept. 297,500

11. D
2000*4.22 8,440
2000*5.56 11,120
2000*1.48 2,960
Cost of IP, end in Mixing
Dept. 22,520

12. C
40,000 - 8,000 32,000
43,000 - 11,000 32,000

13. D DM CC TI
WIP, beg. 50,000
Started 150,000
Units Account to for 200,000

WIP,beg. 50,000 50,000 5,000 -

Transferred Out 125,000 125,000 125,000 125,000
WIP, end 25,000 - 16,250 25,000
Units accounted for 200,000 175000 146,250 150,000

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14. B DM CC TI
WIP, beg. 40
Started 80
Units to account for 120

Transferred out 90 90 90 90
WIP, end 30 0 15 30
Units accounted for 120 90 105 120

Cost per EUP:

TI (127,200/120) 1,060
DM (36000/90) 400
CC (67,725/105) 645

15. D
TI (30*1060) 31,800
DM (0*400) 0
CC (15*645) 9,675
TOTAL 41,475

16. A Materials CC
WIP, beg. -
Started 475,000
Units to account for 475,000

Transferred out 425,000 425,000 425,000

WIP, end 50,000 50,000 25,000
Units accounted for 475,000 475,000 450,000

DM
(895000/475000) 1.88
CC
(4225000/450000) 9.39
TOTAL 11.27

17. A
Materials (50000*1.88) 94,000
CC (25000*9.39) 234,750
TOTAL 328,750

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18. C M CC TI
WIP, beg. 4,000
Started 16,000
Units to account for 20,000

Transferred out 18,000 18,000 18,000 18,000

WIP, end 2,000 2,000 600 2,000
Units accounted for 20,000 20,000 18,600 20,000

19. D
20. D
21. A

22. B
WIP, beg. 94,000 44,400
Started 164,000 272,800
TOTAL 258,000 317,200
Divide: EUP 60,000 52,000
Cost per EUP 4.3 6.1 10.4

Cost of F&T (WA):

50,000*10.4 520,000

23. C
Total costs accounted for
(94000+ 44400+ 164000+272800) 575,200
End 53,400
Costs of units transferred 521,800

24. A DM CC
Transferred Out 50,000 50,000
EUP 60,000 52,000
IP, end 10,000 2,000

DM (10000*4.3) 43,000
CC (2000*6.1) 12,200
Cost allocated to IP, end
(WA) 55,200

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25. B
DM (10000*4.1) 41,000
CC (2000*6.2) 12,400
Cost allocated tp IP, end
(FIFO) 53,400

26. A
M (2,500*80%*20) 40,000
CC (2500*60%*18) 27,000
Cost of the 2500 units 67,000

27. D M CC
WIP, beg. 2,500
Started 15,000
Units Account to for 17,500

WIP,beg. 2,500 500 1,000

Transferred Out 14,500 14,500 14,500
WIP, end 500 125 125
Units accounted for 17,500 15125 15,625

Materials
(15125*10) 151,250

28. B
F&T (14500*22) 319,000
M (500*10) 5,000
CC (1000*12) 12,000
67,000
Total cost
transferred 403,000

29. C
DM-ingredients (7,200*100%*0.35) 2,520
DM- package (7200*0%*0.05) -
DL (7200*30%*0.07) 151.2
OH (7200*30%*.13) 280.8
IP, beg bal. 2,952

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30. B
7,200
144,000
151,
200
-
147,960
IP, end 3,240

DM- Ing. (3,240*100%*.35) 1, 134

Dm- Package (3,240 * 0%*
.05) -
DL
(3,240*^0%*0.07) 136.08
OH (3,240*60%*.13) 252.72
1,522.80

Test Material 2.

1. E
A B
Beg-WIP 3500
Started 7500 7500
End-WIP 2500 1250
EUP 10000 12250

2. A EUP
WIP, beg. 20,000
Started 120,000
Units Account to for 140,000

WIP,beg. 20,000 -
Transferred Out 90,000 90,000
WIP, end 30,000 30,000
Units accounted for 140,000 120,000

Cost per EUP:

372000/ 120000 3.1

Material cost in IP, end:

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(3.1*30,000) 93,000

3. A EUP
WIP, beg. 5,000
Started 24,250
Units Account to for 29,250

WIP,beg. 5,000 1,250

Transferred Out 21,750 21,750
WIP, end 2,500 2,000
Units accounted for 29,250 25,000

Cost per EUP:

Material (114000/25000) 4.36
CC
(150000/25000) 6
OH (40000/25000) 1.6
Total cost per EUP 12.16

4. D EUP
WIP, beg. 18,500
Started 84,400
Units to account for 102,900

Transferred out 90,100 90,100

WIP, end 12,800 12,800
Units accounted for 102,900 102,900

5. C
Completed & Transferred:
Beginning 13,875
Started 71,600
End 2,560
88,035

6. D DM CC
WIP, beg. 10,000
Started -
Units to account for 10,000

Transferred out 8,000 8,000 8,000

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WIP, end 2,000 2,000 500

Units accounted for 10,000 10,000 8,500

Cost per EUP:

DM (33000/10000) 3.3
CC (17500/8500) 2

Cost of transferred out

(8000*5.3) 42,400
Cost of IP, end
DM(2000*3.3) 6,600
CC(500*2) 1,000
TOTAL 7,600

7. D
Transferred out 71,840 71,840 71,840
Completed & on hand 4,160 4,160 4,160
WIP, end 24,000 24,000 18,000
Units accounted for 100,000 100,000 94,000

8. C
EUP,WIP-beg 12000
Units,WIP-beg 20000
Ratio 60%

Total 100%
Converted 60%
WIP-Beg 40%

9. D
Started & completed
(50000- 20000) 30,000

10. B
Cost assigned to unit transferred out
started & completed (77000*2.50) 192,500
Added costs: DM (0*1) -
CC (13000*1.50) 19,500
Normal spoilage: DM (3,500*1) 3,500
CC
(3500*75%*1.50) 3,938

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Beg. Costs: DM 15,000

CC 10,000
Total costs assigned to units transferred out 244,438

11. C
Abnormal Spoilage:
(5000*100%*1) 5,000
(5000*75%*1.50) 5,625
cost assigned to abnormal spoilage 10,625

12. C
Cost of IP, end
Material (14,500*1) 14,500
CC
(14500*70%*1.5) 15,225
Cost of IP, end 29,725

13. B
same solution as in no. 10

14. B
same solution as in no.11

15. C CC
WIP, beg. 2,000
Started 8,000
Units to account for 10,000

Transferred out 7,000 7,000

Normal spoilage 500 500
WIP, end 2,500 2,000
Units accounted for 10,000 9,500

Cost per EUP:

(85500/9500) 9

CC (7000*9) 63,000
Normal Spoilage (500*9) 4,500
CC transferred to next department 67,500

16. A DM CC
17. D WIP, beg. 30,000

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Started 80,000
Units Account to for 110,000

WIP,beg. 30,000 - 3,150

Transferred Out 56,000 56,000 56,000
WIP, end 20,000 20,000 15,000
Normal spoilage (86000*3%) 2,580 2,580 2,580
Abnormal spoilage(110000- 108580) 1,420 1,420 1,420
Units accounted for 110,000 80,000 78, 150

160,000 120,000
80,000 78,000
Cost per eup 2 1.5355

18. B
Cost associated with normal spoilage:
DM
(2,580*100%*2) 5,160
CC (2,580*100%*1.5355) 3,962
TOTAL 9,122

19. D
Cost associated With abnormal spoilage
DM (1420*100%*2) 2,840
CC (1420*100%*1.5355) 2,180
TOTAL 5,020

Test Material 3 b. Transferred out 50000

WIP, end 8000
1. a. Transferred out 50000 Spoiled units 3200
WIP, end 8000 EUP for DM 55200
Spoiled units 2000
EUP for DM 60000 2. WIP beg. 12000
Added Materials 44000

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56000 Cost of WIP 118200

Divided by: 60000
Multiply by: 8000 7. Cost assigned to Ending Inventory:
DM cost 7440 = 29 725 / Not given

3. Total Cost per EUP 1.44 8. Cost assigned to Units Transferred out:
= 263 750 / Not given

9. Abnormal spoilage (5000*1)

Multiply by 52000 WIP, ending (3750*1.5)
EUP for DM and CC 10625

10. Raw Materials 840

Conversion cost 315
Cost of units transferred 74880 Cost of production 1155
Divided by 2100
.55
Multiply by 100
4. a. Completed units 152000 Cost of spoilage to FO 55
Ending inventory 20000
Normal Spoilage 14000 11. a. WIP beg 16000
EUP for DM 186000 Completed 68000
WIP end 4000
b. Completed units 152000 EUP for DM 88000
Ending inventory 10000
Normal Spoilage 8400 b. WIP beg 16000
EUP for CC 174000 Completed 68000
Spoilage 4000
5. a. Completed units 152000 WIP end 8000
Multiply by 6.9 EUP for CC 96000
1048800
b. Normal Spoilage 4800
Multiply by 4.92 12. Cost of WIP, beg:
23616
c. Conversion cost 2880 Conversion Cost (16000*60%*5)= 48000
Multiply by 1.98
Transferred in (16000* 9.75) =156000
5702.4
Cost Added:
*Cost of goods manufactured
Transferred in (80000* 11.7) = 936000
a. 1 048 800
b. 23 616 Direct Materials (88000*3.1) = 272800
c. 5 702.4 Conversion Cost (82400*5.4) = 444960
1078 118.4
Total Cost to be accounted for 1 653760
6. Completed units (20000*4.92)
End. Inventory (10000*1.98)

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13. Cost assigned to units completed and Transferred in units 355000

transferred: 1 661 760
16. Transferred in units 355000
14. Cost of spoilage charged to Factory Multiply by PD cost 12
Overhead: Not given Transferred in costs 4260000

15. Finished and Transferred out 307 500 17. Transferred in cost 4260000
Normal Spoilage 2 500 Add: (351000*14.5) 5089500
IP, ending 45 000 Total cost charged to WIP 9349500

(Test Material 4)- Fill in the blanks

Solutions: Cost per EUP 8.9
1. Cost to account 14 700 9. Incurred DM Costs 21000
Divided by 24 000 Incurred CC Costs 24320
Cost per unit 0.6125 Cost of units F & T 45320
2. WP, end 6000 10. EUP for CC : 1 500
Multiply by: 0.6125
Bal. of WIP, end 3675 11. a. Units Completed 50000
WIP, ending 10000
3. Transferred in (3200*8.39) EUP for DM 60000
WIP, beg. (20000*3.19)
EUP (20000*1.20) b. Units Completed 50000
Total cost 356280 WIP, ending 6000
EUP for CC 56000
4. Current cost 8000 12. Units Completed 50 000
Beginning Inv. 3000 Multiply by: 1.9
Units S and C 5000 Cost assigned to F&T 95000
5. N/A
6. Work in process 7000
Direct Materials 16000 13. Transferred units out: 9600
Conversion costs 25600 14. Cost incurred for DM:
Cost of goodsT-O 48600 ( 40 000 / 24 000 = 1.67)
Cost incurred for CC:
( 39375 / 22500 = 1.75)
7. WIP beg. 15 000 Cost per unit 3.42
Started and Completed 180000
WIP end 8000 15. Cost incurred for DM:
EUP for CC 203000 ( 50 000 / 24 000 = 2.08)
Cost incurred for CC:
8. CC units 1806700 ( 42875 / 22500 = 1.91)
Divided by EUP 203000 Cost per unit 3.99

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Completed 72000
16. N/A WIP end 5600
17. N/A EUP for DM 80800

18. WIP beg 3200

WIP beg 9600 WIP beg 11200
Completed 72000 Completed 72000
WIP end 4000 WIP end 3200
EUP for DL 85600 EUP for DL 86400

( Test Material 5 )- Fill in the blanks

Solutions: Abnormal loss 1000
Transferred in 60000
WIP ending 6000
1. WIP beg 4000 EUP for CC 71000
Abnormal loss 1666.67
Transferred in 60000 4. A. Units Completed 9000
WIP ending 6000 WIP, ending 1700
EUP for CC 71666.67 Abnormal Spoilage 1000
EUP for fruits 11700
2. WIP beg 4000 B. Units Completed 9000
Abnormal loss 3333.33 WIP, ending 0
Transferred in 60000 Abnormal Spoilage 1000
WIP ending 6000 EUP for CC 10000
EUP for CC 73333.33
5, 6, & 7. N/A
3. WIP beg 4000

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