1.

Sharp Company

You are asked to bring the following incomplete accounts of Sharp Printing, Inc. up to date through January 31, 201
the data that appear in the T-accounts as well as additional information given in items (a) through (i).
Sharp’s job-order costing system has two direct cost categories (direct material and direct manufacturing labor) and
cost pool (manufacturing overhead, which is allocated using direct manufacturing labor costs).
Additional Information:
Manufacturing department overhead is allocated using a budgeted rate set every December. Managemen
a. next year's overhead and next year's direct manufacturing labor costs. The budget for 2018 is P400,000
manufacturing labor and P600,000 of manufacturing overhead.
The only job unfinished on January 31, 2018 is No. 419, on which direct manufacturing labor costs are P2,00
b.
direct manufacturing labor hours) and direct material costs are P8,000.
c. Total material placed into production during January is P90,000.
d. Cost of goods completed during January is P180,000.
e. Material inventory as of January 31, 2018 is P20,000.
f. Finished goods inventory as of January 31, 2018 is P15,000.
All plant workers earn the same wage rate. Direct manufacturing labor hours for January totals 2,500. Othe
g.
supervision totals P10,000.
The gross plant payroll for January pay periods totals P52,000. Ignore withholdings. All personnel are paid o
h.
basis.
i. All "actual" manufacturing department overhead incurred during January has already been posted.

Answers:
a Material purchased during January P 95,000
b Cost of Goods Sold during January 185,000
c Direct Manufacturing Labor Costs incurred during January 40,000
d Manufacturing Overhead Allocated during January 60,000
e Balance, Wages Payable Control, December 31, 2017 5,000
f Balance, Work in Process Inventory Control, January 31, 2018 13,000
g Balance, Work in Process Inventory Control, December 31, 2017 3,000
h Balance, Finished Goods Inventory Control, January 31, 2018 15,000
i Manufacturing Overhead underapplied or overapplied for January 3,000

All amounts below are stated in Philippine peso.

Materials Inventory Control Wages Payable Control

15000 h 52000
95000 90000 c
e 20000
 Manufacturing Department
Work in Process Inventory Control Overhead Control
3000 180000 d 57000
c 90000
b,g 40000
g,a 60000
b 13000

Finished Goods Inventory Control Manufacturing Overhead Control

20000 185000
d 180000
f 15000

Cost of Goods Sold

f 185000

Other Computation:
a 15000+Material Purchased-20000=90000
b 20000+180000-15000
c (2000/125)*2500hrs
d (600000/400000)*40000
e Beg+50000-52000=3000
f 2000+(2000*1.5)+8000
g Beg+90000+40000+60000-180000=13000
h 20000+180000-185000
i 60000-57000
nc. up to date through January 31, 2018. Consider
rmation given in items (a) through (i).
ial and direct manufacturing labor) and one indirect
direct manufacturing labor costs).

rate set every December. Management forecasts

osts. The budget for 2018 is P400,000 of direct
anufacturing overhead.
ect manufacturing labor costs are P2,000 (125
0.

or hours for January totals 2,500. Other labor and

000.
re withholdings. All personnel are paid on a weekly

ary has already been posted.

(overapplied)

Wages Payable Control

5000
40000 g
10000 g
3000
 Manufacturing Department
Overhead Control

anufacturing Overhead Control

60000 a,g (allocated)
2. L Company has the following balances as of the year ended December 31, 2017.

Direct Materials Inventory P 15,000

WIP Inventory 34,500
Finished Goods Inventory 49,500
Factory Department Overhead 4,000
Cost of Goods Sold 74,500

Additional information is as follows:

Cost of direct materials purchased during 2017 P 41,000

Cost of direct materials requisitioned in 2017 47,000
Cost of goods completed during 2017 102,000
Factory overhead applied (120% of direct labor) 48,000

Answers:
a Compute beginning direct materials inventory. P 21,000
b Compute beginning WIP inventory. 1,500
c Compute beginning finished goods inventory. 22,000
d Compute actual factory overhead incurred. 52,000

STATEMENT OF COST OF GOODS MANUFACTURED-RAW MATERIALS USED

Beginning balance P 21,000 (squeezed)

Purchase of materials 41,000
Raw materials available 62,000
Ending balance (15,000)
Total raw materials used P 47,000

STATEMENT OF COST OF GOODS MANUFACTURED

Beginning work-in-process inventory P 1,500 (squeezed)

Raw materials used P 47,000
Direct labor 40,000
Factory overhead applied 48,000
Current period manufacturing costs 135,000
Total costs to account for 136,500
Ending work-in-process inventory (34,500)
Cost of goods manufactured P 102,000
SCHEDULE OF COST OF GOODS SOLD

Beginning finished goods inventory P 22,000 (squeezed)

Cost of goods manufactured 102,000
Cost of Goods Available for Sale 124,000
Ending finished goods inventory (49,500)
Cost of goods sold 74,500

Actual factory overhead incurred P 52,000

(squeezed)
3. Jordan Company

Jordan Company has two departments, X and Y. Overhead is applied based on direct labor cost in Departmen
hours in Department Y. The following additional information is available:

Budgeted Amounts Department X

Direct labor cost P 180,000 P
Factory overhead P 225,000 P
Machine-hours 51,000 mh

Actual data for Job #10 Department X

Direct materials requisitioned P 10,000 P
Direct labor cost P 11,000 P
Machine-hours 5,000 mh

Answers:
a Compute the budgeted factory overhead rate for Department X. 125%
b Compute the budgeted factory overhead rate for Department Y. P 4.50 per hour
c What is the total overhead cost of Job 10? P 27,250
d If Job 10 consists of 50 units of product, what is the unit cost of this job? P 1,565 per unit

a Budgeted factory overhead rate for Department X = 225,000 = 125%

180,000

b Budgeted factory overhead rate for Department Y (P/hr) = 180,000 = 4.50

40,000

c Total overhead cost (P) = (P11000 * 125%) + (P4.5/hr * 3000hrs) = 27,250

d If Job 10 consists of 50 units of product, what is the unit cost of this job?

Job 10 (cost = P10,000 + P16,000 + P11,000 + P14000 + P27250 =

per unit) 50 units
t labor cost in Department X and machine-
on is available:

Department Y
165,000
180,000
40,000 mh

Department Y
16,000
14,000
3,000 mh

per hour

per unit

78,250 = P 1,565 per unit

50
4. Harmony Company

Harmony Company manufactures picture frames of all sizes and shapes and uses a job-order costing system.
each production run. The following costs relate to the current run:

Estimated overhead (exclusive of spoilage) P

Spoilage (estimated) P
Sales value of spoiled frames P
Labor hours

The actual cost of a spoiled picture frame is P7.00. During the year 170 frames are considered spoiled. Each sp
spoilage is considered a part of all jobs.

Required:

a. Labor hours are used to determine the predetermined overhead rate. What is the predetermined overhead r
b. Prepare the journal entry needed to record the spoilage.
c. Prepare the journal entry if the spoilage relates only to Job #12 rather than being a part of all production run

Answers:
a Predetermined overhead rate per direct labor hour (P/hr)

b Spoiled Goods P
Overhead Control
Work in Process Inventory

c Spoiled Goods P
Work in Process Inventory - Job # 12

a Predetermined overhead rate per direct labor hour = 160,000+25,000-11500

100,000

Predetermined overhead rate per direct labor hour (P) = 173,500 = 1.735
100,000
s a job-order costing system. There is always some spoilage in
elate to the current run:

160,000
25,000
11,500
100,000

e considered spoiled. Each spoiled frame can be sold for P4. The
of all jobs.

he predetermined overhead rate per direct labor hour?

ng a part of all production runs.

1.735

680
510
P 1,190

680
P 680