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PROBLEM 1

The following information was taken from the books of Maria Corporation:
Month Utility Cost Machine Hour Labor Hours
Jan 950 999 502
Feb 1,175 1,022 733
Mar 1,425 1,220 1,090
Apr 1,506 1,283 1,135
May 1,618 1,313 1,186
Jun 1,525 1,261 1,154
Jul 1,675 1,440 1,264
Aug 1,724 1,290 1,323
Sep 1,626 1,335 1,230
Oct 1,575 1,164 1,165
Nov 1,653 1,373 1,237
Dec 1,418 1,124 1,035
(1) Using Hi-Lo method determined the unit cost variable cost and total fixed using:
(a) Machine hours (b) Labor Hours
(2) Under method of least square and using the independent variable that best forecast the value of the dependent variable, determine
how much utility cost will be incurred for the production that requires 1,380 machine hours and 1,250 Labor hours. (Note: use the
independent variable that gives the higher coefficient of correlation (r))

ANSWER:
A. MACHINE HOURS
Machine Hours
Variable Cost (b) = (1,675 - 950) / (1,440 - 999)
Variable Cost = 1.6440

Fixed Costs (a) = 1,675 - (1.64 X 1,440)


Fixed Costs = (692.347)
B. Labor Hours
Variable Cost (b) = (1,724 - 950) / (1,323 - 502)
Variable Cost = 0.9428

Fixed Costs (a) = 1,724 - (0.94 X 1,323)


Fixed Costs = 476.738
Fixed Variable Correlation
Machine Hours (322.872) 1.467 0.88
Labor Hours 467.083 0.940 0.99

Utility cost budgeted for 1,250 LHrs 1,641.53

PROBLEM 2
Following are the three months incomplete cost of goods sold statement of Kulang Kulang Company:
March April May
Direct Material Beg 95,000 L 50,000
Add Net Purchases A 170,000 W
Total available for use B M 200,000
Less Direct Material End C N X
Direct Materials Used 150,000 O 140,000
Direct Labor D 175,000 Y
Factory Overhead E P Z
Total Manufacturing Cost 300,000 462,500 AA
Add Work in Process Beg F Q 37,500
Total goods put into process G R BB
Less Work in Process end H S 20,000
Cost of Goods Manufactured I 440,000 CC
Add Finished Goods Beg 30,000 T 25,000
Total goods available for sale J 475,000 DD
Less Finished Goods end K U 30,000
Cost of Goods Sold 300,000 V 332,500
Overhead is approximately equal to 50% of Labor Cost
Answer:
a) 135,000.00 p) 87,500.00
b) 230,000.00 q) 15,000.00
c) 80,000.00 r) 477,500.00
d) 100,000.00 s) 37,500.00
e) 50,000.00 t) 35,000.00
f) 20,000.00 u) 25,000.00
g) 320,000.00 v) 450,000.00
h) 15,000.00 w) 150,000.00
i) 305,000.00 x) 60,000.00
j) 335,000.00 y) 120,000.00
k) 35,000.00 z) 60,000.00
l) 80,000.00 aa) 320,000.00
m) 250,000.00 bb) 357,500.00
n) 50,000.00 cc) 337,500.00
o) 200,000.00 dd) 362,500.00

PROBLEM 3
A certain company incurred a total manufacturing cost of P130,000, distributed as follows: Direct Materials P60,000, Direct Labor
P40,000, and factory overhead P30,000. At the end of the period it was determined that the work in process increased by P20,000,
while the finished goods decreased by P8,000. How much would be the cost of goods sold for the period?

ANSWER:
TMC 130,000.00
Inc WIP (20,000.00)
COGM 110,000.00
Dec in FG 8,000.00
COGS 118,000.00
PROBLEM 4
The cost of goods manufactured of XXX Corporation for the month was P105,000, while the raw materials used was P50,000. At the
end of the month work in process decreased by P20,000, while finished goods increased by P15,000. Labor cost was determined to be
50% of raw materials used. How much would be the cost of goods sold and the factory overhead for the month?
ANSWER:
DL 25,000.00
FOH 10,000.00
TMC 85,000.00
Dec in WIP 20,000.00
COGM 105,000.00
Inc in FG (15,000.00)
COGS 90,000.00

PROBLEM 5
The following information is provided by Maunlad Mfg. Corp.:
COGM P 470,000
Labor Cost 100,000
FOH 50,000
FG Beginning 30,000
FG Ending 20,000
COGS 480,000
Raw Materials Used 500% of WIP end
WIP end 75% of WIP beginning
How much would be the costs of raw materials used?

ANSWER:
DM + 300,000.00 375% WIPB
DL + 100,000.00
FOH + 50,000.00
WIPB + 80,000.00 100% WIPB
WIPE - 60,000.00 75% WIPB
COGM 470,000.00
PROBLEM 6
If the total manufacturing costs for the month is P142,000, while the finished goods beginning and ending were P20,000 and P12,000
respectively. How much would be the costs of Work in Process Beginning and Ending respectively, assuming cost of goods sold is
P158,000 and that the work in process ending is 80% of the work in process beginning?

ANSWER:
total manufacturing cost 142000 140000+20%=150000
work in process-b 40000 100%
work in process-e 32000 80% 32000=40000*80%
cost of goods manufactured 150000 158000-8000 8000=20000-12000
finished good-b 20000
finished good-e -12000
cost of goods sold 158000

PROBLEM 7
Following were the other overhead cost incurred by UR Corporation for the year ended 2014:
1st Qtr 2nd Qtr 3rd Qtr 4th Qtr
Volume of production 20,500.00 18,650.00 19,750.00 25,450.00
Supervisory salaries 102,499.00 99,076.50 101,111.50 111,656.50
Property tax and insurance 22,000.00 22,000.00 22,000.00 22,000.00
Maintenance 61,125.00 56,962.50 59,437.50 72,262.50
Supplies 76,982.50 70,757.25 74,458.75 93,639.25
Depreciation of buildings and equipment 50,000.00 50,000.00 50,000.00 50,000.00
Power 140,425.00 127,752.50 135,287.50 174,332.50
Light and heat 165,175.00 153,427.50 160,412.50 196,607.50
Total 618,206.50 579,976.25 602,707.75 720,498.25
Required:
1) Identify which of the cost items above are Fixed, Variable and Semi-Variable.
2) Using method of least square in separating Semi-Variable, determine how much of the total semi-variable cost is a) Fixed and b)
Variable Cost per unit?
3) Under the method of least square, determine how much of the other overhead cost is applicable to production of 22,000 units.
4) Using High and Low method, how much other overhead cost will be applied to production of 22,500 units.
ANSWER:
1. Supervisory salaries Semivariable
Property tax and insurance Fixed
Maintenance Semivariable
Supplies Semivariable
Depreciation of buildings and equip. Fixed
Power Variable
Lights and heat Semivariable

Volume of production 20,500.00 18,650.00 19,750.00 25,450.00


Total Semivariable 405,781.50 380,223.75 395,420.25 474,165.75
For Semi-Variable Cost
b= 13.815
a= 122,574.00

For Total Overhead Cost


b= 20.665
a= 194,574.000

Overhead Cost for the production of 22,000 units


Y = 194,574 + 20.665X 649,204.000

Using Hi-Lo
b= 20.665
a= 194,574.00
Budgeted Overhead Cost at 22,500 659,536.50
PROBLEM 8
: Downstream Manufacturing Company realized too late that it had made a mistake locating its controllers office and its electronic
data processing system in the basement. Because of the Typhoon, the Pasig River overflowed on May 2 and flooded the companys
basement. Electronic data storage was beyond retrieval, and the company had not provided off-site storage of data. Some of the paper
printouts were located but were badly faded and only partially legible. On May 3, when the river subsided, company accountants were
able to assemble the following factory-related data from the debris and from discussions with various knowledgeable personnel. Data
about the following accounts were found:

Raw Material (includes indirect material) Inventory: Balance April 1 was P4,800.
Work in Process Inventory: Balance April 1 was P7,700.
Finished Goods Inventory: Balance April 30 was P6,600.
Total company payroll cost for April was P29,200.
Accounts payable balance April 30 was P18,000.
Indirect material used in April cost P5,800.
Other nonmaterial and non-labor overhead items for April totalled P2,500.

Payroll records, kept at an across-town service center that processes the companys payroll, showed that Aprils direct labor amounted
to P18,200 and represented 4,400 labor hours. Indirect factory labor amounted to P5,400 in April. The presidents office had a file
copy of the production budget for the current year. It revealed that the predetermined manufacturing overhead application rate is based
on planned annual direct labor hours of 50,400 and expected factory overhead of P151,200.
Discussion with the factory superintendent indicated that only two jobs remained unfinished on April 30. Fortunately, the
superintendent also had copies of the job cost sheets that showed a combined total of P2,400 of direct material and P4,500 of direct
labor. The direct labor hours on these jobs totalled 1,072. Both of these jobs had been started during the current period. A badly faded
copy of Aprils Cost of Goods Manufactured and Sold schedule showed cost of goods manufactured was P48,000, and the April 1
Finished Goods Inventory was P8,400.
The treasurers office files copies of paid invoices chronologically. All invoices are for raw material purchased on account.
Examination of these files revealed that unpaid invoices on April 1 amounted to P6,100; P28,000 of purchases had been made during
April; and P18,000 of unpaid invoices existed on April 30.
1. Calculate the cost of direct material used in April.
2. Calculate the cost of raw material issued in April.
3. Calculate the April 30 balance of Raw Material Inventory.
4. Determine the amount of under applied or over applied overhead for April.
5. What is the Cost of Goods Sold for April?
ANSWER:
Downstream Manufacturing Company FOH - Rate IM IL OOH FOH -
Cost of Goods Sold Statement C
For the month of April 2016 3.00 5,800.00 5,400.00 2,500
13,700.00
Under Applied 500.00
Raw Material 4/1 4,800.00
Add Net Purchases 28,000.00
DM DL FOH - A
Total Raw Materials Available 2,400.00 4,500.00 3,216.00
for use 32,800.00
Less Raw Materials 4/30 7,984.00
Raw Materials Used 24,816.00 PROBLEM 9
Less Indirect Materials Micro Corp. uses 1,000 units of Chip annually in its
Used 5,800.00 production. Order costs consist of P10 for placing a
Direct Materials Used 19,016.00 long-distance call to make the order and P40 for
Direct Labor 18,200.00 delivering the order by truck to the company
Factory Overhead Applied 13,200.00 warehouse. Each Chip costs P100, and the carrying
Total Manufacturing Cost 50,416.00 costs are estimated at 15.625%.
Add Work in Process 4/1 7,700.00 Required:
Total Goods put into 1. Compute the economic order quantity for Chip and
process 58,116.00 the total order costs and carrying costs for the year.
Less Work in Process 4/30 10,116.00 2. Determine the best order quantity if Chip is
Cost of Goods purchased only in multiples of 25 units and that the
Manufactured 48,000.00 storage space is limited to 100 units. (Round answers
Add Finished Goods 4/1 8,400.00 to the nearest whole Peso.)
ANSWER:
Total Goods Available for
EOQ = 80
Sale 56,400.00
Ordering Costs = No. of orders X cost
Less Finished Goods 4/30 6,600.00
per order
Cost of Goods Sold Normal 49,800.00
No. of orders = annual requirement / 12.5
Add Under order
Applied
sizeFOH 500.00
COGS - Actual
Ordering Costs 50,300.00 625
=
Carrying Costs = Average Invty X Carrying Cost
per unit
Average Invty = Order Size/2 + Safety
Stocks 40
Carrying Costs = 625

Order
Size 25 50 75 100

No. of orders 40.00 20.00 13.33 10.00


Average Invty. 12.5 25 37.5 50
Total Carrying
Costs 195.31 390.63 585.94 781.25
Total Ordering
Costs 2,000.00 1,000.00 666.67 500.00

Total Ordering and Carrying 1,281.2


Costs 2,195.31 1,390.63 1,252.60 5

PROBLEM 10
Ofilyang Company uses Material NGEE to produce NGAA. Inventory at the beginning of June 2012 was 400 units of NGEE, valued
at P1.80 each. Further, receipts and issuances of NGEE during the month were as follows:
Units Unit Cost
June 8, receipts 500 P2.10
June 14, receipts 600 ?
June 25, Issuance 1,250
The company uses moving average method of stock valuation.
1. If the average unit cost at the issuance date was P1.932. What was the cost per unit of the June 14, receipts?
2. Assuming the company uses FIFO perpetual method of stock valuation, and that the total cost of Material NGEE issued was P2,470.
What will be the costs of the June 14, receipts?

Stock
Card
Received Issued Balance
Unit Unit
Qty Cost Amount Qty Unit Cost Amount Qty Cost Amount

400 1.800 720

500 2.100 1050 900 1.967 1770

600 1.880 1,128.00 1500 1.932 2,898.00

1250 1.932 2,415.00

PROBLEM 11
Charleston Company has developed the following data to assist in controlling one of its inventory items:

Economic order quantity........................................................................ 1000 liters


Average daily use................................................................................... 100 liters
Maximum daily use................................................................................ 120 liters
Minimum daily use..................................... 50 liters
Working days per year............................................................................ 250 days
Cost of carrying inventory...................................................................... P1.00 per liter per year
Lead time................................................................................................ 7 working days

Required: Compute the following:

(1) Order point (OP) = Lead Time Usage (LTU) + Safety Stocks (SS) = 840
(2) Average inventory = Order Size (OS)/2 + SS = 1000/2 + 140 = 640
(3) Maximum inventory assuming normal lead time and usage/Normal Maximum Inventory = OP LTU + OS = 840 700 + 1,000
= 1,140
(4) Cost of placing one order; using EOQ; P20
(5) Absolute Maximum Inventory = OP (LT X Min Daily Use) + OS ;
= 840 (7 X 50) + 1,000 = 1,490

ANSWER:
Safety Stock = 140
Leadtime usage = 700
Order Point 840
Average Invty = 640
Normal Maximum Inventory = 1140
Cost of placing one order = 20
Absolute Maximum Inventory = 1490

PROBLEM 12
Warner Co. uses 6,000 units of material per year at a cost of P4 per unit. Carrying costs are estimated to be P1.125 per unit per year,
and order costs amount to P60 per order. As an incentive to its customers, Warner will extend quantity discounts according to the
following schedule:

Minimum List Net


Order Price Discount Price
500 P4 2% P3.92
1,000 4 4 3.84
2,000 4 6 3.76

Required:
(1) Determine the economic order quantity (800) (ignoring quantity discounts) and the total annual order cost, carrying cost, and
materials costs at EOQ (considering quantity discounts).
(2) Compute the annual order cost, carrying cost, materials cost, and total cost at each discount level. (Round to the nearest peso.)
(3) Identify the order size, choosing from one of the three discount levels, that will minimize the total cost.

ANSWER:
EOQ = 800
Ordering Costs 450
Carrying Costs 450
Material Cost/Costs of
Purchases 23520
Total
Cost 24420

Order
Size 500 1000 2000 Cost per order 60
Carrying cost per
No. of orders 12.00 6.00 3.00 unit 1.125
Average Invty. 250 500 1000
Total Carrying
Costs 281.25 562.50 1,125.00
Total Ordering
Costs 720.00 360.00 180.00

Total Material 23,040.0


Costs 23,520.00 0 22,560.00
Total Costs
23,962.5
24,521.25 0 23,865.00
EOQ

PROBLEM 13
The following data refer to various annual costs relating to the inventory of a single-product company:

Unit transportation-in on purchases................................................................................ P .20


Storage per unit............................................................................................ .12
Insurance per unit......................................................................................... .10
Annual interest foregone from alternate investment of funds...................... P 800.00
Annual number of units required................................................................. 10,000
What is the annual carrying cost per unit?

ANSWER:
P0.30 = (0.12 + 0.10 + 800/10,000)

PROBLEM 14
The following information relates to Hudson Company's Material A:

Annual usage in units................................................................................... 7,200


Working days per year.................................................................................. 240
Normal lead time in working days............................................................... 20
Maximum lead time in working days........................................................... 45
Assuming that the units of Material A will be required evenly throughout the year, the safety stock and order point would be: _750 :
1,350__.
SS = 7,200/240 X (45 20)
OP = LTU + SS = (7,200/240 X 20) + 750
ANSWER:
Computation of Maximum Safety Stock
Usage Variation
Safety Stock = (Maximum Usage - Normal Usage) X Leadtime Normal = Average
Leadtime Variation
Safety Stock = (Maximum Leadtime - Normal Leadtime) X Daily(Normal) Usage
Usage and Leadtime Variation
Safety Stock = [(Max Usage - Normal Usage) X Leadtime] + [(Max Leadtime - Normal Leadtime) X Max Usage]
750
Order Point/Reorder Point = [daily usage X leadtime] + Safety Stocks
1350
PROBLEM 15
Penguin Company manufactures winter jackets. Setup costs are P2.00. Penguin manufactures 4,000 jackets evenly throughout the
year. Using the economic order quantity approach, the optimal production run would be 200 when the cost of carrying one jacket in
inventory for one year is: _____.

ANSWER:
200 = 2 X 4,000 X 2
\ X

PROBLEM 16
Leo Company manufactures specialized farming tools. Transactions and information related to inventory accounts for January 2017
were as follows:
Materials
Beginning Balance
Part X 1,000 units @ P102.50
Part Y 500 units @ P50.25
Part Z 750 units @ P20.35

Leo applies EOQ in controlling the investment in its inventory. For the year 2017, Leo estimated that 40,000, 25,000 and 30,000
units respectively will be used for the years estimated production. The ordering costs which are normally incorporated to the final
unit cost of the materials were estimated to be P250, P175, and P325 for Part X, Part Y and Part Z respectively, while carrying
costs which is accounted as an expense was estimated 3%, 5% and 4% of the purchase price for Part X, Part Y and Part Z
respectively.

Other information related to materials were:


Order Usage per Day Lead-Time (days)
Size Min Normal MaxMin Normal Max
Part X2,550 100 160 200 2 4 6
Part Y1,850 75 100 125 1 3 5
Part Z 4,900 100 120 150 2 3 4

Work in Process
Beginning Balance
Job 309 Job 312 Job 313
Materials
Part X 45 units 150 units 85 units
Part Y 35 units 60 units 48 units
Part Z 40 units 80 units 54 units
Labor @ P45/hr P1,980 P2,340 P1,035
Overhead is applied at P50 per hour which is inclusive of P5 allowance for defects.

Cost charged for the current month


-----------------------Job Number----------------------------
309 312 313 314 315 316
Materials in units
Part X 555 550 615 700 430 350
Part Y 395 370 382 420 350 130
Part Z 80 40 66 120 100 70
Labor Hrs. 54 48 77 11265 45
Prior to the completion of Job 314, due to a customer request a minor adjustment which requires an additional material for Part X and
Part Z of 10 units and 15 units respectively and 3 hours of labors were made. While for Job 309, 312, and 313, 2% of the jobs were
found defective and were considered spoiled from which recoverable amount is estimated at 80% of the total cost incurred. The
defects on these jobs were due from power interruptions.

At the end of the month Job 315 and Job 316 were still in process, while the remaining goods units from the completed jobs were
delivered and billed to the customer at 50% above costs.

Compute for the following:


1) Carrying Cost per unit and Total Purchase Price of Part X, Part Y and Part Z. (rounded to 3 decimal places)
2) Final Unit Costs of Part X, Part Y and Part Z. (rounded to 3 decimal places)
3) Cost of Direct Materials, Direct Labor, and Factory Overhead charged to work in process for the month.
4) Sales Value per completed Jobs.
5) Safety Stock and Reorder Point
6) Materials Inventory End
Prepare the Journal entry for
7) Issuance of Materials
8) Costs of reworks
9) Spoiled Goods
1) Billing and Delivery

ANSWER:
Part X Part Y Part Z Part X Part Y Part Z

Purchase Price 102.525 51.132 20.304 102.533 51.140 20.300


Add Purchase Order Costs 0.098 0.095 0.066 0.098 0.095 0.066

Unit Costs 102.623 51.227 20.370 (2) 102.631 51.235 20.366

Unit Carrying Cost 3.076 2.557 0.812 (1)


Safety Stock 560.00 325.00 240.00

Reorder Point 1,200.00 625.00 600.00


Total

Part X 555 550 615 700 430 350 3,200.00

Part Y 395 370 382 420 350 130 2,047.00

Part Z 80 40 66 120 100 70 476.00

Materials
Invty 1/1 Order Size Qty on Hand end

1000 2,200.00 2550 350.00 2,890.00 102.623 296,580.47

500 1,547.00 1850 303.00 2,153.00 51.227 110,291.73

750 274.00 259.00 20.35 5,270.65

412,142.85

Part X Part Y Part Z


Purchase Price 102.525 51.132 20.304

Qty Received 5,100.00 3,700.00 -

Total Purchase Price 522,877.50 189,188.40 - (1)

Total Direct
Issued From Beg Fro Purch. Materials Reworks TMC
Part
X 3,200.00 102,500.00 225,770.60 328,270.60 1,026.23 329,296.83
Part
Y 2,047.00 25,125.00 79,248.17 104,373.17 104,373.17
Part
Z 476.00 9,686.60 - 9,686.60 305.55 9,992.15

Total 442,330.37 443,662.15

Direct Labor 18,045.00 135 18,180.00

Factory Overhead 19,490.00 135 19,625.00


Direct Materials Job 315 Job 316 Total Qty Total Costs

Part X 430 350 780 80,045.94

Part Y 350 130 480 24,588.96

Part Z 100 70 170 3,459.50

Direct labor 4,950.00

FOH - A 5,500.00

Work in Process End 118,544.40

Sales Value Job 309 Job 312 Job 313 Job 314

Part X 61,500.00 71,762.92 71,825.65 72,862.33

Part Y 21,607.50 21,866.41 21,980.71 21,515.34

Part Z 2,442.00 2,442.00 2,442.00 2,747.25


Total Materials 85,549.50 96,071.32 96,248.36 97,124.92
Labor Cost 4410 4500 4500 5175
Factory Overhead 4900 5000 5000 5175

Total manfacturing 105,571.3 105,748.3


Costs 94,859.50 2 6 107,474.92

Less Spoiled 1,897.19 2,111.43 2,114.97

Final cost of 103,459.8 103,633.3


completed 92,962.31 9 9

Add Markup 46,481.16 51,729.95 51,816.70 53,737.46

139,443.4 155,189.8 155,450.0


Total Sales Value 7 4 9 161,212.38

SGI 1,517.75 1,689.14 1,691.97 4,898.87


FOH-C 379.44 422.29 422.99 1,224.72
WIP 6,123.58

Accounts Receivable 611,295.77


Sales 611,295.77

Cost of Goods Sold 407,530.52


Work in process 407,530.52

PROBLEM 17
On December 31, 2015 KTV Co., with outstanding share capital of P60,000 had the following assets and liabilities:
Cash P 10,000
Accounts Receivable 20,000
Finished Goods 12,000
Work in Process 4,000
Materials P 8,000
Prepaid Expense 1,000
Property, Plant and Equipment 60,000
Current Liabilities 35,000

During 2016, the retained earnings account increased 50% as a result of the years business. No dividends were paid during the year.
Balances of accounts receivable, prepaid expenses, current liabilities, and share capital were the same on December 31, 2016, as they
had been on December 31, 2015.Inventories were reduced by exactly 50% except for finished goods inventory, which was reduced by
33 1/3%. Plant assets(net) were reduced by depreciation of P8,000, charged to factory overhead and to administrative expense.
Sales of P120,000 were made on account, costing P76,000. Direct labor cost was P18,000, Factory overhead was applied at a rate of
100% of direct labor costs, leaving P4,000 underapplied that was closed to cost of goods sold account. Total marketing and
administrative expenses amounted to 10% and 15% of gross sales respectively.
Required: Prepare the statement of financial position and income statement with note showing details of cost of goods sold.

ANSWER:

1. KTV Co.
Statement of Financial Position (3.00)
As of the year ended December 31, 2016

Cash Note - 1 38,000.00


Accounts Receivable 20,000.00
Inventories Note - 2 14,000.00
Prepaid Expenses 1,000.00
Total Current Assets 73,000.00

Property, Plant and Equipment 52,000.00


Total Assets 125,000.00

Current Liabilities 35,000.00


Share Capital 60,000.00
Retained Earnings Note - 3 30,000.00
125,000.00

2.
KTV Co.
Income Statement
For the year ended December 31, 2016

Net Sales 120,000.00


Less Cost of Sales - actual 80,000.00
Gross Profit 40,000.00
Less Expenses
Selling 12,000.00
Administrative 18,000.00 30,000.00
Net Income 10,000.00

Cost of Sales
Materials 1/1 8,000.00
Add Purchases 30,000.00
Total Materials available for use 38,000.00
Less Materials 12/31 4,000.00
Direct materials used 34,000.00
Direct Labor 18,000.00
Factory Overhead 18,000.00
Total Manufacturing Cost 70,000.00
Add Work in process 1/1 4,000.00
Total Goods put into process 74,000.00
Less Work in process 12/31 2,000.00
Cost of goods manufactured 72,000.00
Add Finished Goods 1/1 12,000.00
Total Goods available for sales 84,000.00
Less Finished Goods 12/31 8,000.00
Cost of Goods Sold Normal 76,000.00
Add underapplied overhead 4,000.00
Cost of goods sold actual 80,000.00

Note 1 - Cash
Collection 120,000.00
Payments
Purchases 30,000.00
Direct Labor 18,000.00
Factory Overhead - Control 16,000.00
Selling 12,000.00
Administrative 16,000.00 92,000.00
Net increase in cash 28,000.00
Cash Beginning 10,000.00
Cash ending 38,000.00

PROBLEM 18
ANSWER:
Materials 218,298.00
Accounts Payable 218,298.00

Work in Process 206,470.88


Materials 206,470.88

Payroll 160,000.00
Accrued Payroll 160,000.00

Work in Process 145,000.00


Factory Overhead Control 15,000.00
Payroll 160,000.00

Work In Process 217,500.00


Factory Overhead Applied 217,500.00
Charged to specific job/All production
Work In Process/Factory Ovehead Control 2,000.00
Payroll 800.00
Factory Overhead Applied 1,200.00
Charged to Specific job
Spoiled Goods Inventory 1,400.00
Work In Process 1,400.00
Charged to All jobs
Spoiled Goods Inventory 1,400.00
Factory Overhead Control 875.88
Work In Process 2,275.88

Scrap Materials (10,000 X 1.5 X 2% X P5) 1,500.00


Work In Process/FOHC 1,500.00

Cash 1,050.00
Scrap Materials 1,050.00
Accounts Receivable 994,124.03
Sales 994,124.03
Cost of Goods Sold 568,070.88
Work in Process 568,070.88

Purc. Cost Ratio Freight Total Unit Cost


Material AAA 156,550.00 0.0151 2,364.45 158,914.45 15.734
Material BBB 58,500.00 0.0151 883.55 59,383.55 9.897
215,050.00 3,248.00 218,298.00

Beginning Current Purch. Total


Material AAA 7,500.00 149,473.00 156,973.00
Material BBB 1,250.00 48,247.88 49,497.88
206,470.88

Beginning Current Purch. Total


Material AAA 7,500.00 149,473.00 156,973.00
Material BBB 1,250.00 48,247.88 49,497.88
206,470.88

WIP - Specific Job


DM 206,470.88 1,400.00 Spoiled
DL 145,000.00 1,500.00 Scrap
FOH 217,500.00 Selling Price 994,124.03
Rework 2,000.00 568,070.88 Cost 568,070.88
Gross Margin 426,053.16
160,000.00
WIP - All Production
DM 206,470.88 2,275.88
DL 145,000.00 -
FOH 217,500.00
Rework - 566,694.99 991,716.24
56.897
TEST I - MULTIPLE CHOICE PROBLEMS - Show all supporting computations, present it in good format. Boxed your final
answer on your computation and indicate your letter choice in capital letter. (NO COMPUTATIONS, NO POINTS) (3 pts. Each)
1. The following costs relate to Antonietta Industries for the last quarter:
Conversion cost 435,000
Direct materials 215,000
Manufacturing overhead 190,000
Selling and administrative expense 185,000
What is Antoniettas prime cost for last quarter?
A. 460,000 B. 410,000 C. 405,000 D. 375,000

A
2. Antoniettas total manufacturing cost is
A. 460,000 B. 645,000 C. 650,000 D. 840,000

C
3. Antoniettas total period cost is
A. 185,000 B. 275,000 C. 400,000 D. 620,000

4. Jasmine Co. produced 5,500 outdoor chairs for Job Order No. 610. Total material cost was 51,700. Each chair required 2.2 hours of direct labor at
8.90/hour. A total of 53,845 of factory overhead was traced to Order 610. What is the prime cost per unit of this order?
A. 19.58 B. 28.98 C. 29.37 D. 38.77
B
5. Using the information in No. 26, what is the conversion cost per unit of this order?
A. 19.58 B. 28.98 C. 29.37 D. 38.77

6. Using No. 12 information, what is the unit cost of this order?


A. 37.88 B. 38.77 C. 28.09 D. 36.99
B
7. The following cost data were taken from the records of JGG manufacturing company:
Depreciation on factory equipment 1,000
Depreciation on sales office 500
Advertising 7,000
Freight out (shipping) 3,000
Wages of production workers 28,000
Raw materials used 47,000
Sales salaries and commissions 10,000
Factory rent 2,000
Factory insurance 500
Materials handling 1,500
Administrative salaries 2,000
Based upon this information, the manufacturing cost incurred during the year was:
A. 18,500 B. 80,000 C. 80,500 D. 83,000
Depreciation on factory equipment 1,000
Wages of production workers 28,000
Raw materials used 47,000
Factory rent 2,000
Factory insurance 500
Materials handling 1,500
Manufacturing cost 80,000 B
8. Joy Corp. manufactures plastic coated metal clips. The following were among Joys 2014 manufacturing costs:
Wages:
Machine operators 200,000
Maintenance workers 30,000
Factory foreman 90,000
Materials used:
Metal wire 500,000
Lubricant for oiling machinery 10,000
Plastic coating 380,000
In 2014, Joys direct labor and direct materials amounted to:
Direct Labor Direct Materials Direct Labor Direct Materials
A. 230,000 510,000 C. 320,000 880,000
B. 220,000 500,000 D. 200,000 880,000

Direct labor 200,000

Direct materials (500,000 + 380,000) 880,000 D

TEST II PROBLEM SOLVING


Celsius Company manufactures a product that requires the use of a considerable amount of natural gas to heat it to a desired
temperature. The process requires a constant level of heat, so the furnaces are maintained at a set temperature for 24 hours a day.
Although units are not continuously processed, management desires that the variable cost be charged directly to the product and the
fixed cost to the factory overhead. The following data have been collected for the year:
Units Cost Units Cost
January ............ 2,400 4,400 July.. 2,200 4,250
February.. 2,300 4,300 August.. 2,100 4,100
March 2,200 4,200 September. 2,000 3,950
April 2,000 4,000 October 1,400 3,400
May 1,800 3,800 November.. 1,900 3,700
June 1,900 3,900 December.. 1,800 4,050
1. Separate the variable and fixed elements, using the high-low method. Compute for the variable cost per unit.
2. Determine the variable cost to be charged to the product for the year. (Hint: First determine the number of annual units
produced)
3. Determine the fixed cost to be charged to factory overhead for the year.

1. High-low method
Units Cost
High volume.............................................................. 2,400 4,400
Low volume............................................................... 1,400 3,400
Change ..................................................................... 1,000units 1,000

Variable cost per unit: 1,000 1,000 = 1.00 per unit 5 pts.
Fixed cost 1,400 Units 2,400 Units
Total cost.............................................................. 3,400 4,400
Variable cost, $1.00 per unit................................ 1,400 2,400
Fixed cost............................................................. 2,000 2,000 5 pts.

2. Variable cost charged to product: 24,000 units 1.00 per unit = 24,000. 5 pts.
3. Fixed cost charged to factory overhead: 2,000 per month 12 months = 24,000. 5 pts.

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