Chapter 16

1

CHAPTER 16 Answers to Multiple Choice –Theoretical 1. 2. 3. 4. 5.

a b d a a

6. 7. 8. 9. 10.

c c a a C

Solutions to Multiple Choice – Computational 1.

b Materials and In Process Inventory (MIP), June 1 Materials received Materials and In Process Inventory (MIP), June 30 Materials used to be backflushed to finished goods

2.

a Raw materials purchased Raw materials used Balance of MIP, end

3.

4.

5.

P 10,000 205,000 ( 12,500) P202,500

P880,000 (850,000) P 30,000

c MIP inventory, beginning Raw materials purchased MIP inventory, ending Materials to be backflushed to finished goods

P 38,700 680,000 ( 41,900) P676,800

Conversion costs to be backflushed to finished goods

P 5,300

c Raw materials purchased Materials used: (21,000 x P25) MIP inventory, ending

P550,000 (525,000) P 25,000

Raw materials used Conversion costs (21,000 x P20) Finished goods Cost of goods sold (20,000 x P45) Finished goods inventory, ending

P525,000 420,000 945,000 (900,000) P 45,000

a Raw materials purchased Materials standard cost: (192,000 x P26) MIP Inventory, ending

P5,300,000 ( 4,992,000) P 308,000

2 Cost of goods sold: (192,000 x P41) 6.

P7,872,000

d Materials in April 1 MIP inventory balance: (31,000 – P1,400) P 29,600 Materials received during April 367,000 Materials in April 30 MIP, per physical count (P33,000–P1,800) ( 31,200) Amount to be backflushed P 365,400

7.

c Materials in May 1 MIP balance: (P12,300 – P1,300) Materials received during May Materials in May 31 MIP balance: (P12,100 – P2,100) Amount to be backflused

8.

c Applied conversion costs Actual conversion costs incurred: Direct labor Factory overhead Overapplied conversion costs

9.

P1,300,000 P200,000 995,000

1,195,000 P 105,000

c Materials used Applied conversion costs Cost of goods sold

10.

P 11,000 246,000 ( 10,000) P 247,000

P 300,000 1,300,000 P1,600,000

a Materials backflushed from Finished Goods to Cost of Goods Sold: Materials in June 1, MIP balance (P29,250 – P3,000) P 26,250 Materials received 562,500 Materials in June 30, MIP balance (P32,000 – P4,500) ( 27,500) Materials backflused to Finished Goods from MIP 561,250 Materials in June 1, Finished Goods (P30,000 – P10,000) 20,000 Materials in June 30, Finished Goods (P26,250 – P8,750) ( 17,500) Materials backflused to Cost of Goods sold P 563,750 Adjustment of conversion cost to Cost of Goods Sold: In MIP: (from P3,000 to P4,500) P1,500 In FG: (from 10,000 to P8,750) 1,250 ( 2,750) Cost of Goods Sold, June 30 P 561,000

11.

a Materials in MIP, June 30 Materials in MIP, June 1 Materials used Raw materials purchased during June

P 12,500 (10,000) 202,500 P 205,000

3

Solutions to Problems Problem 16-1 (a)

(b)

(c)

(d)

Materials and in Process inventory (MIP) Accounts payable To record materials purchased.

440,000

Conversion costs Various accounts To record conversion costs incurred

211,000

Finished goods inventory Materials and in Process inventory (MIP) Applied conversion costs To record cost of finished goods.

625,000

Cost of goods sold Finished goods inventory To record cost of goods sold.

595,000

440,000

211,000

425,000 200,000

595,000

Problem 16-2 (a)

(b)

(c)

(d)

Materials and in Process inventory (MIP) Accounts payable To record materials purchased. Conversion costs Various accounts To record actual conversion costs incurred.

2,754,000 2,754,000 723,600 723,000

Finished goods inventory (26,800 x P130) MIP inventory (26,800 x P102) Applied conversion costs (26,800 x P28) To record cost of finished goods

3,484,000

Cost of goods sold (26,500 x P130) Finished goods

3,432,000

2,733,600 750,400

3,482,000

4

Problem 16-3 (a)

(b)

(c)

(d)

Conversion costs Various accounts To record actual conversion costs incurred.

723,600

Finished goods inventory Accounts payable Applied conversion costs To record cost of finished goods.

4,234,400

Cost of goods sold Finished goods To record cost of finished goods.

3,432,000

Applied conversion costs Conversion costs Cost of goods sold To record disposition of under/over applied conversion costs.

723,600

3,484,000 750,400

3,432,000 750,400 723,600 26,800

Problem 16-4 (a)

(b)

(c)

(d)

Materials and In Process Inventory Accounts payable To record materials purchased.

550,000

Conversion costs Various accounts To record actual conversion costs incurred.

440,000

Finished goods inventory (21,000 x P45) MIP inventory (21,000 x P25) Applied conversion costs (21,000 x P20) To record cost of finished goods.

945,000

Cost of goods sold (20,000 x P45) Finished goods inventory To record cost of goods sold.

900,000

550,000

440,000

525,000 420,000

900,000

5

Problem 16-5 (a)

(b)

(c)

(d)

Materials inventory Accounts payable To record materials purchased.

550,000

Conversion costs Various accounts To record actual conversion costs incurred.

440,000

Cost of goods sold Materials inventory Applied conversion costs

900,000

Applied conversion costs Cost of goods sold Conversion costs To closed under or over-applied conversion costs.

400,000 40,000

550,000

440,000

500,000 400,000

440,000

Problem 16-6 (a)

No entry for materials purchased

(b)

Conversion costs Various accounts

440,000

Finished goods inventory Accounts payable Applied conversion costs To record cost of finished goods.

945,000

Cost of goods sold Finished goods inventory To record cost of goods sold.

900,000

Applied conversion costs Cost of goods sold Conversion costs To dispose under/over-applied conversion costs.

420,000 20,000

(c)

(d)

(e)

440,000 525,000 420,000

900,000

440,000

6

Problem 16-7 (1)

(a)

Equivalent Production: [5,000 + (40 x 50%) = 5,000 P250,525 ÷ 5,020 =

P49.905 per unit

(b)

P250,000 ÷ 5,000 =

P50

(c)

Units started : (5,000 + 40 - 35) = 5,005 P250,000 ÷ 5,005 = = = =

per unit

P49.950 per unit

(2)

40 x .50 x P49.905 40 x .50 x P50 40 x .50 x P49.950

P990 P1,000 P999

(3)

Considering that the results of Requirement (2) were within two pesos of each other, then method (b) would be recommended because of its simplicity.