Chapter-2

COST ACCOUNTING – 2016 Chapter 2 - Costs – Concepts and classification Problem 1- Ram Corporation 1. 2. 3. 4. 5. 6. 7. 8. 9. 10.

Direct materials Manufacturing overhead Direct materials Direct labor Manufacturing overhead Manufacturing overhead Direct materials Manufacturing overhead Manufacturing overhead Manufacturing overhead

Problem 2 1. 2. 3. 4. 5.

Manufacturing 6. Manufacturing Selling 7. Administrative Manufacturing 8. Selling Manufacturing 9. Administrative Administrative10.Selling

Problem 3-Rocco Period Cost

Product Cost Direct mat.

Selling 1. 2. 3. 4. 5. 6. 7. 8. 9. 10.

Direct labor

Mfg. OH

Adm

DM Factory rent Direct labor Factory utilities Supervision Depreciation-FE Sales Commission Advertising Depreciation-OE Salary - pres.

220,000 50,000 180,000 8,500 60,000 20,000

1. TOTAL PRODUCT CST = 220,000 + 180,000 + 138,500 2. TOTAL PERIOD COST = 104,000 + 260,000 3. COST PER UNIT = 538,500/ 40,000 units

57,000 47,000 10,000 250,000

= P 13,4625 Problem 4 – Bug Company 1. Variable Inventoriable 2. Variable Inventoriable 3. Fixed Inventoriable 4. Variable Inventoriable 5. Variable Inventoriable Inventoriable

6. Variable Period 7. Variable Inventoriable 8. Variable Period 9. Fixed Period 10. Variable

Problem 5 – Mighty Muffler, Inc. a. P 50,000 b. P 50,000 c. P 60,000 500 d.

= P120/muffler x 400 = P 48,000

P 120 x 800 = P 96,000

e.

P 50,000 + P 48,000 = P 98,000

f.

P 50,000 + P 96,000 = P 146,000

g.

P 50,000/ 400

h.

P 50,000/500 = P 100

I,

P 50,000/800 = P

= P 125

62.50

j.

P 48,000/400 = P 120

k.

P 60,000/500 = P 120

l.

P 96,000/800 = P 120

m. P 125 + P 120

= P 245

n.

P 100 + P 120

= P 220

o.

P

= P 182.50

62.50 + P 120

Problem 6 – Marvin Desk 1. 2. 3. 4. 5. 6.

DM OH OH OH DL OH

8. 9. 10. 11. 12. 13,

OH OH DL OH OH OH

7. OH

14. OH 15. DM

Problem 7 – Mother Goose Company 1. Prime costs

-

530,000

2. Conversion cost

-

575,000

3 Inventoriable cost

-

860,000

4. Total period costs

-

305,000

Problem 8 - Blanche Corporation `

1. Direct materials used Direct labor Variable manufacturing overhead Variable marketing Total variable cost per unit X No. of units produced and sold Total variable costs per month 2. DM DL 20.00 V – manufacturing Variable cost per unit produced 3. Total variable mfg. cost ( 67 x12,000) Total fixed mfg,cost (6 x 12,000) Total manufacturing cost 4. Mfg. cost/unit (876,000/12,000)

P 32.00 20.00 15.00 3.00 70.00 12,000 P 840,000 32.00

15.00 P

804,000 72,000 876.000 73.00

Problem 9 1. Direct materials P 60.00 Direct labor 30.00 Variable manufacturing overhead 9.00 Total variable manufacturing cost per unit P 99.00 `

2. Total variable manufacturing cost per unit Variable marketing and administrative

67.00

P 99.00 6.00

Total variable costs per unit

105.00

3.

Total variable manufacturing cost per unit Fixed manufacturing overhead (30,000/1,200) Full manufacturing cost per unit

P 99,00 25.00 124.00

4.

Full manufacturing cost per unit Variable marketing and administrative Fixed marketing and administrative Full cost to make and sell per unit

124.00 6.00 20.00 150.00

Problem 10 – Westinghouse Company

1. Variable cost/machine hour = 60,000 – 39,000 =

6,000 -

3,000

21,000 3,000 =

High P60,000

2. Total monthly cost Less – Variable 6,000 x 7 3,000 x 7

7.00/machine hr.

Low P 39,000

42,000

21,000 Fixed cost

P 18,000

P 18,000

3. Total electricity cost = Fixed cost + Variable (capacity) = =

18,000 + 7(4,800) 51,600

Problem 11 – Johnson Corporation 1. Variable cost per machine hour =

35,600 – 20,000 4,000 - 2,000 = 7.80 per machine hour

2. 4,000 hours 2000 hours Total electricity expense 35,600 20,000 Less: Variable costs ( 4,000 x 7.80) 31,200 ( 2000 x 7.80) ______ 15,600 Fixed cost 4,400 4,400

3.

Fixed cost Variable cost ( 4,500 x 7.50) Totl manufacturing costs

4,400 35,100 39,500

Problem 12 – Valdez Motors Co. 1. Variable cost per machine hour = 5,475 – 3,975 210 - 145 = 23.08 per machine hour

Total overhead costs Less: Variable costs ( 210 x 23.08) ( 145 x 23.08) Fixed cost

2.

210 hours 145 hours 5,475

3,975

4,847 _____ 628

Fixed cost Variable cost (23,08 x 300) Total overhead cost

3,347 628

628 6,924 7,552

Problem 13 – Marco Company 1. Direct materials Direct labor Factory supplies 24,000 Direct variable costs 1,324,000

Department A Department B P 400,000 P 700,000 350,000 600,000 10,000 P

760,000

P

2. Controllable direct fixed costs Supervisory salaries

P

45,000

P

55,000

3. Uncontrollable direct fixed costs: Depreciation – machinery and Equipment

P

100,000

P

180,000

P

P

55,000 180,000 235,000

4. Controllable direct fixed cost Uncontrollable direct fixed cost Total direct fixed cost

P

45,000 100,000 145,000

5. Total direct variable cost

P

760,000

Total direct fixed 235,000

P

P 1,324,000 145,000

Total direct cost 1,559,000

P

6. Allocated costs from headquarters Allocated repairs & maintenance Allocated factory rent – bldg. Allocated plant executive’s salaries Total indirect costs

P

7. Allocated costs from headquarters Allocated factory rent – bldg. Allocated plant executive’s salaries Depreciation- mach. & equipment Total unavoidable costs

P

P

P

True/False Questions 1. False 6. True 2. False 7. False 3. True 8. True 4. False 9. False 5. False 10. True

905,000

120,000 40,000 60,000 140,000 360,000

P

120,000 60,000 140,000 100,000 420,000

P

1. 2. 3. 4. 5.

A C A B A

11. 12. 13. 14.

C D C B 15. A 16. B 17. B 18. A 19. D 20. B - Problems

6. 7. 8. 9. 10.

B A B B A

P

P

11. False 12. False 13. True 14. False 15. False

Multiple choice 1. D 2. C 3. B 4. C 5. D 6. A 7. D 8. D 9. B 10. C Multiple choice

P

11. 12.

B A

180,000 80,000 140,000 210,000 610,000 180,000 140,000 210,000 180,000 710,000

16. True 17. False 18. True 19. False 20. True