Chapter 3 Cost

CHAPTER 3 - COST ACCOUNTING CYCLE Problem 1 - Ram Manufacturing Company Direct materials used (75,000 x 90%) Direct labor (97,000 x 93% ) Factory overhead (90,210 x 12%) Total manufacturing costs Work in process, January 1 Cost of goods put into process Less: Work in process, January 31 Cost of goods manufactured

67,500.00 90,210.00 112,762.50 270,472.50 25,500.00 295,972.50 27,000.00 268,972.50

Problem 2 - Donna Company Direct materials used Materials, May 1 Purchases Total available Less> Mat.- May 31 Direct labor Factory overhead Total manufacturing costs Work in process, May 1 Cost of goods put into process Less: Work in process, May 31 Cost of goods manufactured Finished goods – May 1 Total goods available for sale Less: Finished goods – May 31 Cost of goods sold

22,000 100,000 122,000 25,000

97,000 80,000 120,000 297,000 25,800 322,800 18,000 304,800 45,000 349,800 24,000 325,800

Problem 3 – Blanche Corporation 1, Income Statement Sales Less: Cost of goods sold Gross profit Less: Operating expenses Marketing Administrative Net income

1,200,000 751,000 449,000 60,000 12,000

72,000 377,000

Blanche Corporation 2. Direct materials used Materials, March 1 Purchases Total available Less> Mat.- March 31 Direct labor Factory overhead Total manufacturing costs Work in process, March 1 Cost of goods put into process Less: Work in process, March 31 Cost of goods manufactured Finished goods – March 1 Total goods available for sale Less: Finished goods – March 31 Cost of goods sold Problem 4 - Roy Company 1, Entries a. Materials Accounts payable b. Payroll Withholding taxes payable SSS Premiums payable Phil Health contributions payable Pag-ibig funds contributions payable Accrued payroll Work in process Factory overhead control Payroll c. Materials Accounts payable d. Factory overhead control SSS premiums payable Phil Health contributions payable Pag-ibig funds contributions payable

50,000 400,000 450,000 42,000

408,000 210,000 140,000 758,000 100,000 858,000 95,000 763,000 90,000 853,000 102,000 751,000

120,000 120,000 54,000 11,200 2,400 375 1,620 38,405 45,000 9,000 54,000 25,000 25,000 5,595 3,600 375 1.620

e. Work in process Factory overhead control Materials

75,000 14,000

f. Accounts payable Materials

1,000

89,000 1,000

Page 2 – Chapter 3 g. Accounts payable Accrued payroll Cash

136,500 38,405 174,905

h. Factory overhead control Miscellaneous accounts

16,900

i. Work in process Factory OH Applied (45,000 x 120%)

54,000

16,900 54,000

j. Finished goods Work in process

116.000 116,000

k. Accounts receivable Sales

150,000 150,000

Cost of goods sold Finished goods

90,000 90,000

2. Statement of cost of goods sold . Direct materials used Purchases Less: Purchase returns Total available for use Less> Mat.- October 31 Direct labor Factory overhead Total manufacturing costs Less: Work in process, October 31 Cost of goods manufactured Less: Finished goods – March 31 Cost of goods sold, normal Less: OA-FO Cost of goods sold, actual Problem 5 – Darvin Company 1. Entries a. Materials Accounts payable b. FOControl Accounts payable c. Payroll W/Taxes payable SSS Premium payable Phil Health contributions payable PFC payable Accrued payroll

145,000 1,000 144,000 55,000

89,000 45,000 54,000 188,000 72,000 116,000 26,000 90,000 8,505 81,495 200,000 200,000 35,000 35,000 210,000 18,520 8,400 1,125 6,300 175,655

Page 4 Work in process Factory Overhead control Selling expense control Adm. expense control Payroll

140,000 30,000 25,000 15,000 210,000

d. Accrued payroll Cash

175,000

e. FO Control Selling expense control Adm. Expense control SSS prem. Payable MC payable PFC payable

14,200 2,375 1,350

175,000

10,500 1,125 6,300

f. Work in process FO Control Materials

185,000 35,000

g. Work in process FO Control

114,200

h. Finished goods Work in process

410,000

i. Accounts receivable Sales

539,000

Costs of goods sold Finished goods

385,000

j. Cash

220,000 114,200 410,000 539,000 385,000 405,000

Accounts receivable k. Accounts payable Cash

405,000 220,000 220,000

Page 5 2. Cost of goods sold statement Direct materials used Materials, January 1 Purchases Total available Less> Mat.- Jan. 31 Ind. Materials Direct labor Factory overhead Total manufacturing costs Work in process, January 1 Cost of goods put into process Less: Work in process, January 31 Cost of goods manufactured Finished goods – January 1 Total goods available for sale Less: Finished goods – January 31 Cost of goods sold 3. Income Statement Sales Less: Cost of goods sold Gross profit Less: Operating expenses Selling Administrative Net income 4 Balance sheet Cash Accounts receivable Finished goods Work in process Materials

110,000 194,000 60,000 47,200 30,000

Total

_______ 441,200

Problem 6 1. Cost of goods manufactured Work in process, December 31 Cost of goods put into process Total manufacturing costs Work in process, January 1

50,000 200,000 250,000 30,000 35,000

65,000

185,000 140,000 114,200 439,200 18,000 457,200 47,200 410,000 35,000 445,000 60,000 385,000 539,000 385,000 154,000

27,375 16,350

43,725 110,275

Accounts payable Accrued payroll W/tax payable SSS Prem. payable Medicare Cont. payable PFC payable Common stock Retained earnings

25,000 8,655 18,520 18,900 2,250 12,600 200,000 155,275 441,200

800,000 87,000 887,000 ( 790,000) 97,000

Page 6 2. Cost of goods manufactured Finished goods, January 1 Total goods available for sale Cost of goods sold Finished goods, December 31 4.

Direct materials used Materials, December 31 Total available for sale Materials, January 1 Materials purchased

Problem 7 – Kyle Manufacturing Company 1. Direct materials used ( 300.000 x 75%) Direct labor (350,000 x 60%) Factory overhead – actual Indirect materials (300,000 x 25%) 75,000 Indirect labor (350,000 x 40%) 140,000 Heat, light, and water 120,000 Depreciation 75,000 Property taxes 65,000 Repairs and maintenance 40,000 Total manufacturing costs/cost of goods manufactured 2, 3. 4. 5

800,000 80,000 880,000 (750,000) 130,000 590,000 150,000 740,000 (100,000) 640,000 225,000 210.000

515,000 950,000

Unit cost = 950,000/125,000 = P7.60 per unit Prime cost = 225000 + 210,000 = P 435,000 Conversion cost = 210,000 + 515,000 = P 725,000 Period cost = 80,000 + 50,000 = P 130,000

Problem 8 - Norman Company 1, Materials, October 1 Purchases Materials, October 31 Direct materials used Direct labor Factory overhead (80,000 = 12,500 x 8.00) 6,40 Total manufacturing costs

48,000 112,000 (40,000) 120,000 80,000 100,000 300,000

2.

Total manufacturing costs Work in process, Oct. 1 Work in process, Oct. 31 Cost of goods manufactured

300,000 24,000 ( 16,000) 308,000

3.

Cost of goods manufactured Finished goods, Oct. 1 Finished goods, Oct. 31 Cost of goods sold

308,000 72,000 ( 80,000) 300,000

Page 7 4. Sales Cost of goods sold Marketing and administrative expenses Net income Problem 9 – Janice Company 1, Sales (50,000/10%) Selling & administrative expenses Net income Cost of goods sold

400,000 ( 300,000) ( 40,000) 60,000 500,000 ( 50,000) ( 50,000) 400,000

2.

Cost of goods sold Finished goods, March 31 Finished goods, March 1 Cost of goods manufactured

400,000 180,000 ( 120,000) 460,000

3.

Cost of goods manufactured Work in process, March 31 Work in process, March 1 Total manufacturing costs Factory overhead Direct labor (126,000/75%) Direct materials used Materials, March 31 Purchases Materials, March 1

460.000 100,000 ( 90,000) 470,000 (126,000) (168,000) 176,000 20,000 (100,000) 96,000

Problem 10 - Selina Corporation 1. Cost of goods manufactured Work in process, December 31 Cost of goods put into process

2. 3.

1,700,000 500,000 2,200,000

Cost of goods manufactured + WP, end = TMC + WP, beg 1700,000 + X = 1,800,000 + .80X X - .80X = 1,800,000 – 1,700,000 X = 100,00/.20 = 500,000 WP, Dec. 31 = 500,000 Total manufacturing cost Factory overhead ( (1,800,000 x 25% ) Direct labor (450,000/72%) Direct materials used

Problem 11 - Kyra Alexis Corporation 1. Materials put into process Materials, Aug. 31 Materials, Aug. 1 Materials purchased

1,800,000 ( 450,000) ( 625,000) 725,000 120,000 75,000 ( 60,000) 135,000

Page 8 2. Materials put into process Direct labor ( 70,000 + 80,000) Factory overhead - A (70,000 x 120%) B ( 80,000 x 80%) Total manufacturing cost

120,000 150,000 84,000 64,000

148,000 418,000

3.

Total manufacturing cost Work in process, Aug. 1 Work in process, Aug. 31 Cost of goods manufactured

418,000 80,000 ( 64,000) 434,000

4.

Cost of goods manufactured Finished goods, Aug. 1 Finished goods, Aug. 31 Cost of goods sold

434,000 54,000 ( 60,000) 428,000

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

11. 12. 13. 14. 15. 16. 17. 18. 19 20.

B C B C C D B B B B

21. 22. 23. 24. 25. 26. 27. 28. 29. 30.

B D A B 116,000 A (No. 5 should be 73% D A A B