Chapter-3

CHAPTER 3 - COST ACCOUNTING CYCLE Problem 1 1. A 2. A 3. A, C 4. A 5. A 6. B 7. A 8. A, C 9. A 10. A 11. A 12. C 13. A 14. A 15. C Problem 2 - Marvin Manufacturing Company Marvin Manufacturing Company Cost of Goods Sold Statement For the year ended December 31, 2014 Direct materials used Materials, January 1 Purchases Total available for use Less> Materials, December 31 Direct labor Factory overhead Total manufacturing costs Work in process, January 1 Cost of goods put into process Less: Work in process, December 31 Cost of goods manufactured Finished goods, January 1 Total goods available for sale Less: Finished goods, December 31 Cost of goods sold

175,000 250,000 425,000 125,000

300,000 270,000 324,000 894,000 90,000 984,000 120,000 864,000 100,000 964,000 80,000 884,000

Problem 3 – Donna Company ( Cost of goods sold should P 550,000) Donna Company Cost of Goods Sold Statement For the month of May, 2014 Direct materials used Materials, May 1 Purchases Total available Less> Material - 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 Problem 4 - Ram 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 e. Work in process Factory overhead control Materials

124,000 107,800 231,800 115,000

116,800 160,000 240,000 516,800 129,200 646,000 124,000 522,000 150,000 672,000 122,000 550,000

180,000 180,000 80,000 11,200 2,400 375 1,620 64,405 60,000 20,000 80,000 20,000 20,000 5,595 3,600 375 1.620 120,000 10,000 130,000

f. Accounts payable Materials

5,000

g. Accounts payable Accrued payroll Cash

148,300 64,405

5,000

212.705

h. Factory overhead control Miscellaneous accounts

24,900

i. Work in process Factory OH Applied (56,000 x 120%)

72,000

24,900 72,000

j. Finished goods Work in process

180.000 180,000

k. Accounts receivable Sales

210,000 210,000

Cost of goods sold Finished goods

140,000 140,000

2. Statement of cost of goods sold . Direct materials used Purchases Less: Purchase returns Total available for use Less: Ind. Mat. used 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 Actual factory overhead (FO Control ) Less: Applied factory overhead Over applied factory overhead Problem 5 – Darvin Company 1. Entries a. Materials Accounts payable b. FOControl Accounts payable

200,000 5,000 195,000 10,000 65,000

75,000

120,000 60,000 72,000 252,000 72,000 180,000 40,000 140,000 11,705 128,295

60,495 72.000 ( 11,705)

200,000 200,000 35,000 35,000

c. Payroll W/Taxes payable SSS Premium payable Phil Health contributions payable PFC payable Accrued payroll Work in process Factory Overhead control Selling expense control Adm. expense control Payroll

210,000 18,520 8,400 1,125 6,300 175,655 140,000 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 Applied (140,000x80%)

112,000

h. Finished goods Work in process

410,000

i. Accounts receivable Sales

539,000

Costs of goods sold Finished goods

385,000

j. Cash

220,000 112,000 410,000 539,000 385,000 405,000

Accounts receivable k. Accounts payable Cash

405,000 220,000 220,000

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 - normal Underapplied factory overhead Cost of goods sold – actual 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 45.000 30,000

Total

_______ 439,000

Problem 6 - Blanche Corporation 1, Income Statement Sales Less: Cost of goods sold Gross profit Less: Operating expenses Marketing Administrative Net income

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

65,000

185,000 140,000 112,000 437,000 18,000 455,000 45,000 410,000 35,000 445,000 60,000 385,000 2,200 387,200 539,000 387,200 151,800

27,375 16,350

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

43,725 108,075 25,000 8,655 18,520 18,900 2,250 12,600 200,000 153,075 439,000

1,200,000 755,230 444,770 60,000 12,000

72,000 372,770

2. Cost of goods sold statement 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 7 1. Cost of goods manufactured Work in process, December 31 Cost of goods put into process Total manufacturing costs Work in process, January 1

50,000 400,000 450,000 47,485

402,515 210,000 140,000 752,515 102,350 854,865 117,135 737,730 100,000 837,730 82,500 755,230

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

2.

Cost of goods manufactured Finished goods, January 1 Total goods available for sale Cost of goods sold Finished goods, December 31

800,000 80,000 880,000 (750,000) 130,000

4.

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

590,000 150,000 740,000 (100,000) 640,000

Problem 8 – Madelyn Company 1. The company is using job order costing because the it is manufacturing a unique and custom made furniture 2. Manufacturing is allocated based on the direct labor cost incurred Factory overhead rate - 24,000,000/20,000,000 = 120% of direct labor cost 3. Actual factory overhead ( 500,000 + 750,000+1,000,000+11,000,000+2,000,000) 22,000,000 Applied ( 20,000,000 x 120%) 24,000,000 Overapplied overhead ( 2,000,000)

4. Direct materials used Direct labor Factory overhead applied Total manufacturing cost Work in process, January 1 Work in process, December 31 Cost of goods manufactured Finished goods, January 1 Finished goods, December 31 Cost of goods sold – normal Problem 9 - Alonzo Company 1. Purchases Increase in raw materials inventory Direct materials used Direct labor Factory overhead Total manufacturing cost Decrease in work in process inventory Cost of goods manufactured Decrease in finished goods inventory Cost of goods sold

30,000,000 20,000,000 24,000,000 74,000,000 5,000,000 ( 4,000,000) 75,000,000 13,000,000 (11,000,000 77,000,000 180,000 ( 15,000) 165,000 220,000 200,000 585,000 8,500 593.500 5,000 598,500

2. Cost per unit manufactured (593,500/10,000 units)

59.35

3. Sales Less – Cost of goods sold Gross profit

980,000 598,500 381,500

Problem 10 – Janice Company 1, Sales (50,000/10%) Selling & administrative expenses Net income Cost of goods sold

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 11 - Beautiful Corporation a. Direct materials requested (used) Materials inventory, end Materials inventory, beginning Materials purchased

82,320 38,910 ( 36,240) 84,990

b.

Direct labor cost (53,200/80%)

79,000

c.

Cost of goods sold Finished goods inventory, end Finished goods inventory, beg. Cost of goods completed

209,050 47,940 ( 44,260) 212,730

d.

Direct materials Direct labor Factory overhead applied Total manufacturing costs Work In process inventory, beg. Cost of goods put in to process Cost of goods completed Work in process inventory, end

e. f. g.

Materials inventory, beg Work in process inventory, beg. Finished goods inventory, beg.

h.

Materials inventory, beg. Purchases Materials inventory, end Materials requested (used)

i.

Factory applied (72,250 x 80%)

j.

Cost of goods completed Finished goods inventory, beg. Finished goods inventory, end Cost of goods sold

221,400 47,940 ( 51,180) 218,160

k.

Direct materials inventory used Direct labor Factory overhead applied Total manufacturing cost Work in process, beg. Cost of goods completed Work in process inventory, end

93,080 72.250 57,800 223,130 58,270 (221,400) 60,000

82,320 79,000 53,200 214,520 56,480 271,000 ( 212,730) 58,270 38,910 58,270 47,940 38,910 96,120 ( 41,950) 93,080 57,800

Problem 12 – Ravena Compny Materials Inventory________ Bal. beg. 21,360 b) 76,190 a)Purchases 93,640

Work in Process Inventory Bal. beg. 15,112 e) 185,063 b) DM 76,190 c) DL 49,640 d) FO 64,532

-

Finished Goods Inventory_____ Bal. beg. 17,120 f) 182,857 e) Cof GM 185,063

Factory Overhead Applied______ d) 64,532

Accounts Receivable________ 320,000

Payroll Payable_________ c) 49,640

f) Sales

Sales________________ f) 320,000 2.

f) CofGS

Direct materials used Direct labor Factory overhead applied WP inventory, beg. Cost of goods put into process Less: WP inventory, end DM DL FO Cost of goods completed

3.

Cost of goods sold (320,000/175%)

4,

Job No. 1 Balance Oct. 1(1,596 + 1,290 + 1,677) Cost added Direct labor Overhead (960 x 130%) Total costs

Cost of goods sold________ 182,857 76,190 49,640 64,532 15,112 205,474 6,680 6.970 7,761

20,411 185,063 182,857 3,402

960 1,248

Product unit cost (5,610/1,200) Job. No. 3 Balance Oct. 1 (1,984 + 1,760+ 2,288) Cost added Direct labor Overhead (1,610 x 130%) Total costs

4.675

Product unit cost (9,735/900)

10.82

2,208 5,610

6,032 1,610 2,093

3,703 9,735

Multiple choice THEORIES 1. A 11. D 2. C 12. C 3. B 4. C 5. B 6. B 7. C 8 C 9. D 10.D

PROBLEMS 1. B 2. 970,000 3. D 4. B 5. D 6. C 7. B 8. B 9. B 10. C

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

B C C D B B B B B D

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

A B B B A D D B A A