Chapter 4 Cost

Chapter 4 True or False 1. False 6. True 2. True 7. False 3. True 8. False 4. False 9. True 5. True 10.False

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

Matching 1. a 2. h 3. p 4. d 5. k

6. 7. 8. 9. 10.

Multiple choice – Theory 1, d 6. d 2. b 7. a 3. b 8. c 4. d 9. b 5. d 10. c

11. 12. 13. 14. 15.

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

21. True 22. False 23. False 24. False 25. True

16. 17. 18 19. 20.

21. 22. 23. 24. 25.

b g k, l, m i n d d c b c

a c b b b

c b a c b

Problem 1 – Garcia Company 1 Journal entries 1. Materials Accounts payable 2.

3. 4. 5.

Work in process Factory overhead control Materials Materials Work in process FO Control Accounts payable Materials

28,000 28,000 22,000 3.000 25,000 800 500 300 1,000 1,000

Payroll 39,000 Withholding taxes payable 3,025 SSS Premiums payable 1,600 Phil Health contributions payable 375 Pag-ibig funds contributions payable 1,200 Accrued payroll 32,800

Page 2 Accrued payroll Cash

32,800

Work in process Factory overhead control Payroll

33,400 5,600

Factory Overhead Control SSS Premiums payable Phil Health cont. payable Pag-ibig cont. payable

3,575

FO Control Accum Depr. Prepaid ins. Accounts payable

15,000

9.

Work in process FO Applied

26,720 26,720

10.

Finished goods WP Job 401 Job 402

72,220 72,220

6.

7.

8

11.

12.

32,800

39,000 2,000 375 1,200 3,000 950 11,050

31,720 40,500

Accounts receivable Sales (31,720 x 140%)

44,408 44,408

Cost of goods sold FG

31,720 31,720

Cash

35,000 35,000

Accounts receivable Direct materials 3,000 5,500 8,500 Direct materials 5,600 7,000 12,600

Job 401 Direct labor 2,500 10,400 12,900

Factory overhead 2,000 8,320 10,320

Job 402 Direct labor 3,000 12,500 15,500

Factory overhead 2,400 10,000 12,400

Page 3 Direct materials 9,500 ( 500) 3.

Job 403 Direct labor 10,500

Factory overhead 8,400

Cost of goods sold statement Direct materials used Materials, August 1 Purchases Less. Purchase returns Total available for use Less: Materials, Aug. 31 Ind. Materials Direct labor Factory overhead Total manufacturing costs Work in process, Aug. 1 Cost of goods put into process Less: Work in process, Aug. 31

22,000 28,000 1,000 24,800 2,700

27,000 49,000 27,500

Cost of goods manufactured Finished goods, Aug. 1 Total goods available for sale Less: Finished goods, Aug. 31 Cost of goods sold - normal Add. Under applied factory overhead Cost of goods sold Problem 2 - Golden Shower Company 2. Journal entries a. Materials Accounts payable````` X 20,000 x 5.20 = 104,000 Y 24,000 x 3.75 = 90,000 Ind. Materials 35,040 b. Payroll Withholding taxes payable SSS premiums payable Phil Health cont. payable Pag-ibig funds cont. payable Accrued payroll

21,500 33,400 26.720 81,620 18,500 100.120 27,900 72,220 25,000 97,220 65,500 31,720 155 31,875

229,040 229,040

220,000 31,000 7,000 440 6,600 174,960

Accrued payroll Cash Page 4otal

174,960 174,960

c. Work in process Factory overhead control Marketing & Adm. Exp. Control Payroll

156,000 24,000 40,000 220,000

Factory overhead control Marketing & adm. Exp. Control SSS Premiums payable Phil Health contr. Payable Pag-ibig funds contribution payable SSS (5%) FOC (180,000) 9,000 M & A Exp.control 2,000 11,000

Phil Health (0,.25%) 360 80 440

14,760 3,280 11,000 440 6,600 Pag-ibig ( 3% ) 5,400 1,200 6,600

d. Work in process Factory overhead control Materials Job 101 (x) 4,000 x 5.00 (x) 16,000 x 5.20 Job 103 ( x) 2,000 x 5.20 (Y) 5,000 x 3.75

20,000 83,200 103,200

Total 14,760 3,280 18.040

216,350 15,040 231,390 Job 102 (Y) 8,000 x 3.00 (Y) 16,000 x 3.75

24,000 60,000 84,000

10,400 18,750 29,150

e. Work in process FO Applied Job 101 = 10,000 x 2.25 102 = 16,000 x 2.25 103 = 12,000 x 2.25

85,500 85,500 22,500 36,000 27,000

f. Accounts receivable Sales

510,000 510,000

Cost of goods sold Work in process

380,700 380,700

Page 5 g. Cash Sales discount Accounts receivable

494,000 26,000 520,000

h. Marketing & Adm. Exp. Control Factory overhead control Cash Accum. Depreciation i.

Accounts payable Cash

j.

Factory overhead applied Cost of goods sold FO Control

30,000 25,600 51,600 4,000 170,000 170,000 85,500 6,100 79,400

DIRECT MATERIALS 5,000 103,200 108,200

JOB 101 DIRECT LABOR 4,000 44,000 44,000

FACTORY OVERHEAD 2,000 22,500 24,500

DIRECT MATERIALS 1,200 84,000 85,200

JOB 102 DIRECT LABOR 2,000 80,000 82,000

FACTORY OVERHEAD 800 36,000 36,800

DIRECT MATERIALS 21,.950

JOB 103 DIRECT LABOR 36,000

FACTORY OVERHEAD 27,000

STOCKCARDS MATERIAL X ISSUED

RECEIVED 20,000 @ 5.20

104,000 4,000 @ 5.00 18,000 @ 5.20

20,000 93,000

BALANCE 4,000 @ 5.00 20,000 4,000 @ 5.00 20,000 20,000 @ 5/20 104,000 2,000 @ 5.20

10,400

MATERIAL Y ISSUED

RECEIVED 24,000 @ 3.75

BALANCE 8,000 @ 3.00 24,000 8,000 @ 3.00 24,000 24,000 @ 3.75 90,000

90,000 8,000 @ 3.00 21,000 @ 3.75

24,000 78,750

3,000 @ 3.75

Problem 3 - J.A.N., Inc. 1. Direct material Direct labor (300 x 8) Factory OH (200 x 15) Total mfg. cost

4,300 2,400 3,000 9,700

2. Direct material Direct labor Prime cost

4,300 2,400 6,700

3. Direct material Factory overhead applied Conversion cost

2,400 3,000 5,400

Problem 4 – 1. Materials – Dept. 1 Dept. 2

2.400 1,300 3,700

3. Dept. 1 (500 x 4.00) Dept. 2 (320 x 1.00)

2. Dept. 1 (500 x 8.20) Dept. 2 (220 x 8.00)

4,100 1,760 5,860

5. Gross profit Less: M & A Net income

13,120 2,970 10,150

4. Contract price Less: Cost to manufacture DM. 3,700 DL 5,860 FO 2.320 Gross profit

Problem 5 - Star Wars Corporation Requirement No. 1 1. Work in process Materials 2.

Work in process Payroll

50,000 50,000 150,000 150,000

11,250

2,000 320 2,320 P 25,000

11,880 13,120

Page 7 3. Work in process FO Applied

90.000 90,000

4.

Finished goods Work in process

290,000 290,000

5.

Accounts receivable Sales

427,917 427,917

Cost of goods sold Finished goods

290,000 290,000

Selling price Direct materials Direct labor Factory OH Total cost Gross profit

Job 110 126,667 15,000 50,000 30,000 95,000 31,667

Job 220 170,000 10,000 50,000 30,000 90,000 80,000

Job 330 131,250 25,000 50,000 30,000 105,000 26,250

Total 427,917 50,000 150,000 90,000 290,000 137,917

Problem 6 – Ellen Corporation MATERIALS__________ WORK IN PROCESS_______ Beg. 60,000 5) 125,000 Bal. beg. 85,000 2) 820,000 6) 145,000 Bal. end 80,000 5) DM 125,000 205,000 205,000 4) DL 400,000 3) OH 320,000 Bal.end 110,000 930,000 930,000 FINISHED GOODS______ Bal. beg. 120,000 1) 850,000 2) 820,000 Bal. end 90,000 940,000 940,000 7)

FACTORY OH CONROL____ 330,000

1)

COST OF GOODS SOLD_____ 850,000

FACTORY OH APPLIED _____ 3) 320,000

Entries 1. Materials Accounts payable

145000

2.

125,000

Work in process

145,000

Materials

125,000

Page 8 3. Work in process Payroll

400,000 400,000

4.

Work in process FO Applied

320,000 320,000

5.

Finished goods Work in process

820,000 820,000

6.

Cost of goods sold Finished goods

850,000 850,000

FO Control Various accounts Problem 7 - Ellen Joyce Company 1. Work in process Materials

330,000 330,000

2.

Work in process Payroll

156,000 156,000

3.

Work in process FO Applied

118,500 118,500

4.

Finished goods Work in process Job 201 Job 202 Job 203 Total Accounts receivable Sales

343,000 343,000

7.

5.

-

Cost of goods sold Finished goods Cost of goods sold statement Direct materials Direct labor Factory overhead Total manufacturing costs Less: Work in process, end Cost of goods manufactured

98,500 98,500

190,000 94,000 59,000 343,000 350,000 350.000 284,000 284,000 98,500 156,000 118,500 373,000 30,000 343,000

Less: Finished goods, end Cost of goods sold Page 8 = Abner Corporation 1. Direct materials used Materials – end Materials – beg. Direct materials purchased

59,000 284,000 205,000 90,000 ( 95,000) 200,000

2.

Total manufacturing costs Factory overhead Materials used Direct labor costs

675,000 ( 175,000) ( 205,000) 295,000

3.

Cost of goods available for sale Finished goods, end Cost of goods sold

775,000 (110,000) 665,000

4.

Sales Cost of goods sold Gross profit Problem 9 - Pacific Production Company 1. Materials - April 1 Purchases Materials – April 30 Direct materials used Indirect materials used

900,000 (665,000) 235,000

2.

Accrued payroll – April 30 Payroll paid Direct labor cost Indirect labor

6,000 44,000 ( 32,000) 18,000

3.

Direct labor cost Factory overhead rate Factory overhead applied

32,000 125%40,000

4.

Direct materials Direct labor Factory overhead Total manufacturing costs Work in process, beg. Work in process, end Cost of goods manufactured

78,000 32,000 40,000 150,000 82,000 ( 94,000) 138,000

5.

Cost of goods manufactured Finished goods, April 1

138,000 296,000

64,000 84,000 ( 60,000) ( 78,000) 10,000

Finished goods, April 30 Cost of goods sold Page 10 Problem 11 – Table and Chair Manufacturing Company 1) Materials Accounts payable

(304,000) 130,000

2)

Work in process FOC Materials

11,480 40

Payroll Accrued payroll

5,445

Work in process FOC Payroll

4,645 800

FOC

2,875

3)

4)

15,000 15,000

11,520 5,445

5,445

Rent Expense Payable Accum. Depreciation – Machines Accum. Depreciation – Factory Building Utilities Expense Payable Payroll Taxes Payable 5)

Work in process FO Applied

6)

Finished goods Work in process Direct materials Direct labor Factory overhead Total

7)

Cash

1,500 160 490 225 300 5,261.25 5,261.25

Job 101 10,500 3,175 3,618.75 17,293.75

21,386.25 21,385.25 Job 102 Total 980 11,480 1,470 4,645 1,642.50 5,261.25 4,092.50 21,386.25 25,000

Sales Cost of Goods Sold Finished goods

25,000 17,293.75 17,293.75

Accounts receivable Sales

4,000

Cost of goods sold Finished goods

4,092.50 4,092.50

4,000

Page 11 Problem 11 – Candy Corporation 1)

Job 101 Job 102 WP, July 1

2)

Job 101 Job 102 Job 103 Total

3)

P 175,000 120,000 P 295,000 80,000 x 125% 95,000 x 125% 115,000 x 125%

= P 100,000 = 118,750 = 143,750 362,500

Job 101 175,000

Job 102 120,000

Total 295,000

55,000 80,000 100,000 410,000`

80,000 95,000 118,750 413,750

135,000 175,000 218,750 823,750

Job 101 Add: Underapplied factory overhead Actual FO 375,000 Less: Applied FO 362,500 Cost of goods sold – actual

410,000

5)

FG, Inventory July 31 (Job 102)

413,750

6)

WP, Inventory, July 31 ( Job 103) Materials Labor Factory overhead Total WP Inventory, July 31

92,000 115,000 143,750 350,750

WP, beg. Cost added Materials Labor Overhead Total 4)

Problem 12 – MLT Company 1) Materials, June 1 Purchases Materials, June 30 Indirect materials Direct materials used 2)

Cost of goods manufactured Work in process, June 30 Work in process, June 1

12,500 422,500`

15,000 33,000 ( 19,000) ( 1,000) 28,000 120,000 30,000 ( 40,000)

3)

Total manufacturing cost

110,000

Cost of goods available for sale Total manufacturing costs Finished goods, June 1

190,000 (110,000) 80,000

Problem 13 – Miracle Company (start with No.. 3 then No. 2) 1) Cost of goods manufactured 168,000 WP, January 31 95,000 WP, January 1 ( 80,000) Total manufacturing cost 183,000 Direct labor (63,000 / 75%) ( 84,000) Factory overhead ( 63,000) Direct materials used 36,000 Materials January 31 50,000 Indirect materials used 1,000 Purchases ( 46,000) Materials, January 1 41,000 2)

Cost of goods sold – normal Finished goods, January 31 Finished goods, January 1 Cost of goods manufactured

150,000 78,000 ( 60,000) 168,000

3)

Sales ( 25,000 / 12.5%) Selling and administrative expenses Net income Cost of goods sold, actual Overapplied FO Actual 62,800 Less: Applied 63,000 Cost of goods sold, normal

200,000 ( 25,000) (25,200) 149,800 200 150,000

Problem 14 – Nona Company 1)

Units sold Finished goods, end Finished goods, beg Units completed/manufactured

2)

Direct materials used Direct labor Factory overhead Total mfg. cost/cost of goods manufactured Divide by units completed Cost of goods manufactured per unit

12,300 300 ( 100) 12,500 1,847,700 2,125,800 1,026,500 5,000,000 12,500 400/unit

Page 13 3) From Finished goods, beg. (100 units x P 430 ) From units completed during the period ( 12,200 x P 400) Cost of goods sold Or Finished goods, beg. Cost of goods manufactured Finished goods, end ( 300 x P400) Cost of goods sold

43,000 4,880,000 4,923,000 43,000 5,000,000 ( 120,000) 4,923,000

MULTIPLE CHOICE – PROBLEMS 1. A 11. OH IS APPLIED AT 125% OF DLCOST - B 2. A 12, A 21. C 3. C 13. C 22. C 4. D 14. D 23. C 5. A 15. A 24. B 6. B 16. D 25. 46,000 7. B 17. C 26. D 8. A 18. C 27. B 9. A 19. D 28. B 10. B 20. C 29. D 30. B