CHAPTER 5-cost

1

CHAPTER 5 Multiple Choices – Theoretical 1. 2. 3. 4. 5.

c b a a a

6. 7. 8. 9. 10.

a a a d a

Multiple Choices – Computational 1.

(a) Regular pay (46 hours x P45) Overtime pay (6 hours x P22.50) Gross earnings

2.

(a) Regular pay (42 hours x P40) Overtime pay (2 hours x P20) Gross earnings Deductions: Withholding tax (3%) SSS contributions (2%) Phil. Health contributions (1%) Pag-ibig contributions (1%) Net pay

3.

P2,070 135 P2,205

P1,680.00 40.00 1,720.00 P51.60 34.40 17.20 17.20

(b) Regular pay (50 hours x P180) Overtime pay (10 hours x P90) Charge to work in process

4.

P9,000.00 900.00 P9,900.00

(a) Regular pay, charge to work in process account

5.

120.40 P1,599.60

P9,000.00

(b) Bonus pay [(P100 + P320) x 40 hours x 4 weeks] / 50 = Vacation pay [(P100 + P320) x 40 hours x 2)] / 50 = Total charge to Manufacturing Overhead Control

6.

(b), P1,344

7.

(d), P672

P 1,344 672 P 2,016

2 8.

(d) Gross earnings Less regular pay (80 hours x P48) Overtime pay Divided by overtime rate (P48 x 150%) Overtime hours

P4,560 3,840 720 72 10

Regular pay (80 + 10) x P46 = P4,320 9.

(d) Benefits Overtime premium (P4,560 - P4,320) Charged to Manufacturing Overhead Control

10.

(b) Bonus (P14,904 / 11.5 mos.) Vacation [(P14,904 x ½) / 11.5 mos.] Pension (P2,070 / 12) Total monthly liability

11.

P1,092.80 240.00 P1,332.80

(c) , 7 hours x P20 = P140

P1,296 648 180 P2,124

3 PROBLEMS Problem 5-1 (1)

(2)

Factory Payroll Withholding tax payable SSS contribution payable Phil. Health contribution payable Pag-ibig contribution payable Payroll payable To record labor incurrence Work in process Factory overhead control Selling expenses Administrative expenses Factory Payroll To record payroll distribution.

480,000 4,800 19,200 4,800 7,200 444,000

288,000 66,000 72,000 54,000 480,000

Factory overhead control Selling expenses Administrative expenses SSS Contribution payable ECC payable Phil health contribution payable Pag-ibig contribution payable To record employer’s contribution.

SSS ECC Phil. Health Pag-ibig

Direct Labor (P288,000) P17,280 5,760 2,880 4,320 P30,240

Indirect Labor (P66,000) P3,960 1,320 660 990 P6,930

28,800 9,600 4,800 7,200 Sales Salaries (P72,000) 4,320 1,440 720 1,080 P7,560

Office Salaries (P54,000) 3,240 1,080 540 810 P5,670

Problem 5-2 (1)

(2-a)

Factory Payroll Withholding tax payable SSS contribution payable Phil. Health contribution payable Pag-ibig contribution payable Payroll payable To record labor incurrence

18,000

Administrative expenses Factory Payroll To record distribution of payroll.

18,000

2,400 720 180 270 14,430

18,000

Total (P480,000) P28,800 9,600 4,800 7,200 P50,400

4 Problem 5-2 (continued) (2-b) Administrative expenses SSS Contribution payable ECC payable Phil. Health contribution payable Pag-ibig contribution payable To record employer’s share for payroll taxes.

1,890 1,080 360 180 270

Problem 5-3 (1)

(2)

Work in process Factory Payroll To record labor cost for: Regular pay (48 hours x P200) Overtime pay (8 hours x P100) Total

10,400 10,400 P 9,600 800 P10,400

Work in process (regular pay) Factory overhead control (overtime pay) Factory Payroll To record payroll distribution.

9,600 800 10,400

Problem 5-4 (a)

(b)

(c)

Factory Payroll Payroll payable To record labor cost. Work in process Factory Payroll To record labor distribution.

27,600 27,600 27,600 27,600

Factory overhead control 3,600 Estimated liability for bonus Estimated liability for vacation To record liability for bonus and vacation pay: Bonus: P27,600 x 11.5 months = P2,400 Vacation: P27,600 / 2) P13,800 / 11.5 months = P1,200.

2,400 1,200

Problem 5-5 Factory overhead control Estimated liability for bonus Estimated liability for vacation To record vacation and bonus pay for one Week’s production.

7,104 4,736 2,368

Bonus [(P200 + P1,280) x 40 hours x 4 weeks] / 50 weeks = P4,736 Vacation [P200 + P1,280) x 40 hours x 2 weeks] / 50 weeks = 2,368

5 Problem 5-6 (1)

(2)

(3)

(4)

Factory Payroll Withholding tax payable SSS contribution payable Phil. Health contribution payable Pag-ibig contribution payable Payroll payable To record labor incurrence

112,000 9,488 4,920 1,400 2,240 93,952

Payroll payable Cash To record payment of the payroll.

93,952

Factory overhead control Marketing expenses Administrative expenses SSS contribution payable Phil. Health contribution payable Pag-ibig contribution payable ECC payable To record employer’s payroll taxes.

6,216 2,072 2,072

93,952

Withholding tax payable SSS contribution payable Phil. Health contribution payable Pag-ibig contribution payable ECC payable Cash in bank To record payment of payroll taxes.

5,600 1,400 2,240 1,120 43,488 22,280 3,960 6,912 1,120 77,760

Problem 5-7 Employee J. Sy F. Lim H. Ong W. Tao

Regular Earnings

Overtime Premium

P1,872.00 1,702.00 1,453.60 1,188.00

P -0185.00 94.80 66.00

Gross Earnings P 1,872.00 1,887.00 1,548.40 1,254.00

Problem 5-8 (1)

Nov. 7:

Nov. 14:

Factory Payroll Withholding tax payable Payroll payable WTP (P2,760 + P10,680) x 3%

10,680.00

Factory Payroll Withholding tax payable (3%) Payroll payable

11,040.00

403.20 10,276.80

331.20 10,708.80

6

Problem 5-8 (continued): Nov. 21:

Nov. 28:

(2)

(3)

Factory Payroll Withholding tax payable (3%) Payroll payable

10,800.00 324.00 10,476.00

Factory Payroll 10,560.00 Withholding tax payable (3%) SSS contribution payable (45,840 x 3%) Phil. Health cont. payable (P45,840 x 2%) Payroll payable

Work in process Factory overhead control Factory Payroll

316.80 1,375.20 916.80 7,951.20

35,880.00 7,200.00 43,080.00

Factory overhead control 4,523.40 SSS contribution payable (P43,080 x 4.5%) Phil. Health cont. payable (P43,080 x 2%) Estimated liability for vacation pay (P43,080 c 4%)

1,938.60 861.60 1,723.20

Problem 5-9 (1) E Employe e Reyes Santos Manalo Cruz Sanchez Webb

(2)

a r n i n g

Regular Earnings 560.00 1,196.00 752.50 442.90 382.50 920.00 4,253.90

Overtime Premium 78.00 26.25 15.45 21.25 140.95

s

Gross Earnings 560.00 1,274.00 778.75 458.35 403.75 920.00 4,394.85

D With. Tax 84.00 191.10 116.81 68.75 60.56 138.00 659.23

e

d SSS 34.72 78.99 48.28 28.42 25.03 57.04 272.48

u

c

t

Phil. Health 8.40 19.11 11.68 6.88 6.06 13.80 65.92

Factory Payroll 4,394.85 Withholding tax payable SSS contribution payable Phil. Health contribution payable Pag-ibig contribution payable Union dues deduction payable Payroll payable To record payroll for the week ending October 31, 2010.

i

o PagIbig 8.40 19.11 11.68 6.88 6.06 13.80 65.92

n

s Others 10.00 10.00 10.00 10.00 10.00 10.00 60.00

659.23 272.48 65.92 65.92 60.00 3,271.30

Net Amount 422.88 955.69 580.30 337.42 296.04 687.36 3,271.30

7 Problem 5-10 (1)

(2)

(3)

Factory Payroll 658,150 SSS contribution payable Phil. Health contribution payable Withholding tax payable Pag-ibig contribution payable Payroll payable or Wages payable To record payroll for the week ending April 20, 2010.

40,805 9,872 98,723 9,800 498,950

Payroll payable Vouchers payable To record payroll voucher.

498,950 498,950

Voucher payable Cash in bank To record payment of the payroll.

498,950 498,950

Problem 5-11 (1)

(2)

(3)

(4)

Factory Payroll 84,380 Withholding tax payable SSS contribution payable Phil. Health contribution payable Pag-ibig contribution payable Pension plan contribution payable Payroll payable or salaries and wages payable To record payroll. Work in process Factory overhead control Factory payroll

12,700 5,232 1,266 1,680 4,200 59,302

62,140 19,460

Factory overhead control 9,958 SSS contribution payable Phil. Health contribution payable Pag-ibig contribution payable ECC payable To record employer’s payroll taxes on factory wages for the month.

84,380 2,532 1,688 1,688 4,050

The balance of the Factory Payroll account if any represents the amount of factory wages earned and charged to production but unpaid at the end of the month. The balance is shown the balance sheet under the current liability section.

8 Problem 5-12 (1)

ETG Corporation Summary of Factory Payroll Taxes For the month ended March 31, 2010

Department Factory Supply Factory Adm. Cutting Assembly Finishing Total

(2)

SSS P 3,273.60 3,302.12 4,487.56 4,954.42 5,246.44 P21,264.14

Phil. Health P 792.00 798.90 1,085.70 1,198.65 1,269.30 P5,144.55

Factory payroll SSS contribution payable Phil. Health contribution payable Pag-ibig contribution payable ECC payable Withholding tax payable To record employer’s payroll taxes.

Pag-ibig P 792.50 798.90 1,085.70 1,198.65 1,269.30 P5,144.55

ECC P528.00 532.60 723.80 799.10 846.20 P3,429.70

40,132.54 21.264.14 5,144.55 5,144.55 3,429.70 5,149.60

Problem 5-13 2010 Sept. 15:

30:

Factory payroll 32.500 SSS contribution payable Phil. Health contribution payable Pag-ibig contribution payable Withholding tax payable Salaries and wages payable To record factory payroll, Sept. 1-15.

2,015 487 487 4,900 24,611

Salaries and wages payable Vouchers payable To record payroll voucher.

24,611 24,611

Voucher payable Cash in bank To record payment of payroll.

24,611

Factory payroll 83.200 SSS contribution payable Phil. Health contribution payable Pag-ibig contribution payable Withholding tax payable Salaries and wages payable To record factory payroll, Sept. 16-30.

24,611

2,058 498 498 5,120 75,026

With. Tax P 825.33 496.51 1,174.24 1,383.75 1,269.77 P5,149.60

9 Problem 5-13 (continued) Sept. 30

Salaries and wages payable Voucher payable To record payroll voucher.

75,026

Voucher payable Cash in bank To record payment of payroll.

75,026

Work in process Factory overhead control Factory payroll To record payroll distribution.

75,026

75,026 46,240 19,460 65,700

Factory overhead control 8,237.00 SSS contribution payable Phil. Health contribution payable Pag-ibig contribution payable ECC contribution payable To record employer’s payroll taxes on Factory wages for the month of September.

4,073 985 1,579 1,600

Problem 5-14

JOB COST SHEET Customer Delta Dept. Store Description On file Quantity 200

DATE

MATERIALS REQ. NO. AMOUNT

Job 479 Date Started 9/10/2010 Date Completed _______ DIRECT LABOR DATE 9/23 9/30

REF. TTA TTA

HOURS 207 732 939

APPLIED FACTY OVERHEAD AMOUNT 1,034.00 3,568.00 4,602.00

DATE

HOURS

RATE

AMOUNT

10 Problem 5-14 (continued) JOB COST SHEET Customer Educational Toys Description On file Quantity 300

DATE

MATERIALS REQ. NO. AMOUNT

Job 480 Date Started 9/18/2010 Date Completed _______ DIRECT LABOR DATE 9/23 9/30

REF. TTA TTA

HOURS 183 447 630

APPLIED FACTY OVERHEAD AMOUNT 858.00 2,182.00 3,040.00

DATE

HOURS

RATE

AMOUNT

JOB COST SHEET Customer Peter Pan Toys Store Description On file Quantity 350

DATE

MATERIALS REQ. NO. AMOUNT

Job 481 Date Started 9/25/2010 Date Completed _______ DIRECT LABOR

DATE 9/23 9/30

REF. TTA TTA

HOURS 247 1,006 1,253

APPLIED FACTY OVERHEAD AMOUNT 1,237.00 2,772.00 4,009.00

DATE

HOURS

RATE

AMOUNT

JOB COST SHEET Customer Jose’s Specialty Store Description On file Quantity 200

DATE

MATERIALS REQ. NO. AMOUNT

Job 482 Date Started 9/27/2010 Date Completed _______ DIRECT LABOR

DATE 9/30

REF. TTA

HOURS 387

APPLIED FACTY OVERHEAD AMOUNT 1,949.00

DATE

HOURS

RATE

AMOUNT

11

Problem 5-14 (continued) JOB COST SHEET Customer Pablo Toys Shop Description On file Quantity 150

DATE

MATERIALS REQ. NO. AMOUNT

Job 483 Date Started 9/27/2010 Date Completed _______ DIRECT LABOR DATE 9/30

REF. TTA

HOURS 96

APPLIED FACTY OVERHEAD AMOUNT 490.00

DATE

HOURS

RATE

AMOUNT

DEPARTMENTAL OVERHEAD ANALYSIS SHEET Department __________________ DATE Sept 2 9 15 16 23 30 30

REF. TTA TTA TTA TTA TTA TTA SPT

TOTAL 1,917.00 2,801.00 7,320.00 3,430.00 3,722.00 3,163.00 7,979.27 30.332.27

INDIRECT MATERIALS

Month of September, 2010 INDIRECT LABOR 1,917.00 2,801.00 7,320.00 3,430.00 3,722.00 3,163.00 22,353.00

PAYROLL TAXES

7,979.27 7,979.27

DEPN.

REPAIRS &MAINT.

UTILITIES

OTHER ITEM

AMOUNT

12

Problem 5-14 (continued) Work in Process DATE 2010 SEPT. 30

EXPLANATION

POST REF.

DEBIT

J9-33

50,171.00

No. CREDIT

BALANCE

DR. CR.

50,171.00

Dr.

SSS Contribution Payable DATE 2010 SEPT. 30

EXPLANATION

POST REF.

DEBIT

J9-34

No. CREDIT

4,961.99

EXPLANATION

POST REF.

DEBIT

J9-34

CREDIT 1,200.48

DR. CR.

4,961.99

Cr.

No.

EXPLANATION

POST REF. J9-34

DEBIT

CREDIT 385.45

211

BALANCE

DR. CR.

1,200.48

Cr.

Pag-ibig Contribution Payable DATE 2010 SEPT. 30

210

BALANCE

Phil. Health Contribution Payable DATE 2010 SEPT. 30

122

No.

212

BALANCE

DR. CR.

385.45

Cr.

13

Problem 5-14 (continued)

Withholding Tax Payable DATE 2010 SEPT. 30

EXPLANATION

POST REF.

DEBIT

J9-34

CREDIT 1,431.35

Factory Payroll DATE 2010 SEPT. 1 2 9 15 16 23 30 30 30

EXPLANATION Balance

POST REF. √ WP WP WP WP WP WP SP J9-33

DEBIT

CREDIT

13,740.00 16,190.00 7,320.00 14,950.00 15,130.00 14.124.00 7,508.00 80,032.00

2010 SEPT. 30 30

EXPLANATION

POST REF. J9-33

DEBIT 29,861.00 7,979.27

CREDIT

213

BALANCE

DR. CR.

1,431.35

Cr.

No.

Manufacturing Overhead Control DATE

No.

BALANCE 8,930.00 4,810.00 21,000.00 28,320.00 43,270.00 58,400.00 72,524.00 80,032.00 -0-

500 DR. CR. Cr. Dr. Dr. Dr. Dr. Dr. Dr. Dr.

No.

501

BALANCE

DR. CR.

29,861.00 37,840.27

Dr. Dr.

14

Problem 5-14 (continued) DOLLS, INC. Summary of Factory Wages September 2010 PAYROLL PERIOD Sept. 1-2 3-9 1-15 10-16 17-23 24-30 16-30

DIRECT LABOR 2,893.00 13,389.00 11,520.00 11,408.00 10,961.00 50,171.00

Summary Direct Labor Indirect Labor Total

INDIRECT LABOR 1,917.00 2,801.00 7,320.00 3,430.00 3,722.00 3,163.00 7,508.00 29,861.00

TOTAL 4,810.00 16,190.00 7,320.00 14,950.00 15,130.00 14,124.00 7,508.00 80,032.00

50,171.00 29,861.00 80,032.00

GENERAL JOURNAL DATE 2010 Seot. 30

30

ACCT NO.

REF

Work in process Manufacturing overhead control Factory payroll To record labor cost distribution.

122 501 500

√ √ √

50,171.00 29,861.00

Manufacturing overhead control SSS contribution payable Phil. Health cont. payable Pag-ibig cont. payable With. Tax payable To record employer’s payroll taxes on factory wages for the month.

501 210 211 212 213

√ √ √ √ √

7,979.27

ACCOUNT

DEBIT

CREDIT

80,032.00

4,961.99 1,200.48 385.45 1,431.35

15

Problem 5-14 (continued) Requirement 12: JOB

HOURS

479 480 481 482 483 TOTAL

TOTAL COST

939 632 806 387 96

P 4,602.00 3,109.00 4,009.00 1,949.00 490.00 P14,158.00

2,860

Requirement 13: Indirect labor Payroll taxes Total

P29,861.00 7,979.27 P37,840.27

Requirement 14: NO. AND ACCOUNT NAME 122 210 211 212 213 500 501

DEBIT BALANCE

Work in process 50,171.00 SSS contribution payable Phil. Health contribution payable Pag-ibig contribution payable Withholding tax payable Factory payroll -0Manufacturing overhead control

CREDIT BALANCE P 4,961.99 1,200.48 385.45 1,431.35 -037,840.27