Cost Accounting - 2014

Chapter 2 - Costs – Concepts and classification

Problem 1- Ram Corporation

1. Manufacturing overhead
2. Manufacturing overhead
3. Direct materials
4. Direct labor
5. Manufacturing overhead
6. Manufacturing overhead
7. Direct materials
8. Manufacturing overhead
9. Manufacturing overhead
10. Manufacturing overhead

Problem 2
1. Manufacturing 6. Manufacturing
2. Selling 7. Administrative
3. Manufacturing 8. Seling
4. Selling 9. Administrative
5. Administrative 10.Selling

Problem 3-Rocco Product Cost Period Cost

Direct mat. Direct labor Mfg. OH Selling Adm
1. DM 220,000
2. Factory rent 50,000
3. Direct labor 180,000
4. Factory utilities 8,500
5. Supervision 60,000
6. Depreciation-FE 20,000
7. Sales Commission 57,000
8. Advertising 47,000
9. Depreciation-OE 10,000
10. Salary - pres. 250,000

1. TOTAL PRODUCT CST = 220,000 + 180,000 + 138,500

2. TOTAL PERIOD COST = 57,000 + 307,000
3. COST PER UNIT = 538,500/ 40,000 units
= P 13,4625

Problem 4 – Bug Company

1. Fixed Period 6. Variable Period
2. Fixed Inventoriable 7. Variable Inventoriable
3. Fixed Inventoriable 8. Fixed Inventoriable
4. Variable Inventoriable 9. Fixed Period
5. Fixed Inventoriable 10. Fixed Inventoriable
Problem 5 – Mighty Muffler, Inc.
a. P 50,000
b. P 50,000
c. P 60,000 = P120/muffler x 400 = P 48,000
500
d. 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 = P 125
h. P 50,000/500 = P 100
I, P 50,000/800 = P 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 62.50 + P 120 = P 182.50

Problem 6 – Marvin Desk

1. DM 8. OH
2. OH 9. OH
3. OH 10. DL
4. OH 11. OH
5. DL 12. OH
6. OH 13, 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 –
a. c - fixed (total amount is constant)
b. a – variable (4,480/3,200 = 1.40; 6,300/4,500 = 1.40 per unit is constant)
c. d - mixed ( 3,950/3,200 = 12.34; 5,250/4,500 = 1.16) total amount and amount per unit
varies in relation to units sold)

Problem 9 - Blanche Corporation

` 1. Direct materials used P 32.00
Direct labor 20.00
Variable manufacturing overhead 15.00
Variable marketing 3.00
Total variable cost per unit 70.00
X No. of units produced and sold 12,000
Total variable costs per month P 840,000
 2. Fixed manufacturing overhead P
6.00
Fixed marketing costs 4.00
Total fixed cost per unit 10.00
X No. of units produced and sold 12,000
Total fixed costs per month P 120,000

Problem 10
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 P 99.00

Variable marketing and administrative 6.00
Total variable costs per unit 105.00

3. Total variable manufacturing cost per unit P 99,00

Fixed manufacturing overhead (30,000/1,200) 25.00
Full manufacturing cost per unit 124.00

4. Full manufacturing cost per unit 124.00

Variable marketing and administrative 6.00
Fixed marketing and administrative 20.00
Full cost to make and sell per unit 150.00

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 4,400

Variable cost ( 4,500 x 7.50) 35,100
Totl manufacturing costs 39,500
Problem 12 – Valdez Motors Co.
1. Variable cost per machine hour = 5,475 – 3,975
210 - 145
= 23.08 per machine hour

2. 210 hours 145 hours

Total overhead costs 5,475 3,975
Less: Variable costs
( 210 x 23.08) 4,847
( 145 x 23.08) _____ 3,347
Fixed cost 628 628
Problem 13 – Marco Company
Department A Department B
1. Direct materials P 400,000 P 700,000
Direct labor 350,000 600,000
Factory supplies 10,000 24,000
Direct variable costs P 760,000 P 1,324,000

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

4. Controllable direct fixed cost P 45,000 P 55,000

Uncontrollable direct fixed cost 100,000 180,000
Total direct fixed cost P 145,000 P 235,000

5. Allocated costs from headquarters P 120,000 P 180,000

Allocated repairs & maintenance 40,000 80,000
Allocated factory rent – bldg. 60,000 140,000
Allocated plant executive’s salaries 140,000 210,000
Total indirect costs P 360,000 P 610,000

6. Allocated costs from headquarters P 120,000 P 180,000

Allocated factory rent – bldg. 60,000 140,000
Allocated plant executive’s salaries 140,000 210,000
Depreciation- mach. & equipment 100,000 180,000
Total unavoidable costs P 420,000 P 710,000

True/False Questions
1. False 6. True 11. False 16. True
2. False 7. False 12. False 17. False
3. True 8. True 13. True 18. True
4. False 9. False 14. False 19. False
5. False 10. True 15. False 20. True

Multiple choice
1. B 11. C 21. A
2. C 12. D 22. C
3. B 13. C 23. A
4. C 14. B 24. C
5. D 15. A 25. D
6. A 16. B 26. B
7. D 17. B 27. A
8. D 18. A 28. B
9. B 19. D 29. C
10. C 20. B 30. B