Downstream Manufacturing Company realized too late that it had made a mistake locating its controller’s office and

its electronic data processing system in the

basement. Because of the Typhoon, the Pasig River overflowed on May 2 and flooded the company’s basement. Electronic data storage was beyond retrieval, and
the company had not provided off-site storage of data. Some of the paper printouts were located but were badly faded and only partially legible. On May 3, when
the river subsided, company accountants were able to assemble the following factory-related data from the debris and from discussions with various knowledgeable
personnel. Data about the following accounts were found:

• Raw Material (includes indirect material) Inventory: Balance April 1 was P4,800.
• Work in Process Inventory: Balance April 1 was P7,700.
• Finished Goods Inventory: Balance April 30 was P6,600.
• Total company payroll cost for April was P29,200.
• Accounts payable balance April 30 was P18,000.
• Indirect material used in April cost P5,800.
• Other nonmaterial and non-labor overhead items for April totalled P2,500.

Payroll records, kept at an across-town service center that processes the company’s payroll, showed that April’s direct labor amounted to P18,200 and represented
4,400 labor hours. Indirect factory labor amounted to P5,400 in April. The president’s office had a file copy of the production budget for the current year. It revealed
that the predetermined manufacturing overhead application rate is based on planned annual direct labor hours of 50,400 and expected factory overhead of
P151,200.

Discussion with the factory superintendent indicated that only two jobs remained unfinished on April 30. Fortunately, the superintendent also had copies of the job
cost sheets that showed a combined total of P2,400 of direct material and P4,500 of direct labor. The direct labor hours on these jobs totalled 1,072. Both of these
jobs had been started during the current period. A badly faded copy of April’s Cost of Goods Manufactured and Sold schedule showed cost of goods manufactured
was P48,000, and the April 1 Finished Goods Inventory was P8,400.

The treasurer’s office files copies of paid invoices chronologically. All invoices are for raw material purchased on account. Examination of these files revealed that
unpaid invoices on April 1 amounted to P6,100; P28,000 of purchases had been made during April; and P18,000 of unpaid invoices existed on April 30.

1. Calculate the cost of direct material used in April.

2. Calculate the cost of raw material issued in April.
3. Calculate the April 30 balance of Raw Material Inventory.
4. Determine the amount of under applied or over applied overhead for April.
5. What is the Cost of Goods Sold for April?
Problem 2: You are asked to bring the following incomplete accounts of SYM Company updated through May 2015.
Direct Materials Accounts Payable Finished Goods
| 5/31/15 P20,000 | 4/30/15 P 10,000 4/30/15 P25,000|
| | |

Work in Process Factory overhead control Cost of Goods Sold

4/30/15 P2,000| P55,000 | |
| | |
Additional information:
(a) The overhead is applied by using a budgeted rate that is set at the beginning of each year by forecasting the
years overhead and relating it to forecasted machine hours. The budget for 2015 called for a total of 15,000
machine hours and P750,000 of factory overhead.
(b) The accounts payable is for direct materials purchases only. The balance on May 31, was P12,000. Payment of
P78,000 were made during May.
(c) The finished goods inventory as of May 31 was P7,000.
(d) The cost of goods sold during the month was P165,000.
(e) On May 31, there was only one unfinished Job in the factory. Cost record shows that P1,000 (40 hours) of direct
labor and P2,000 of direct materials had been charged to Job. Thirty machine hours were used on that Job.
(f) Total of 940 direct labor hours were worked during the month of May. All factory workers earn the same rate of
pay.
(g) All ‘actual” overhead incurred during May has already been posted.
(h) A total of 1,000 machine hours was used during May.
Required: 1) Cost of Goods Sold Statement; 2) Compute for the under/over applied overhead; 3) Prepare all necessary journal entries