MODULE 2

EXERCISES
SUGGESTED SOLUTIONS

PROBLEM 1
1. Materials P 15,000.00
Accounts payable P 15,000.00

2. Work in process 11,480.00

FOC 40.00
Materials 11,520.00

3. Payroll 5,445.00
Accrued payroll 5,445.00

Work in process 4,645.00

FOC 800.00
Payroll 5,445.00

4. FOC 2,675.00
Rent Expense Payable 1,500.00
Accum. Depreciation – Machines 160.00
Accum. Depreciation – Factory Building 490.00
Utilities Expense Payable 225.00
Payroll Taxes Payable 300.00
2,675.00
5. Work in process 5,261.25
FO Applied 5,261.25

6. Finished goods 21,386.25

Work in process 21,386.25

Job 101 Job 102 Total

Direct Materials 10,500.00 980.00 11,480.00
Direct Labor 3,175.00 1,470.00 4,645.00
Factory overhead 3,618.75 1,642.50 5,261.25
Total 17,293.75 4,092.50 21,386.25

7. Cash 25000.00
Sales 25000.00

Cost of Goods Sold 17293.75

Finished goods 17293.75

Accounts receivable 4000.00

Sales 4000.00

Cost of goods sold 4092.50

Finished goods 4092.50
1. Allocation based on cost

Product Invoice Percentage Share of Freight Total cost Cost per pound

X 11,250 49% 450 11,700 2.60

Y 13,500 49% 540 14,040 2.34

Z 15,750 49% 630 16,380 2.184

2. Allocation based on shipping weight

Product Weight Percentage Share of Freight Total cost Cost per pound
X 4,500 9% 405 11,655 2.59
Y 6000 9% 540 14,040 2.34
Z 7000 9% 675 16,425 2.19

PROBLEM 3

1. FIFO
Issued = 600 x 4.00 = 2,400

Cost of inventory - 200 x 5.00 =- 1,000

500 x 4.50 = 2,250
400 x 4.00 = 1,000

2. WEIGHTED AVERAGE

Received Issued Balance

1 1,000 x 4.00 4,000

3 250 x 4.00 1,000 750 x 4.00 3,000

5 500 x 4.50 2250 1,250 x 4.20 5,250

6 150 x 4.20 630 1,100 x 4.20 4,620

10 110 x 4.20 462 990 x 4.20 4,158

11 ( 10 ) x 4.20 ( 42) 1,000 x 4.20 4,200

15 500 x 5.00 2500 1,500 x 4.47 6,700

20 ( 300 ) x 5.00 ( 1,500 ) 1,200 x 4.33 5,200

26 100 x 4.33 433 1,100 x 4.33 4,767

PROBLEM 4

a. Loss due to spoiled work is spread over all jobs

1 Work in Process P 1,320,000

Materials P 360,000
Payroll 480,000
FO Applied 480,000

2 Spoiled Goods 8,000

FO Control 8,500
Work in Process ( 100 x 165) 16,500

3 Finished goods 1,303,500

Work in Process 1,303,500
Unit cost = 1303500/7900 = 165

b. Loss due to spoiled work is charged to the specific job

1 Work in Process P 1,320,000

Materials P 360,000
Payroll 480,000
FO Applied 480,000

2 Spoiled Goods 8,000

FO Control 8,500
Work in Process ( 100 x 165) 16,500

3 Finished goods 1,312,000

Work in Process 1,312,000

PROBLEM 5

FO rate = 207000 207000 207000 207000 207000

500000 52100 units 69,000 MHrs. 85000 DLHrs. 765000

41,40%of DMC P3,97/unit P3.00/MHr P2.44/DLHr. 27.06%ofDLC

PROBLEM 6

1. FO rate P 60,000 P 60,000 P60,000

P 60,000 40,000 DLHrs. 25,000 MHrs.

100%of DLC P 1.50/DLHr. P2.40/MHr.

2. a) Factory overhead was based on direct labor cost

JOB 101 JOB 102 JOB 103 JOB 104 JOB 105 JOB 106
DM 5,000 7,000 8,000 9,000 10,000 11,000
DL 7,200 10,000 11,000 9,000 15,000 4,200
FO APP/. 7,200 10,000 11,000 9,000 15,000 4,200
TOTAL 19,400 27,000 30,000 27,000 40,000 19,400

b.) Factory overhead was based on direct labor hours

JOB 101 JOB 102 JOB 103 JOB 104 JOB 105 JOB 106
DM 5,000 7,000 8,000 9,000 10,000 11,000
DL 7,200 10,000 11,000 9,000 15,000 4,200
FO APP. 7,500 9,000 9,750 8,400 15,750 4,500
TOTAL 19,700 26,000 28,750 26,400 40,750 19,700

c.) Factory overhead was based o machine hours

JOB 101 JOB 102 JOB 103 JOB 104 JOB 105 JOB 106
DM 5.000 7,000 8,000 9,000 10,000 11,000
DL 7,200 10,000 11,000 9,000 15,000 4,200
FO APP. 7,200 7,680 9,600 8,160 15,000 3.600
TOTAL 19,400 24,680 28,600 26,160 40,000 18,800

PROBLEM 7

1. Direct method
P1___ P2___ S1___ S2___
Direct cost P 90,000 P 60,000 P 20,000 P 32,000
Allocated cost
S1 10,000 10,000 ( 20,000)
S2 20,000 12,000 ( 32.000)
Total P120,000 P 82,000
Base 50,000 MHrs. 20,000 DLHrs
FO rate P 2.40/MHr. P 4.10/DLHr.

2. Step method
P1___ P2___ S1____ S2___
Direct cost P 90,000 P 60,000 P 20,000 P 32,000
Allocated cost
S1 2,000 2,000 ( 20,000) 16,000
S2 30,000 18,000 (
48,000)
Total P122,000 P 80,000
Base 50,000 MHrs. 20,000 DLHrs
FO rate P 2.44/MHr P 4.00/DLHr.
3. Algebraic method
P1___ P2___ S1___ S2____
Direct cost P 90,000 P 60,000 P 20,000 P 32,000
Allocated
S1 3.143 3,143 ( 31,429) 25,143
S2 28,572 17,143 11,429 ( 57,143)
Total P121,715 P80,286
Base 50,000 MHrs. 20,000 DLHrs
FO rate P 2.43/MHr. P 4.0/DLHr.

S1 = 20,000 + 20% S2

S2 = 32,000 + 80% S1

S1 = 20000 + 20% ( 32,000 + 80% S1 )

= 20,000 + 6,400 + .16 S1
S1 - .16S1 = 26,400
S1 = 26,400 / .84
31,429

S2 = 32,000 + 80% 31,429

= 32,000 + 25,143
= 57,143

PROBLEM 8

No. Regular OT Overtime Total

Employee Hrs Rate Pay Hours Rate Premium Pay
Austria 42 36.00 1,512 2 18.00 36.00 1,548
Bautista 43 36.00 1,548 3 18.00 54.00 1,602
DeSantos 44 45.00 1,980 4 22.50 90.00 2,070
Motus 40 30.00 1,200 - - - -
Reyes 40 30.00 1,200 - - -__ -___
TOTAL 7,440 180.00 7,620

b)

1. Payroll 7,620
Accrued payroll 7,620

2. Accrued payroll 7,620

Cash 7,620

3. Work in Process ( 1,512 + 1,548 + 1,980 ) 5,040

FOC ( 1,200 + 1,200 + 180 ) 2,580
Payroll 7,620
PROBLEM 9

Employee Guranteed Total pay - piece rate Deficiency Total

Wage Payroll
Cruz 2,000 ( 240 x 7.50 ) 1,800 200.00 2,000.00
Briones 2,000 ( 286 x 7.50 ) 2,145 - 2,145.00
David 2,000 ( 275 x 7.50 ) 2,062.50 - 2,062.50
Mendoza 2,000 ( 240 x 7.50 ) 1,800 200.00 2,000.00
Rivera 2,000 ( 225 x 7.50 ) 1,687.50 312.50 2,000.00
Tolentino 2,000 ( 285 x 7.50 ) 2,137.50 - 2,137.50
TOTAL 12,000 11,632.50 712.50 12,345.00

2. Charged to Work in process - 11,632.50

3. Charrged to factory overhead account - 712.50

PROBLEM 10

Deductions were computed on the assumption that previous payment of wages

were made without deductions and all deductions are made on the last payment
for the month.
Assume the following amount as previous wages (for the past 3 weeks)

Castro - 5,600
Ardina - 7,500
Briones - 6,500
David - 6,200
Fajardo - 5,900
Tomas - 5,800
Villas - 5,200

REGU LAR PAY OVER TIME PAY TOTAL

Employee HRS. RATE HRS. RATE PAY
Castro 42 40.00 1,680.00 2 40.00 1,720.00
20.00
Ardina 45 50.00 2,250.00 5 125.00 2,375.00
25.00
Briones 48 40.00 1,920.00 8 160.00 2,080.00
20.00
David 48 40.00 1,920.00 8 160.00 2,080.00
20.00
Fajardo 45 40.00 1,800.00 5 100.00 1,900.00
20.00
Tomas 42 40.00 1,680.00 2 40.00 1,720.00
20.00
Villas 40 40.00 1,600.00 - - -__ 1,600.00
TOTAL 12,850.00 625.00 13,475.00

- done -