MINDANAO STATE UNIVERSITY - GENERAL SANTOS CITY

DEPARTMENT OF ACCOUNTANCY
ACT120: COST ACCOUNTING AND CONTROL

Practice Questions:

PROBLEM 1
The books of Samsung Company show the following account balances as of March 1:
Finished Goods P78,830
Work in process 292,621
Materials 65,000
Over/Under Applied 12,300 (credit)

The work in process account is supported by the following job order cost sheets:
Job Item Direct Materials Direct Labor FOH
204 80,000 Balloons P15,230 P21,430 P13,800
205 5,000 life parts 40,450 40,450 22,370
206 10,000 life belts 60,875 43,860 19,366

During March, the following transactions occurred:

A. Purchased of materials, P43,200

B. Purchase of special materials was P5,800 for new Job 207, which calls for 4,000 life
jackets.
C. Indirect labor cost was P12,480. Direct labor was as follows:
JOB AMOUNT HOURS
204 P26,884 3,355.5
205 22,750 3,250.0
206 28,920 3,615.0
207 20,370 2,910.0
D. Materials issued:
204 P9,480
205 11,320
206 10,490
207 16,640
Note: Job 207 excludes P5,800 of special materials, which are also issued at this time.

E.Other factory overhead totaled to: P28,461.87

F. Factory overhead is applied at the rate of P2.30 per direct labor hour. An applied factory
overhead account is used and is then closed to overhead control account.
G. Jobs 206 and 207 did not left the production area.
G. Job 204 was shipped and billed at a contract price of P117,500

Requirement:
1. Compute for the total cost of each job at the end of March.
2. Compute the amount of over/under applied factory overhead
3. Compute the amount of work in process inventory on March 31
4. Compute the cost of goods manufactured.

Problem 2
Acer Company presented the following data:
1. Cost of goods manufactured and cost of goods sold were P375,000 and P300,000,
respectively.
2. Purchase of raw materials amounted to twice as much as net income before taxes.
3. Gross margin based on sales was 40%. There were no purchase returns but sales returns
amounted to P10,000.
4. Inventory valuations were as follows:
A. Raw Materials - on hand at end of period was 1/3 as much as start
B. Work in process - no beginning inventory, but P25,000 was on hand at end of period.
C. Finished goods - end of period was four times as large as at start.
5. Breakdown of cost incurred in manufacturing was as follows:
Raw Materials 50%
Direct Labor 30%
Manufacturing OH 20%

6. Selling expenses amounted to four times as much as general expense.

7. Net income after taxes amounted to P52,000. Income tax rate is 35%/

Requirement:
1. Cost of goods manufactured statement
2. Statement of Comprehensive income

Problem 3
Coldplay Music manufactures two paint products: Paint XX and Paint YY. The company uses
the same processing equipment to produce both products. Between batches, the processing
equipment must be washed and cleaned.

After analyzing the company’s entire operations, Coldplay’s accountant and production
managers have identified activity cost pools, and accumulated annual budget overhead costs
by pool as follows:

Activity Center Estimated Overhead

Purchasing P240,000
Processing 1,400,000
Packaging 580,000
Testing 240,000
Storage 180,000
Washing 560,000
Following further analysis, activity cost drivers were identified and their expected use by
product and activity were scheduled as follows:

Activty Expected Cost Drivers Usage

Center Cost Drivers per Activity Paint XX Paint YY
Purchasing Purchase Orders 1,500 orders 800 700
Processing Liters processed 1,000,000 liters 400,000 600,000
Packaging Containers Filled 400,000 containers 180,000 220,000
Testing Number of Tests 4,000 tests 2,100 1,900
Storage Average liters on hand 18,000 liters 10,400 7,600
Washing Number of Batches 800 batches 350 450

Coldplay has budgeted 400,000 liters of Paint XX and 600,000 liters of Paint YY for
processing this year.

Required:
1. Schedule showing computations of the activity-based overhead rates.
2. Schedule assigning each activity’s overhead cost pool to each product.
3. Compute the overhead cost per unit for each product.