[ADVANCED FINANCIAL ACCOUNTING & REPORTING AFAR-13a Costs Flow Accounting for Materials: Upon Purchase: (Direct materials and indirect materials) Materials (or Stores Control) Eatnea lb ‘Accounts payable. 200K Issued to production/Requisitioned/taterials used/Applied to Production: Work-in-process (Ditact material)... v0 Factory Overhead Contro! or Actual FOH (Indirect materi). ed Materials (or Stores Cortral) ns 10x Upon Payment: ‘Accounts payable arg Cash, 00 Accounting for Labor: (ignore employer's share in payroll taxes) Labor Incurrence: (Factory Labor: Direct and indirect Labor, Sales and admin. Salaries): Payroll ez 00 Withholding ta DayabIe nn eae MX SSS Premiums payable zs G 10x PhilHlealth Prensiums payable. cee 0K Accrued payroll. Labor Distribution/Labor applied to production: Work-in-process ~ Direct iabor. Factory Overhead Control or Actual FOH (Indirect ito), = OK Sales salaries... 20x General and administrative expenses. 30% Payroll - er Payment of Payroll: Accrued payroll : wi 20K Cash. cia fa Accounting for Factory Overhead: Incurrence of FOH: Factory Overhead Contra ot ActUat FOH 1 10K Cash, Accounts payable, Accum. dep., Prep. Exp. vox FOH Applied to production: Work-in-Process.....- oe 3K ‘Applied Factory Overhead (FOH Rate* x Activity)... %0% *Budgeted Factory Overhead Rates: Budgeted FOH = 9x Actual DM Budgetec DM Budgeted FOH % x Actual DL Cost Budgeted DL Cost Budgeted FOH P / DLH x Actual DLH Budgeted OH! Normal or Standard Capacity - DLH Budgeted FOH =P / MH x Actual MH Budgeted Mii/ Normal or Standard Capacity ~ MH Budgeted FOH =P /Actual Unit Produced x Actual Unit Produced Budgeted Units of prodctiun or Normal/Standard Capacity - Units Disposition of Overapplied/tinderappiied OH (entries may vary depending on the practice of the company): ‘Applied Factor Overhead, e : 0K Overhead!* Applied FOH (CGS/IS, WP, FG) 20x Factory Overhead! Control _ ey POOR ‘debit if underapplied FOH AFAR-13aADVANCED FINANCIAL ACCOUNTING & REPORYING AFAR-13b Problem IV: Barfield Company Direct Materials, beg, P ‘Add: Net Purchases Direct Materials available for us2. P Less: Direct Materia, ending Direct materials used Direct labor. Applied factory overhead. Manufacturing Costs. > ‘Add: Work-in-process, beginning, Total work placed in process, Less: Work-in-process, ending ees Cost of goods inanufactured. - ‘Add: Finished Goods, beginning Cost of goods available for sale Less: Finished Goods, ending, Cost of Goods Sold, normal costing Problem V: Matz Company Raw Materials, beg, P ‘Add: Net Purchases. Raw Materials available for use P Less: Raw Materials, ending Pp Indirect materials used, Direct materials used Direct labor Applied factory overhead —— Manufacturing Costs, - ‘Add: Work-in-process, beginning.. _ Total work placed in process, P Less: Work-in-process, ending, Cost of goods manufactured |Add: Finished Goods, beginning ee Cost of goods available for sale. Pe Less: Finished Goods, ending ———— Cost of Goods Sold, normal costing : Solution to Problem IX: Warren, inc Predetermined OH Rat Inatgeted Factory Overhead Normal Capacity / Budgeted Capacity / Standard Capacity 1. Predetermined Fixed OH Rate= Budgeted Fixed Overhead = P 300,000. NCap or 8Cap. Or Stad. Cap. 150,000 hrs 2. Predetermined Variable OH Rate= Budgeted Variable Overhe P.150,000_ Cap or BCap. Or Stad. Cap. 150,000 hrs. 3. Over/Under Applied Factory Overhead: ‘Actual Factory Overhead. .P 435,000 Less: Applied Faciory Overhead (P1 + 72) x 140,000 Actual MH... 420,000 Underapplied Factory Overhead eB 15,000 4 and 5 ~ {AFOH (Actuat Factory Overhead) 435,000 BABOCU (Budgeted Allowed Based on Capacity Utilized Spending / Actual MH): 140,000 machine hours P(5,000) Fav Fixed as Budgeted .-P 300,000 Variable: P1 x 140,000 MH ~ 140,000 P 440,000 dle Cap. 20,000 Unf. Applied Factory Overhead (AH < SR): 150,009 x P3 420,000“ Underapplied Factory Overhead 15,000 Unt Solution to Problem X: Carter Marketing Corporation Direct Materials. 75,000 Direct Labor: Department X. . . P-40,000 Department ¥.... 100,000 Department Z - 20,000 160,000 Applied Factory Overhead: Department X: P42,000 « 6/2 120,000 Department ¥: P100,000 x 1/5 20,000 Department Z: P20,006 x 2/4. _ 10,000 150,000 Manufacturing Costs 385,000 (c) AFAR-13bADVANCED FINANCIAL ACCOUNTING 6 REPORTING AFAR-13c Solution to Problem XI: Rizza Lyn Company. Direct Materials. LP 26,000 Direct Labor. 20,000 Applied Factory Overhead 30,000 Manufacturing Costs. ‘ P 76,000 ‘Add: Work-in-process, beginning of Sune ‘111900 Total Work Placed in Process. P 87,900 Less: Work-in-process, ending of June {P2,800+(P1,800x150%)]. 7,300 Cost of goods manufactured. P 80,600 Cost of goods manufactured. P 80,600 ‘Add: Finished goods, beginning of June __=0- Cost of Goods Available for Sale. P 80,600 Less: Finished Goods, ending of uve. 4,000 Cost of Goods Sold. . soosuneeeeseP 76,600 (b) Solution to Problem XII: Sharron Company. Direct materials, 3/1/2016. P 80,000 ‘Add. Net purchases 92,000 Direct materials available for use P 172,000 Less Direct matenais, 3331/2076 _ 100,000 Direct materials used 72,000 Direct iabor 168,000 Applied factory overhead 126,000 / 75%! Manufacturing Costs P 366,000. Add: Work-in-process. 1/7016, 160,000 Total work placed in process P 526,000 Less: Worksin-process, 3/51/2016 490,000 Cost of goods manufactured . P 336,000 Add: Finished Goods, 3/1/2015 120,000 Cost of goods available for sale 486,000 Less Finished Goods, 3/31/2016 456,000 Cost of Goods Sold. P..300,000 Sales 400.000 f Less: Cost of goods sold 300,000 Gross profit 100.000 Less: Operating expenses ~'50,000/ 12.5% Net income P__50,000 or Company ~ Speaiod Goods _ (1. Spoiled Loss is Charged to FORC/interral |2. Spoited toss ts Charged to Particular Failure _ — _20b/Exacting Specs./Production Run | totat tof 2,200 units: | Total Cost of 2,200 units: | ‘Workin process ‘Work-mprocess | (P56 x2.200) 123,200 PSS x 2.200) 121,000 | Matenais. P20 “44.000 Matenals. P20 44000 | Payrol, P18 29,600 Payal, P18 3960 | ‘App. FOH, P18 39400 | Age FOH,PI8PI=P17 97.400 ‘Spoiled Ge Invent 200 units. ‘Spoiled Goods Inventory: 200 units. 1 Cash al SV 6.000 Cash at SV 6.000 FOHC(P11,200 ~ P6,000) 6,200 we 600 | WP. (P56 x 200) 11,200 | ‘Transfer to Fi | Transfer to Finished Goods: | Finished Goods 112.000 | Fished Goods 115,000 We (23200-11200) 112.000 ‘WP (121,000-6,000) 115,000 UC = P112,000/2,000 = Ps6/u_ UC = P115,000/2,000 = P57.5/u | 2. Rework Cost is charged to Particular Job Total Cost of 200 motors: Worksn-process Wiorkn-process. 2.660 Matera, 2 Materials, 80 Payot, £00 Payot ‘00 Rep FOH, 150% xPI60 «1200 App FOH, 150%xPI60 1200 | | Rework Cost of 10 motor i Rework Coat of 10 motors | FOHC 00 wip 500 | | Materials 120 Materais 100 | Payoh 160 Payot 160 ‘App FOH, 150% x. 160 240 ‘App FOH, 150%xP160 240 “Transfer to Finish | Transfer to Finished Goods: Finished Goods 2060 | Finished Goods 3.190 Workin-process 26600 ‘Workin process 2360 UC = P2, 6607200 = Pr3 310 (UC = P3,1607200 = P15.84 AFAR-13c