Chapter 2-Test Material 2

Total ordering cost=No. of orders per year x cost per order

EOQ for raw materials 1,500 units

EOQ based on annual demand 15,000 units
Ordering Cost P25

EOQ based on annual demand 15,000 units

Divide: EOQ for raw materials 1,500 units
No of orders per year 10
Multiply: Ordering Cost ₱ 25.00
Total Ordering Cost for the year ₱ 250.00

2 and 3

RIP, Beg (24,000-5,000) ₱ 19,000.00

Add: RM Purchases 700,000.00
Less: RM, End (30,000-7,500) (22,500.00)
Raw Material Used ₱ 696,500.00

RIP, Coversion Cost Beg ₱ 5,000.00

Add: CC for the period 600,000.00
Less: RIP, end (7,500.00)
Conversion Cost Used ₱ 597,500.00

Conversion Costs ₱ 3,960,000.00

Divide: Rate of OH 180%
Direct Labor Cost ₱ 2,200,000.00

5
Total Manufacturing Cost ₱ 500,000.00
Less: conversion Cost (225,000.00)
Raw Materials Used ₱ 275,000.00
6
Raw Material Purchased ₱ 1,000,000.00
Add: Freight ₱ 50,000.00
Gross Purchase ₱ 1,050,000.00
Multiply: Rate issued for production 75%
Raw Materials Issued ₱ 787,500.00
Multiply: Rate of Direct Materials 90%
Cost of Direct Materials ₱ 708,750.00

Work in Process, beg ₱ 14,700.00

Add: Total Factory Cost 158,400.00
Total Cost of Work Put into Process 173,100.00
Less: Work in Process, end (16,900.00)
Cost of Goods Manufactured 156,200.00
Add: Finished Goods, beg 12,600.00
Cost of Goods Available for Sale 168,800.00
Less: Finished Goods, end (10,500.00)
Cost of Goods Sold ₱ 158,300.00

Sales ₱ 200,000.00
Less: Cost of Sales (158,300.00)
Gross Profit ₱ 41,700.00

Cost of Goods Sold ₱ 1,800,000.00

Add: Finished Goods, ending 150,000.00
Cost of Goods Available for Sale 1,950,000.00
Less: Finished Goods, beg (135,000.00)
Cost of Goods Manufactured 1,815,000.00
Add: Work in Process, end 120,000.00
Total Cost of Work Put into Process 1,935,000.00
Less: Work in Process, beg (105,000.00)
Total Manufacturing Cost 1,830,000.00
Less: Direct Labor (750,000.00)
Manufacturing Overhead (656,900.00)
Direct Materials Used ₱ 423,100.00

9
Direct Materials ₱ 1,625,000.00
Factory Overhead (5,000,000 x 30%) 1,500,000.00
Direct Labor (1,500,000/80%) 1,875,000.00
Total Manufacturing Cost 5,000,000.00
Add: Work in Process, beg 450,000.00
Total Cost of Work Put into Process 5,450,000.00
Less: Work in Process, end (600,000.00)
Cost of Goods Manufactured ₱ 4,850,000.00

10
Raw Materials, beg ₱ 88,500.00
Add: Purchases 252,000.00
Raw Materials Available ₱ 340,500.00
Less: Raw Materials Issued (5000x P17.7 + 7,000xP18) (214,500.00)
Raw Materials Available ₱ 126,000.00
Add:Excess Materials (800xP18) 14,400.00
Raw Materials Available ₱ 140,400.00
Less: Return of Materials to Supplier (500xP18) 9,000.00
Raw Materials, End ₱ 131,400.00

11
TOTAL Materials
RIP, Beg 35,000.00 21,000.00
Purchases 750,000.00 750,000.00
Conversion Cost 900,000.00
Less: RIP, end (48,000.00) (36,000.00)
Goods Manufactured 1,637,000.00 735,000.00
Finished Goods, beg 52,000.00 44,000.00
Less: Finished Goods, end (60,000.00) (50,000.00)
Cost of Goods Sold 1,629,000.00 729,000.00

12

Materials Conversion Cost

RIP, Beg 29,800.00 1,400.00
Purchases 367,000.00
Less: RIP, end (31,200.00) (1,800.00)
Raw Materials Used 365,600.00 (400.00)

Adjusting Entry

Raw and In Process 400

Cost of Goods Sold 400
13-14

Raw Materials 450,000.00

Direct Labor (2000 hours * P65 rate per hour) 130,000.00
Factory Overhead 133,000.00
Overtime (30% of P50 * 200 hrs)= 3,000
Indirect Materials= 50,000
Applied Factory Overhead= 80,0000
Manufacturing Cost ₱713,000.00
Divided by: Units Produced / 25000 units
Cost per unit ₱ 28.52
Multiply: Units Sold x22000
Cost of Goods Sold ₱ 627,440.00
Multiply: Mark-Up Cost (40% on costs) x1.4
Sales ₱ 878,416.00

Sales ₱ 878,416.00
Less: Cost of Goods Sold (627,440.00)
Operating Expenses (145,000.00)
Selling Expense-P65,000
Administrative Expense -P80,000
Net Income ₱ 105,976.00

15

Annual Units Required 84,375

Divide: Days per year /360
Daily Units Required 234.375
Multiply: Lead Time x20
Reorder Point 4,688.00

16
Raw Materials, End ₱ 125,000.00
Add: Direct Materials Issued 569,000.00
Less: Deffective Materials (48.00)
Add: Excess Material 25.00
Direct Materials Purchased during the Period ₱ 694,023.00
Raw Material
Conversion Cost
Cost of Goods Manufactured

Finished Goods, beg

Add: Cost of Goods Manufactured
Less: Finished Goods, End
Cost of Goods Sold

Prime Cost
Less: Direct Labor
Raw Material Used

Raw Material Used

Add: Raw Material End
Raw Material Available
Less: Raw Material Beg
Cost of Raw Material Purchased
Conversion Cost
14,000.00

900,000.00
(12,000.00)
902,000.00
8,500.00
(10,000.00)
900,500.00
₱ 696,500.00
597,500.00
₱ 1,294,000.00

₱ 40,000.00
1,294,000.00
(42,000.00)
₱ 1,292,000.00

₱ 6,840,000.00
(2,200,000.00)
₱ 4,640,000.00

₱ 275,000.00
60,000.00
335,000.00
(50,000.00)
₱ 285,000.00