Professional Documents
Culture Documents
Cost Acctg Chapter 4 1
Cost Acctg Chapter 4 1
CHAPTER 4
1. b 6. b
2. b 7. c
3. b 8. b
4. b 9. a
5. b 10. A
1. (a)
Cost of
Date of Issue Purchase Lot Units x Cost Materials Issued
5/15 5/5 15 x P20 = P300
5/19 BI 10 x P15 = 150
5/30 5/5 & 5/24 (5 x P20) + (10 x P18) = 280
P730
Ending inventory: 5 (from 5/24 purchase) x P18 = P90
2. (a)
3. (a)
Cost of
Date Units Unit Cost Materials Issued
BI 10 P15 P150
5/5 20 20 400
5/24 10 18 180
40 P730
4. (c)
5. (a)
6. (d)
7. (c)
8. (a)
9. (a)
10. (a)
11. (d)
12. (a)
13. (b)
14. (a)
15. (a)
Cost P 110,492
NRV (P134,315 - P26,855) 107,460
Inventory write-down P 3,032
16. (a)
Solutions to Problems
Problem 4-1
FIFO
RECEIVED ISSUED BALANCE
DATE REF. UNITS PRICE AMOUNT UNITS PRICE AMOUNT UNITS PRICE AMOUNT
Jan. 1 Bal. 150 40.00 P 6,000.00
6 PO74 200 40.50 8,100 150 40.00)
200 40.50) 14,100.00
12 R18 150 40.00)
75 40.50) 9,037.50 125 40.50 5,062.50
14 PO83 250 41.00 10,250 125 40.50)
250 41.00) 15,312.50
17 R23 125 40.50)
75 41.00) 8,137.50 175 41.00 7,175.00
31 R19 40 41.00 1,640 135 41.00 5.535.00
LIFO
RECEIVED ISSUED BALANCE
DATE REF. UNITS PRICE AMOUNT UNITS PRICE AMOUNT UNITS PRICE AMOUNT
Jan. 1 Bal. 150 40.00 P 6,000.00
150 40.00
6 200 40.50 14,100.00
12 R18 200 40.50)
25 40.00) 9,100.00 125 40.00 5,000.00
14 PO83 250 41.00 10,250 125 40.00)
250 41.00) 15,525.00
17 R23 200 41.00 8,200.00 125 40.00)
50 41.00) 7,050.00
31 R19 40 41.00 1,640 125 40.00)
10 41.00) 5,410
MOVING AVERAGE
RECEIVED ISSUED BALANCE
DATE REF. UNITS PRICE AMOUNT UNITS PRICE AMOUNT UNITS PRICE AMOUNT
Jan. 1 Bal. 150 40.00 P 6,000.00
6 PO74 200 40.50 8,100 350 40.30 14,105.00
Problem 4-2
Problem 4-3
FIFO METHOD
Material A-42
RECEIVED ISSUED BALANCE
DATE REF. UNITS PRICE AMOUNT UNITS PRICE AMOUNT UNITS PRICE AMOUNT
May 1 Bal. 271 P9.50 P2,574.50
2 R032 110 9.50 1,045.00 161 9.50 1,529.50
3 PO507 650 10.20 6,630 161 9.50)
650 10.20) 8,159.50
8 R036 150 9.50 1,425.00 11 9.50)
650 10.20) 6,734.50
31 R082 11 9.50)
199 10.20) 2,134.30 451 10.20 4,600.20
FIFO METHOD
Materials B-18
RECEIVED ISSUED BALANCE
DATE REF. UNITS PRICE AMOUNT UNITS PRICE AMOUNT UNITS PRICE AMOUNT
May 1 Bal. 83 P7.00 P 581.00
3 PO507 650 6.50 4,225.00 83 7.00)
650 6.50) 4,806.00
6 R034 83 7.00)
92 6.50) 1,179.00 558 6.50 3,627.00
12 R046 80 6.50 520.00 478 6.50 3,107.00
26 PO061 650 5.90 3,835.00 478 6.50)
650 5.90) 6,942.00
31 R082 382 6.50 2,483.00 96 6.50)
650 5.90) 4,459.00
8
Materials B-18
RECEIVED ISSUED BALANCE
DATE REF. UNITS PRICE AMOUNT UNITS PRICE AMOUNT UNITS PRICE AMOUNT
May 1 Bal. 83 P7.00 P 581.00
Problem 4-4
Problem 4-5
Note: In 2010 the cost of inventory is higher than market. Therefore, the
allowance of Inventory write-down is not needed. Inventory on the balance
sheet will be shown at cost.
10
Problem 4-6
Goodson Printers
Income Statement
Year Ended January 31, 2010
Sales P729,370
Sales returns and allowances 48,211
Net sales 681,159
Cost of goods sold:
Finished goods inventory, Feb. 1 P 47,910
Cost of goods manufactured 422,280
Cost goods available 470,190
Finished goods inventory, Jan 31 49,620
Total 420,570
Loss on inventory write-down 9,682 430,252
Gross profit 250,907
Operating expenses
Selling expenses 96,357
Administrative expenses 60,061 156,418
Net income before provision for income tax 94,489
Provision for income tax 28,347
Net income after income tax P 66,141
Problem 4-7
FIFO METHOD
RECEIVED ISSUED BALANCE
DATE REF. UNITS PRICE AMOUNT UNITS PRICE AMOUNT UNITS PRICE AMOUNT
Mar. 1 Bal 1,000 125 125,000
5 R091 400 125 50,000 600 125 75,000
9 PO016 600 140 84,000 600 125)
600 140) 159,000
13 R094 600 125)
250 140) 110,000 350 140 49,000
22 PO023 600 145 87,000 350 140)
600 145) 136,000
29 R098 250 140 35,000 100 140)
145) 101,000
Problem 4-8
FIFO METHOD
FIFO METHOD
Problem 4-9
(4) Net income will decrease, since the ending inventory under the average method in
2010 is smaller than the ending inventory under the FIFO method.
14
Problem 4-10
WEIGHTED AVERAGE:
(P1,753,500 / 42,000) 14,000 41.75 584,500
AVERAGE FIFO
Available for sale P1,753,500 P1,753,500
Less ending inventory 584,500 596,000
Cost of sales P1,169,000 P1,157,500
(Sch. 1) (Sch. 2)
Problem 4-11
Shang Company
Income Statement – FIFO
Years Ended December 31, 2008, 2009 and 2010
2008 2009 2010
Sales P3,000,000 P4,000,000 P4,800,000
Cost of sales – FIFO 1,350,000 1,950,000 2,330,000
Gross profit 1,650,000 2,050,000 2,470,000
Operating expenses 800,000 900,000 1,000,000
Net income P 850,000 P1,150,000 P1,470,000
Proof:
Net income – AVERAGE P 700,000 P1,100,000 P1,400,000
Understatement of ending inventory:
2008 150,000 (150,000)
2009 200,000 (200,000)
2010 270,000
Net income – FIFO P 850,000 P1,150,000 P1,470,000
15
Problem 4-12
Valuation at
Lower of Cost
Inventory Units Unit Cost NRV per unit or NRV
Materials:
R-10 1,000 P110 P100 P 100,000
S-11 2,000 250 260 500,000
T-12 3,000 300 330 900,000
Goods in Process:
X-20 4,000 500 480 1,920,000
Y-21 5,000 650 620 3,100,000
Finished Goods:
A-30 2,000 800 790 1,580,000
B-31 2,000 730 780 1,460,000
Ending inventory at lower of cost or NRV P9,560,000
Problem 4-13
Valuation at
Lower of Cost
Materials Units Unit Cost NRV per Unit or NRV
AA 1,000 P120 P150 P120,000
BB 1,500 110 120 165,000
CC 1,200 150 140 168,000
DD 1,800 140 160 252,000
EE 1,700 130 160 221,000
Ending inventory at lower of cost or NRV P926,000
Problem 4-14
Valuation at
Lower of Cost
Product Units Unit Cost NRV per unit or NRV
A-1 700 P700 P650 P650
B-2 495 475 745 475
C-3 255 255 250 250
D-4 450 450 740 450