NOTRE DAME OF MIDSAYAP COLLEGE

MIDSAYAP, COLLEGE

COLLEGE OF BUSINESS AND ACCOUNTANCY

SUBJECT: COST ACCOUNTING AND CONTROL

TEACHER: HAMOD M. GULIDTEM, CPA

PERFORMANCE/ACTIVITIES

PROBLEM 1

LAKERS COMPANY contained the following account balances:

Cash P 100,000
Accounts Receivable 60,000
Finished Goods 35,000
Work in Process 18,000
Materials 50,000
Accounts Payable 10,000
Accrued Payroll 8,000
Ordinary Share Capital 200,000
Retained Earnings 45,000

During January 2019, the following transactions were completed.

1. Materials purchased on account, P200,000.

2. Factory overhead incurred on account, P35,000.
3. Payroll for the period consist of: direct labor – P140,000; indirect labor – P30,000; sales
salaries – P25,000; and administrative salaries – P15,000.
Deductions from payroll were as follows:
Withholding taxes P 18, 520
SSS Premiums 8,400
Phil Health Contributions 1,125
Pag-ibig Funds 6,300

4. P175,000 was paid for the payroll.

5. Computation of employer’s payroll tax is as follows:

Factory Selling Administrative
SSS Premiums P 8,500 P 1,250 P 750
Phil Health 600 375 150
Pag-ibig Fund 5,100 750 450

6. Materials issued: direct materials – P185,000; indirect – P35,000.

7. Factory overhead was charged to production at 80% of direct labor cost.
8. Work finished and placed in stock P410,000.
9. Cost of goods sold – P385,000. The markup was 40% of cost.
10. Cash collected from customers, P405,000
11. Payments for liabilities amounted to P220,000, other than payroll.

Requirements:

a. Journal entries to record the above entries.

b. Cost of Goods Sold Statement for January 2019.
c. Statement of Comprehensive Income for January 2019.
d. Statement of Financial Position as of January 31, 2019.
PROBLEM 2

On August 31, the inventory balances of CLIPPERS COMPANY, a manufacturer of high

quality men’s shirts, were as follows:

Materials Inventory P 21,360

Work in Process Inventory 15,112
Finished Goods Inventory 17,120

Job order cost cards for job in process as of September 30 had these totals:

Job No. Direct Materials Direct Labor Overhead

1 P1,596 P1,290 P1,677
2 1,492 1,380 1,794
3 1,984 1,760 2,288
4 1,608 1,540 2,002

The predetermined overhead rate is 130% of direct labor cost. Materials purchased and received
in September were as follows:

September 4 P 33, 120

September 15 28, 600
September 22 31, 920

Direct labor cost for September were as follows

September 15 P 23,680
September 25 25,960

Direct materials requested by production during September were as follows:

September 6 P 37,240
September 25 38,950

On September 30, CLIPPERS COMPANY sold on account finished goods with a 75% markup
over cost for P320,000.

Required:

1. Using T-accounts for Materials Inventory, Work in Process Inventory, Finished Goods
Inventory, Overhead, Accounts Receivable, Payroll Payable, Sales and Cost of Goods Sold,
reconstruct the transactions in September.

2. Compute the cost of units completed during the month.

3. What was the total cost of goods sold during the month?
4. Determine the ending inventory balances,

5. Jobs 1 and 3 were completed during the first week of October. No additional materials cost
were incurred, but Job 1 required P960 more of direct labor, and Job 3 needed an additional
P1,610 of direct labor. Job 1 was composed of 1,200 shirts and Job 3 of 900 shirts.
Compute the product unit cost for each job. (Round your answer to 2 decimal places.)