Item 1-3

Monday, 10 January 2022 8:48 pm

QUIZ 2- COST ACCOUNTING & CONTROL

1. Nissan Company estimated direct labor hours for 2017 to be 117,000 hours with budgeted
overhead of P2,340,000.The company applies factory overhead on the basis of direct labor hours.
During the year, record shows that the factory overhead incurred were the same as planned and
the factory overhead account resulted to a debit balance of P78,000
How many direct labor hours were actually worked during 2017? 113,000 DLH

MOH RATE = Budgeted Overhead Thus, P78,000 is an underapplied overhead meaning applied
overhead is less than what was actually incurred
Est. Cost driver
Budgeted Overhead 2,340,000
MOH RATE = 2,340,000
Less: Underapplied -78,000
117,000 Hrs
Applied Overhead 2,262,000
MOH RATE = 20 per DLH
Divide by :MOH Rate 20
Actual Hours 113,100
2. Casio Manufacturing Company operates on a modified wage plan. During one week's operation, the
following direct costs were incurred

Units Completed
Employee PC- M T W TH F
Rate/100 units
Leah P12 680 710 650 800 480
Sarah 11 630 640 290 280 700
Bamboo 13 620 610 710 600 280

As provided in the collective bargaining agreement, a minimum wage of P350 a week is guaranteed for
each worker.

How much is the total payroll for week is charged to factory overhead? 70.60 PHP
3. PBB Manufacturing Company uses backflush costing to account for its manufacturing costs. The
following activities for the 1st quarter of the current year follows:
Purchase Direct Materials on Account
Direct Labor Cost Incurred
Factory Overhead cost incurred
Sold the completed goods at 30% mark up on cost

Conversion cost is charged to cost of sales when incurred. At the beginning of the quarter, RIP while the
Finished Goods Inventory has a balance of P100,000 of which P40,000 is direct materials. There is no change
in RIP and FG inventory accounts

The cost of sales for the period is ? The Gross Profit for the period is?
PHP 1,700,000 & P510,000

Direct Materials 800,000

Product Cost 1,700,000
Direct Labor 500,000
Mark up rate 30%
Factory Overhead 400,000
Gross Profit 510,000
Product Cost 1,700,000

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Wednesday, 12 January 2022 12:02 pm

5. H&M Manufcturing Company's record shows the following account balances as of June 30, 2017.
Cash P822,500 The following transactions were completed during July:

Raw Materials 295,000 a. Raw materials purchased on account, P 740,000

Work In Process 270,000 b. Raw materials requisitioned during the month: Direct Materials,
P570,000: Indirect Materials, P110,000
Accounts Payable (credit) 210,000
c. Direct Materials returned by production department to storeroom
Factory Overhead none during the month, P11,000
d. Raw materials returned to vendors during the month prior to
payment, P25,000
e. Payment to vendors during the month, P685,000

The Balance of Raw Materials Account at end of July 1 is ?

341,000 PHP Dr Raw Materials

Raw Materials, Beg 295,000 Cr Acc. Payable

Purchases 740,000 Dr Work In Process

Requisitions -680,000 Dr MOH

Cr Raw Materials
Returned to SR 11000
Dr Raw Materials
Used -25,000
Cr MOH
Raw Materials, End 341,000
Cr Work In Process

6. Cotton on Manufacturing Company had remaining credit balance of P10,000 in its

factory overhead account at year-end. It also had the year-end balances in the
following accounts:

Work In Process ₱ 250,000

Finished Goods 150,000
Cost of Goods Sold 850,000
Assuming the credit balance of factory overhead is closed to cost of goods sold, what is the balance of cost of
goods sold after closing the variance?
840,000 PHP

Manufacturing OH
Actual OH Applied OH Thus the credit balance of 10,000 represents as an over applied OH.
Basis is the actual overhead incurred
overapplied < > Underapplied

PAJE is as follows:
Cost of Goods sold, bef. Adj ₱ 850,000
Manufacturing Overhead 10,000
Over applied Adj. -10,000
Cost of Goods Sold 10,000
Adj. Cost of Goods Sold ₱ 840,000

7. Sunshine Manufacturing Company just stated its operation in this year. After its first six months of
operations, Sunshine Manufacturing Company had the following data on its operations
a. Cost of goods sold amounted to P2,450,000
b. Manufacturing Cost were distributed as follows: 40% direct materials used; 30% direct labor;, 30% manufacturing
overhead
c. Work in Process, March 31 was 10% of total manufacturing costs
d. Finished goods remaining in stock were 20% of the total cost of goods manufactured

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Wednesday, 12 January 2022 12:47 pm

Compute for the total factory cost for the period?

2,540,000 PHP

Direct Materials Used

Direct Labor
Factory Overhead
Manufacturing Cost 40% DM Used, 30% DL, 30% MOH

Work In Process, Beg

Goods Put into process
Work In Process, End 10% of TMC

Goods Manufactured ₱ 450,000

Finished Goods, Beg
Goods Available for sale
Finished Goods, End
Cost of Goods Sold ₱ 2,450,000 20% COGM

8. The cost of goods manufactured for the period is P450,000; Factory Overhead
is P150,000; Decrease in Work In Process Inventory P30,000
Determine the amount of prime costs for the period?
270,000 PHP
Prime Costs is equal to Direct Materials plus Direct Labor

Direct Materials 270,000

] Prime Costs
Direct Labor
Factory Overhead 150,000
Manufacturing Cost 420,000
WIP end is less than WIP beg
Decrease in Work In Process 30,000
Cost of Goods Manufactured 450,000 Illustration:
WIP Beg + 30,000

Goods Put into process xxx

WIP End - 20,000
Goods Manufactured xxx
NET EFFECT OF WIP +

9. Victory Manufacturing Company produces a variety of products. The firm operates 24 hours per day with
three daily work shifts. The first shift workers receive regular pay. The 2nd shift receives 10% pay premium
and the 3rd shifts receives 20% pay premium. In addition, the firm pays overtime premium of 50% based on
the pay rate for the 1st shifts. All labor premiums are included in the overhead.
The actual payroll for the month is as follows;
Total wages for 16,000 hrs ?
Wage rate for 1st shift P 35 per hour
Total regular hours worked 15,000

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Wednesday, 12 January 2022 1:02 pm

Entry to record the payroll for the month (Charge Directly to WIP or FOH not to
factory payroll account)

Work In Process ₱
560,000
Factory Overhead ₱ 70,000
Factory Payroll ₱ 630,000

Divided Evenly Regular Pay Premium OT Premium

Overtime Hrs 1,000 35000 17,500
1st Shift 5,000 175000
2nd Shift 5,000 175000 17,500
3rd Shift 5,000 175000 35,000
₱ 560,000 ₱ 52,500 ₱ 17,500

10. One Friday morning, a customer brings a rush order of 2,500 units of Product X at a unit sales price of P20.
Glory Company agrees to produce these units for the customer over the weekend for shipment on
Monday. Fifty of the direct labor employees who earn P60 an hour work eight hours each day on Saturday
and Sunday to complete the order. Glory Company regular working day is Monday to Friday. The company's
policy on overtime during weekend is time and a half. Materials costing P3 per unit was used on the order.
The factory overhead application rate is P18 per direct labor hour.

Determine the gross profit on this order

Sales Price Regular Pay for 2 days 48,000.00

(P20 x 2,500) 50,000.00 Overtime Premium 72,000.00
Production Cost - 141,900.00 Direct Materials 7,500.00
Loss 91,900.00 Manufacturing Overhead
(P18 x 800 hrs) 14,400.00
141,900.00
11. Princess Company allocates service costs using direct method. The following budgeted data are
available for the coming calendar year.

Provider of Service

Departments Budgeted OH S1 S2
Dept. 1 ₱ 940,000.00 40% 50%
Dept. 2 ₱ 850,000.00 50% 30%
S1 ₱ 200,000.00 - 20%
S2 ₱ 176,000.00 10% -
Determine the gross profit on this order

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Wednesday, 12 January 2022 1:10 pm

12. The following cost information was taken from the records of Skyline
Manufacturing Company.
Budgeted Direct Labor costs: 75,000 hrs at P52.50 per hour
Budgeted manufacturing overhead: P 2,953,125
Actual direct labor costs: 72,000 hours at P54.00 per hour
Actual Manufacturing Overhead: P2,500,000, excluding indirect materials and indirect labor of
P800,000
Indirect materials: beginning, P50,000;purchases, P250,000; ending, P65,000

Determine the total amount of overhead applied during the year.

P2,835,000

OH rate= Budgeted Manufacturing Overhead

Actual Direct Labor Hours 72,000
Budgeted Direct Labor Hours
OH Rate 39.375
OH rate= 2,953,125
Applied Overhead ₱ 2,835,000
75,000 hrs
OH rate= 39.375

13. Satellite company applies factory overhead on the basis of a rate per direct labor hour. The
company provides you with the following data for the month of August, year 1. Selected inventories
have the following balances:
August 1 August 31
Inventories:
Work in Process ₱ 78,000 ₱ 85,000
Finished Goods 81,000 60,000
Prime costs for the month year:
Direct Materials used ₱ 48,000
Direct Labor (45,000 actual LH) 294,000
Sales have increased 20% over last month's sale of P500,000; as a result gross margin for August is
P190,000.Actual factory overhead for August is P58,100
Factory Overhead Application Rate
P1.20 per DLH
Direct Materials used ₱ 48,000 Sales ₱ 600,000 20% increase

Factory Overhead 54,000 Cost of Sales ₱ 410,000

Direct Labor 294,000 Gross Margin ₱ 190,000
Manufacturing Cost ₱ 396,000
Work In Process, Aug 1 78,000 Applied Factory Overhead 54,000

Goods put into process ₱ 474,000 Actual Direct Labor Hours 45,000 hrs.

Work In Process, Aug 31 - 85,000 OH Rate ₱ 1.20

Goods manufactured ₱ 389,000

Finished Goods, Aug 1 81,000
Goods available for sale ₱ 470,000
Finished Goods, Aug 31 - 60,000
Cost of Sales ₱ 410,000

Quiz 2 Page 5
Wednesday, 12 January 2022 6:46 pm

14. Michellin Company manufactures two products: car wheels and truck wheels. To
determine the amount of overhead to be assigned to each product line, the
accountant, Melvin Santos, has developed the following information:
Car Wheels Truck Wheels
Estimated units of production 80,000 20,000
Budgeted DLH per wheel 2.5 at P40/H 4 at P40/H
Actual production 75,000 18,000
Actual DLH utilized 190,000 H @P38.50 82,500 H @ P38.50

The total estimated overhead costs for the two product lines are P7,350,000.

The conversion cost component per unit of each product lines using traditional
method of allocating overhead based on direct labor hours is ____?
P 164.03 and P296.77

OH rate= Budgeted Manufacturing Overhead

Budgeted Direct Labor Hours
OH rate= 7,350,000
280000
OH rate= 26.25

Direct Labor ₱ 7,315,000 ₱ 3,176,250

Factory Overhead 4,987,500 2,165,625
Conversion Cost ₱ 12,302,500 ₱ 5,341,875
/ Units 75,000 18,000
Conversion Cost per unit ₱ 164.03 ₱ 296.77
15. Villar Company estimated Department A's overhead at P255,000 for the period based on an
estimated volume of 100,000 direct labor hours .At the end of the period, the factory overhead
account for Department A was charged with P265,500; actual direct labor hours used were 105,000

The over or under applied overhead for the period is____?

P 2,250 overapplied
Actual Direct Labor Hours 105,000
OH rate = Estimated Overhead
x OH Rate ₱ 2.55
Estimated cost driver
Applied Overhead ₱ 267,750 >
OH rate = 255,000
Actual Overhead -265,500
100,000
Over-applied ₱ 2,250
OH rate = ₱ 2.55

Quiz 2 Page 6