I.

The work in process account of A Company showed:

Work in Process

Materials P22,000 | Finished goods P68,000

Direct labor 37,000 |
Factory overhead 55,500 |

Materials charged to the one job still in process amounted to P5,000. Factory
overhead is applied as a predetermined percentage of direct labor cost.
Required: Compute the following:
(a) The amount of direct labor cost in finished goods.
(b) The amount of factory overhead in finished goods.

SOLUTION
(a.) The amount of direct labor cost in finished goods.
Materials 22,000
Still in process (5,000)
Materials available 17,000
Finished Goods 68,000
Materials available (17,000)
Labor and Overhead 51,000
Factory Overhead 55,500 / Direct Labor 37,000 = 1.5 overhead rate
Labor and overhead 51,000 / 250% = 20,400
= Direct labor Cost in Finished Goods

(b.) The amount of factory overhead in finished goods.

Direct Labor Cost 20,400
Overhead Rate 150%
30,600
=Amount of Factory Overhead in finished
goods.
II. B Company customized items in a job order shop. On November 1, the
following balances appear in the inventory records
Finished goods P179,000
Work in process 308,000
Materials 83,000

The amount in Finished Goods represents P101,000 recorded for Job#175 and
P78,000 recorded for IJob# 177. The work in process account represents the
three customized items in process, as follows:
Item#179 Item#180 Item#181
Factory overhead P75,000 P50,000 P25,000
Direct labor 60,000 40,000 20,000
Direct materials 26,000 7,000 5,000

The following transactions occurred during November:

(a) Purchased materials on account, P80,000.
(b) Requisitioned P60,000 of materials from inventory: P15,000 applied to
Job#180, P25,000 to Job#181, and P16,000 to Job#182, a new order; the
balance was for indirect materials.
(c) Recorded the liability for the payroll and the labor cost distribution in a single
entry: total payroll, P208,750. Of the payroll cost, 10% applied to Job#179, 20%
to Job#180, 35% to IJob#181, 30% to Job#182, and the remainder to indirect
labor.
(d) Paid the payroll.
(e) Applied factory overhead at the rate of 150% of direct labor cost.
(f) Completed Job#179 and Job#180.
(g) Sold Job#175, Job#177, and Job#180 at 50% over manufacturing costs.

Required:
1. Determine the cost of goods sold
2. Determine the cost of goods manufactured
3. Determine the total manufacturing cost

SOLUTION
1. Determine COGS.
Job 175 101,000
Job 177 78,000
Job 180
 Factory Overhead 50,000
Direct Labor 40,000
Direct Materials 7,000
Job 180 15,000
(41,750 x 150%) 62,625 216,375
COGS 395,375

2. Determine COGM.
Direct materials 26,000
Direct Labor 60,000
Factory Overhead 75,000
Manufacturing Cost 161,000
Job no. 179 20,875
X150%
31,312.50
Total 213,187.50

Direct materials 7,000

Direct Labor 40,000
Factory Overhead 50,000
Job no. 180 15,000
41,750
62,625 216,375
Job 179 213,187.50
COGM 429,565.50

3. Determine Total Manufacturing Cost.

WIP Direct materials (15k + 25k + 16k) = 56,000
WIP Direct Labor (20,875+41,750+73,062.50+62,625) = 98,312.50
JOB 179 FO = 31,312.50
JOB 180 FO = 62,625
JOB 181 FO = 109,593.50
JOB 182 FO = 93,937.50
Manufacturing Overhead = 297,468.50
Total Manufacturing Cost = 557,781
III. C Company is to submit a bid on the production of 5,500 bells. It is
estimated that the cost of materials will be P8,500, and the cost of direct labor will
be P12,000. Factory overhead is applied at 50% of direct labor cost in the
Molding Department and at P7.50 per direct labor hour in the Finishing
Department. Of the above direct labor, it is estimated that 500 direct labor hours
at a cost of P4,000 will be required in Finishing. The company wishes a markup
of 100% of its total production cost.
Required: Determine the following:
(1) Estimated cost to produce.
(2) Estimated prime cost.
(3) Estimated conversion cost.
(4) Bid price.

SOLUTION
Estimated Cost to produce = 28,250
Estimated Prime Cost = 20,500
Estimated Conversion cost = 19,750
Bid Price (Estimated Cost to produce x 100%) = 56,500

IV. D Company had the following inventories at the beginning and end of July:
July 1 July 31
Materials P20,000 P 45,000
Work in process ? 185,000
Finished goods 65,000 115,000

During July, the cost of materials purchased was P160,000 and factory overhead of
P125,000 was applied at a rate of 75% of direct labor cost. July cost of goods
sold was P240,000.

1. Determine the cost of goods manufactured

2. Determine the total manufacturing cost
3. Determine the cost of goods sold

SOLUTION

1. Determine COGM.
 WIP Beginning 121,250
Materials + DL + FO 353,750
Total Manufacturing Cost 475,000
WIP End (185,000)
COGM 290,000

2. Determine Total Manufacturing Cost.

WIP Beginning 121,250
Mat + DL + FO 353,750
Total Manufacturing Cost 475,000
3. Determine COGS.
Finished Goods, Beginning 65,000
COGM 290,000
COGAFS 355,000
Finished Goods, End (115,000)
Cost of Goods Sold 240,000