MODULE 13

1. Amaryllis Corporation provide the following information:

No. of employees at the beginning of the month 600
No. of employees at the end of the year 640
No. of employees resigned 40
No. of employees discharged 10
No. of employees replaced 20

Average no. of employees during the period = 620

Required: Calculate the labor turnover by applying three methods:

a. Separation Method = (40+10)/620 x 100 = 8.06%
b. Replacement Method = 20/620 x 100 = 3.23%
c. Flux Method = (40+10+20)/620 x 100 = 11.29%
2. Barberton Corp. determined P284,200 payroll for the week (5 days)
consisting of P240,000 earned by 80 direct laborers and P44,200 earned
by 20 indirect laborers. The total factory bonuses to be paid at year-end is
estimated at P980,000. All factory workers receive a three-week paid
vacation and 10 paid holidays.
Required: Prepare the journal entries to:

(a) Distribute the weekly payroll and to

Work-in-Process Inventory 240,000
Factory Overhead Control 44,200
Payroll 284,200

(a) Accrue the bonus, vacation, and holiday pay.

Factory Overhead Control (11,600+17,400+20,000) 49,000

Accrued expense 49,000

Holiday Pay:

Salary per day (284,200 / 5) 56,840

Multiplied by: # of paid holidays 10
Total Holiday pay 568,400
Divide by: # of working weeks 49
Holiday pay expense per week 11,600

Vacation Pay:

Salary per week 284,200

Multiplied by: # of vacation weeks 3
Total Vacation pay 852,600
Divide by: # of working weeks 49
Vacation pay expense per week 17,400

Bonus:

Year-end bonus 980,000

Divide by: # of working weeks 49
Bonus expense per week 20,000

3. Calathea Company incurred payroll for the week(5 days) of P100,000 which
consists of P70,000 earned by 20 production workers and P30,000 earned
by 10 sales workers. Calathea also estimated that annual bonus of
P432,000 will be paid at year end. All employees are entitled to 4-week
paid vacation and 10 paid holidays.
Required: Prepare the journal entries to:
(a) Distribute the weekly payroll and
Work-in-Process Inventory 70,000
Factory Overhead Control 30,000
Payroll 100,000

(b) Accrue the bonus, vacation and holiday pay

Factory Overhead Control (4,166.67 + 8,333.33 + 9,000) 21,500
Accrued expense 21,500

Holiday Pay:

Salary per day (100,000/5) 20,000

Multiplied by: # of paid holidays 10
Total Holiday pay 200,000
Divide by: # of working weeks 48
Holiday pay expense per week 4,166.67

Vacation Pay:
Salary per week 100,000
Multiplied by: # of vacation weeks 4
Total Vacation pay 400,000
Divide by: # of working weeks 48
Vacation pay expense per week 8,333.33

Bonus:

Year-end bonus 432,000

Divide by: # of working weeks 48
Bonus expense per week 9,000

4. Lizzie Corporation is a local manufacturer that uses a job order costing.

Manufacturing Overhead is applied using a predetermined overhead rate
based on direct labor cost. The cost ledger shows the following information
for the month of August:

Work in Process, Aug. 1 250,000

Materials used during the month 120,000
Direct Labor Cost during the month 100,000
Factory Overhead applied 80,000
Goods manufactured 296,000

Lizzie had 3 outstanding jobs in ending work in process inventory that are
expected to be delivered next month:
Job no. 108 with direct materials of P35,000; Direct Labor P20,000
Job no. 109 with direct materials of P45,000; Direct Labor P25,000
Job no. 110 with applied overhead of P28,000

Determine the total labor cost charged to Job no. 110

Predetermined Overhead Rate 80% based on DL Cost

Factory Overhead applied Job no. 110 28,000
Direct Labor of Job no. 110 (28,000 / 80%) 35,000
Total Labor Cost P63,000

5. For the second week (5 day workweek) in October 2020, Lily Company’s records
show direct labor, P180,000 for 60 workers; indirect factory labor, P30,000 (10
workers); sales salaries, P42,000(14 employees); and administrative office
 salaries, P15,000(5 employees). Assume the withholding tax rate is 20%, and the
workers’ daily wage is P600.

Required:
(1) Prepare the entry to record the payroll liability.
Payroll P 267,000
Withholding Taxes Payable P 53,400
SSS Premium Payable 9,692.10
PhilHealth Premium Payable 7,342.50
HDMF Premium Payable 8,900
Accrued Salaries 187,665.40

(2) Prepare the entry to distribute payroll cost.

Work-in-Process Inventory P 180,000

Factory Overhead Control 30,000
Selling Expenses 42,000
Administrative Expenses 15,000
Payroll P 267,000

(3) Prepare the entry to record the employer’s payroll taxes in one compound entry.

Factory Overhead Control 28,952

Selling Expenses 5,790.40
Administrative Expenses 2,068
SSS Premium Payable 19,677.90
PhilHealth Premium Payable 7,342.50
HDMF Premium Payable 8,900
EC Contributions 890
MODULE 14
1.Charlie Co. uses 78,125 pound of flour each year, the cost of placing an order is P18,
and the carrying cost per pound of flour is P0.45.
a. Compute the Economic Order Quantity for Oats

2 × 78,125 × 18
𝐸𝑐𝑜𝑛𝑜𝑚𝑖𝑐 𝑂𝑟𝑑𝑒𝑟 𝑄𝑢𝑎𝑛𝑡𝑖𝑡𝑦 = √
0.45

2,812,500
=√
0.45

= √6,250,000

𝑬𝒄𝒐𝒏𝒐𝒎𝒊𝒄 𝑶𝒓𝒅𝒆𝒓 𝑸𝒖𝒂𝒏𝒕𝒊𝒕𝒚 = 2,500

b.Compute the total carrying and ordering costs for the EOQ
Carrying costs = (0.45 x 2,500) / 2
Carrying costs = 562.50
Ordering Costs = (78,125 x 18) / 2,500
Ordering Costs = 562.50
TOTAL = 1,125

2. Delta Co. produces casings for sewing machines: large and small. To produce the
different casings, equipment must be set up. The set up cost per production run is
P18,000 for either casing. The cost of carrying small casings in inventory is P6 per casing
per year; the cost of large casings is P18 per unit per year. To satisfy demand, the
company produces 2,400,000 small casings and 800,000 large casings
a. Compute the number of small casings that should be produced per set up to minimize
total set up and carrying costs.

2 × 2,400,000 × 18,000
𝐸𝑐𝑜𝑛𝑜𝑚𝑖𝑐 𝑂𝑟𝑑𝑒𝑟 𝑄𝑢𝑎𝑛𝑡𝑖𝑡𝑦 = √
6

86,400,000,000
=√
6

= √14,400,000,000

𝑬𝒄𝒐𝒏𝒐𝒎𝒊𝒄 𝑶𝒓𝒅𝒆𝒓 𝑸𝒖𝒂𝒏𝒕𝒊𝒕𝒚 = 120,000

b. Compute the total cost of carrying and set up associated with the economic order
quantity for the small casings

Carrying costs = (CU x EOQ) / 2

Carrying costs = 6 x 120,000 / 2
Carrying costs for small casings = 360,000
Ordering Costs = (RU x CO) /EOQ
Ordering Costs = (2,400,000 x 18,000 ) / 120,000)
Ordering costs for small casings = 360,000
Total cost of carrying and set up for small casings = 720,000

c. Compute the number of large casings that should be produced per set up to minimize
total set up and carrying costs for this product?

2 × 800,000 × 18,000
𝐸𝑐𝑜𝑛𝑜𝑚𝑖𝑐 𝑂𝑟𝑑𝑒𝑟 𝑄𝑢𝑎𝑛𝑡𝑖𝑡𝑦 = √
18

28,800,000,000
=√
18

= √1,600,000,000

𝑬𝒄𝒐𝒏𝒐𝒎𝒊𝒄 𝑶𝒓𝒅𝒆𝒓 𝑸𝒖𝒂𝒏𝒕𝒊𝒕𝒚 = 40,000

d. Compute the total of set up cost and carrying cost associated with the economic order
quantity of large casings
Carrying costs = (CU x EOQ) / 2
Carrying costs = (18 x 40,000) / 2
Carrying costs for large casings = 360,000
Ordering Costs = (RU x CO) /EOQ
Ordering Costs = ( 800,000 x 18,000) / 40,000
Ordering costs for large casings = 360,000
Total cost of carrying and set up for large casings = 720,000
3. Echo Company sells a number of products to many restaurants in the area. One
product is a special meat cutter with a disposable blade. Blades are sold in a package of
12 at P20 per package. It has been determined that the demand for the replacement
blades is at a constant rate of 2,000 packages per month. The packages cost the
company P10 each from the manufacturer and require a three-day lead time from date of
order to date of delivery. The ordering cost is P1.20 per order and the carrying cost is
10% per year. The company uses the economic order quantity formula.

a. Compute the economic order quantity

2 × 24,000 × 1.20
𝐸𝑐𝑜𝑛𝑜𝑚𝑖𝑐 𝑂𝑟𝑑𝑒𝑟 𝑄𝑢𝑎𝑛𝑡𝑖𝑡𝑦 = √
10 𝑥 10%

57,600
=√
1

= √57,600

𝑬𝒄𝒐𝒏𝒐𝒎𝒊𝒄 𝑶𝒓𝒅𝒆𝒓 𝑸𝒖𝒂𝒏𝒕𝒊𝒕𝒚 = 240

b. Compute the number of orders per year

Number of orders per year = RU / EOQ
= 24,000 / 240
= 100
c. Compute the total cost of ordering and carrying blades for the year.
Carrying costs = (CU x EOQ) / 2
Carrying costs = (10 x 0.10 x 240) / 2
Carrying costs = 120
Ordering Costs = (RU x CO) /EOQ
Ordering Costs = (24,000 x 1.20) / 240
Ordering Costs = 120
TOTAL = 240
 4. For the first week (5-day workweek) in Sept. 2021, Young Company’s records
show direct labor, P450,000 for 90 workers; indirect factory labor, P75,000 (15
workers); sales salaries, P105,000 (21 employees); and administrative office
salaries, P40,800 (5 employees). The workers’ daily wage is P1,000.

Required:
(a) Prepare the entry to record the payroll liability.
Payroll P670,800
Withholding Taxes Payable P134,160
SSS Premium Payable 23,478
PhilHealth Premium Payable 9,223.50
HDMF Premium Payable 13,100
Accrued Salaries 490,838.50

(b) Prepare the entry to distribute payroll cost.

Work-in-Process Inventory P450,000
Factory Overhead Control 75,000
Selling Expenses 105,000
Administrative Expenses 40,800
Payroll P 670,800

(c) Prepare the entry to record the employer’s payroll taxes in one compound entry.
Factory Overhead Control 58,143.75
Selling Expenses 11,628.75
Administrative Expenses 4,171
SSS Premium Payable 50,310
PhilHealth Premium Payable 9,223.50
HDMF Premium Payable 13,100
ECC Premiums Payable 1,310

Deductions & Contributions

Employee Employer
Withholding Tax 20%
SSS contributions 3.5% 7.5%
 PhilHealth contribution 1.375% 1.375%
HDMF P100 P100
EC Contribution P 10

5. Old Manufacturing Corp. started its operations on Sept. 1 (Monday). Employees work from
Monday to Friday based on a 40-hour workweek basis. Payroll is prepared on a weekly basis
and paid on the following Wednesday. Gross salaries and wages:
Headcount Daily Rate
Direct Labor 32 P750
Indirect Labor 8 600
Selling 10 800
Administrative 5 640

Use the table shown in number 4 for deductions and contributions.

Required:
1. Prepare the journal entry to record the weekly payroll for the whole month of
September.
Payroll 200,000
Salaries/Wages Payable 200,000

2. Prepare the journal entry to record the payment of the weekly payroll for the
whole month of September
Salaries/Wages Payable 200,000
Cash 200,000

3. Prepare the journal entry to record the accrued payroll in September.

Payroll 200,000
Withholding Taxes Payable 40,000
SSS Premium Payable 7,000
PhilHealth Premium Payable 2,750
HDMF Premium Payable 5,500
Accrued Salaries 144,750

4. Prepare the entry to record the distribution of payroll.

Work-in-Process Inventory 120,000
Factory Overhead Control 24,000
Selling Expenses 40,000
Administrative Expenses 16,000
Payroll 200,000
 5. Prepare the entry to record employer’s contribution
Factory Overhead Control 17,180
Selling Expenses 4,650
Administrative Expenses 1,970
SSS Premium Payable 15,000
PhilHealth Premium Payable 2,750
HDMF Premium Payable 5,500
ECC Premiums Payable 550

6. Prepare the journal entry to record the remittance of income tax withheld and
employee contributions for the month of September
Withholding Taxes Payable 40,000
SSS Premium Payable 7,000
PhilHealth Premium Payable 2,750
HDMF Premium Payable 5,500
Cash 55,250

7. Prepare the journal entry to record the remittance of employer contributions for
the month of September.

SSS Premium Payable 15,000

ECC Premiums Payable 550
PhilHealth Premium Payable 2,750
HDMF Premium Payable 5,500
Cash 23,800