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Polytechnic University of the Philippines 쇴 ACCOUNTING 123 쇴 Assessment 3.docx

Assessment 3.docx
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COST ACCOUNTING
Lesson 3 - Assessment

1. HP Company generated the following data for the year just ended:
Total manufacturing costs P10M
Cost of goods manufactured P10,250,000
Overhead applied based on direct labor costs 75%
Overhead applied based on total manufacturing costs 27%

Determine the amount of labor charged to work in process account.

Solution:
1,000,000 x 27% = 2,700,000
2,700,000 / 75% = 3,600,000

View answer and explanation 쇱

2. Betty La Fea Company reported the following for the year ended:
Beginning inventories:
Raw Materials P450,000
Work in Process 560,000
Finished Goods 900,000

Ending inventories:
Raw Materials P600,000
Work in Process 760,000
Finished Goods 1,040,000
Goods Manufactured P6,800,000
Raw material purchases P2,650,000
Overhead Applied 50% of DLC

Compute for the prime costs for the year ended.

Solution:
DM = Beginning + Purchases − Ending
DM = 450,000 + 2,650,000− 600,000
DM = 2,500,000

CGM = DM + DL +OHA + WIP ,Beg. −WIP, End.

6,800,000 =2,500,000 + DL + 0.5 DL+ 560,000 − 760,000
6,800,000 =2,300,000 −1.5 DL
1.5 DL = 4,500,000
1.5 1.5
DL =3,000,000

PrimeCost = Direct Materials + Direct labor

PrimeCost = 2,500,000+ 3,000,000
PrimeCost =5,500,000

View answer and explanation 쇱

3. Sharp Enterprises operates its factory on a two-shift basis and pays late-shift differential of 50%
above the regular wage rate of P60 per hour. The company also pays a premium of 30% for overtime
work. During the year, work occurred in the following categories:
Number of hours worked during the regular shift 10,000
Number of overtime hours for regular shift workers 300
Number of hours worked during the late shift 6,000

Determine the amount of total payroll and distribute the total payroll to Work in process and
factory overhead.
Solution:
Regular Shift = 60
Late Shift = 60 × 15% = 9 + 60 = 69
OT = 60 × 30% = 18

10,000 × 60 = 600,000
300 × 18 = 5,400
:
 300 × 18 = 5,400
6,000 × 69 = 414,000
Factory Payroll = 1,019,400

Work in process = 1,014,000

Factory overhead = 5,400

Work in process 1,014,000

Factory overhead 5,400
Factory payroll 1,019,400

View answer and explanation 쇱

9
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4. A factory employee is paid P45 per hour for a regular workweek of 40 hours. During the week ended
June 21, the employee worked 50 hours and earned time and a half for overtime hours.
Compute the amount debited to work in process.
Solution:
Work ∈Process =45 × 40
Work ∈Process =1,800

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5. Sunshine Manufacturing Company just started its operation in this year. After its first three months of
operations, Sunshine Manufacturing Company had the following data on its operation.

 Cost of goods sold amounted to P540,000.

 Manufacturing costs were distributed as follows: 40% direct materials used; 30% direct labor;
30% factory overhead.
 Work in process, March 31 was 10% of the total manufacturing costs.
 Finished goods remaining in stock were 20% of the total cost of goods manufactured.
Compute for the amount of direct labor costs incurred for the period.

View answer and explanation 쇱

Solution:
FG, Beg.+CGM = CGS− FG, End.
0 -CGM = 540,000+0.2 CGM
0.8CGM 540,000
=
0.8 0.8
CGM = 675,000

WIP, Beg.+MC = CGM − WIP ,End .

0 - MC = 675,000+ 0.1 MC
0.9 MC 540,000
=
0.9 0.9
MC = 750,000

FinishedGoods ,Ending= 675,000 ×20%= 135,000

Direct Materials= 750,000 × 40% = 300,000

Direct Labor= 750,000 ×30%= 225,000

Factory Overhead= 750,000 ×30% = 225,000

Work∈ Process, Ending= 750,000 ×10%= 75,000

Work in Process, Beg 0

Add: Direct Materials (40%) 300,000
Add: Direct Labor (30%) 225,000
Add: Manufacturing Overhead (30%) 225,000
Total Manufacturing Cost 750,000
Less: Work in Process, Ending 75,000
Cost of Goods Manufactured 675,000

Finished Goods, Beginning 0

Add: Cost of Goods Manufactured 675,000
Total Goods Available for sale 675,000
Less: Finished Goods, Ending 135,000
Cost of Goods Sold 540,000

6. 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.
Solution:
Cost of goods manufactured 450,000
Factory overhead (150,000)
Work in process inventory (30,000)
Prime Cost 270,000

View answer and explanation 쇱

섈 슼 '

TITLE

Assessment 3.docx
:
 SCHOOL

Polytechnic University of the Philippines

COURSE TITLE

ACCOUNTING 123

UPLOADED BY

iamabby08

PAGES

TERM

Fall 2020

TAGS

Goods Manufactured

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