Assignment: Cost Accounting, Cost Concepts, Understanding and Classifying

Costs

A-1Uniliver, a manufacturing company, incurs the costs shown below:

Cost Product cost Period Direct Indirect
cost cost cost
Prime Conversio
n
Direct materials used Y Y
Taxes and licenses (plant) Y Y
Payroll for production Y Y
supervisor
Accident insurance on Y Y
factory workers
Wages-assembly workers Y Y Y
Small tools used Y Y
Advertising Y
Office supplies used Y
Depreciation-factory bldg. Y Y
Factory utilities Y Y
Administrative salaries Y
Bad debt expense Y
Prime cost = direct materials + direct labor; Conversion cost = direct labor + factory overhead
REQUIRED: a.) classify each cost as either a product cost or a period cost. If product cost,
identify it as prime and/or conversion cost. b.) classify each as either a direct or indirect cost
using the product as a cost object.
A-2 On January 1, the balances of Woodywood Company were as follows: Finished Goods, P
225,000; Work in Process, P 100,000; Materials, P 95,000. During January, the following
transactions were completed:
a. Materials were purchased, P 300,000.
b. Direct materials amounting to P 210,000 were issued from the warehouse.
c. Indirect materials amounted to P 30,000.
 d. Total salaries and wages for January amounted to P 130,000, including salaries of
salesmen P 30,500 and administrative salaries of P 25,000. Labor time tickets show that P
65,500 of the labor cost was direct labor.
e. Other factory overhead costs incurred on account were P 12,000.
f. Total factory overhead is closed to and transferred to Work in Process account.
g. Finished products totaled P 158,500 and finished goods in the shipping room in January
31 totaled P 48,000.
h. Customers to whom shipments were made during the month were billed for P 350,000.
REQUIRED: Prepare journal entries for the ff. transactions.
1. Periodic method
2. Perpetual method
Perpetual Periodic
A. RMI 300,000 Purchases 300,000
AP 300,000 AP 300,000
B. WIP – DM 210,000 No entry
RMI 210,000
C. FOH control – IM 30,000 No entry
RMI 30,000
D. Payroll 130,000 Same
Salaries payable 130,000
WIP – DL 65,500 Salaries - Direct labor 65,500

FOH control – IL 9,000 Salaries – FOH 9,000

Sales Salaries 30,500 Salaries – Sales 30,500

Admin salaries 25,000 Salaries – Admin 25,000

Payroll 130,000 Payroll 130,000

\ FOH Control 12,000 Factory overhead 12,000

Accruals (AP) 12,000 Accruals (AP) 12,000
F. WIP – FOH 51,000 No entry
FOH control 51,000
G. FGI 326,500 No entry
 WIP 326,500
H. AR 350,000 AR 350,000
Sales 350,000 Sales 350,000
COS 335,000
FGI 335,000

Ledger:
RMI
95,000 210,000
300,000 30,000
(bal)
155,000

WIP
100,000 158,500
210,000
65,500
51,000
Bal.
426,500

FGI
225,000 335,500
158,500
Bal. 48,000
A-3 The December 31, 2018 trial balance of KIM Company showed the following information:
Sales P 14,000,000 Sales return & allow. P 20,000
Purchases 2,400,000 Factory overhead 1,880,000
Freight-in 30,000 Advertising expense 150,000
Direct labor 3,200,000 Delivery expense 60,000
Sales salaries 200,000

Inventories:
12/31/18 1/01/18
Finished goods P 460,000 P 620,000
Work in process 130,000 120,000
Materials 190,000 170,000

REQUIRED: Compute for the following:

1.) Total manufacturing cost 5.) Gross profit
2.) Total goods placed in process 6.) Selling expenses
3.) Cost of goods manufactured 7.) General and admin expenses
4.) Cost of goods sold 8.) Net income/ net loss

Sales P 14,000,000
SRA (20,000)
Net Sales 13,980,000

Cost of Sales:
RMI, beg. 170,000
Net cost of Purchase 2,430,000
RMI, end 190,000
Materials used 2,410,000
DL 3,200,000
FOH 1,880,000
Manufacturing cost 7,490,000
WIP, beg. 120,000
Cost of goods place in process 7,610,000
WIP, end 130,000
COGM 7,480,000
FG, beg. 620,000
TGAS 8,100,000
FG, end 460,000
 COGS 7,640,000 7,640,000

Gross profit 6,340,000

Operating expenses 410,000

Net income 5,930,000

A-4 On September 2018, Zocco Company incurred the following costs: Direct materials, P
200,000; Factory overhead, P 250,000; and Direct labor, P 105,000. Inventories were as follows:
Beginning Ending
Finished goods P 350,000 P 200,000
Work in process 360,000 350,000
Materials 250,000 125,000

REQUIRED:
a. Total manufacturing cost for the month of September.
b. The cost of goods manufactured for the month of September.
c. The cost of goods sold for the month of September.

Direct materials 200,000

Direct labor 105,000
FOH 250,000
Total manufacturing cost 555,000
WIP, beg. 360,000
WIP, end (350,000)
COGM 565,000
FG, beg. 350,000
FG, end. (200,000)
COGS 715,000
A-5 Coco company manufactures tables. The following information was available at the
beginning and ending of August:
Beginning Ending
Materials inventory P 42,500 P 22,000
Work in process inventory 45,500 16,000
Finished goods inventory 25,500 12,000

During august, materials costing P 126,000 were purchased, direct labor cost totaled P 109,600,
and factory overhead was P 112,500 which includes P 22,500 of indirect materials. How much is
the cost of good manufactured for August?
 RMI, beg. 42,500
Purchases 126,000
RMI, end (22,000)
Materials used 146,500
Indirect materials (22,500)
Direct materials used 124,000
Direct labor cost 109,600
FOH 112,500
Manufacturing cost 346,100
WIP, beg. 45,500
WIP, end (16,000)
COGM 375,600

A-6 On June 2018, Flaming Company’s purchases materials amounting to P 125,000, and the
cost of goods sold for June was P 330,000. Factory overhead was 300% of direct labor cost.
Other information pertaining to Flaming Company’s inventories and production for June is as
follows:
Inventories Beginning Ending
Finished goods P 142,500 P 40,000
Work in process 25,500 17,000
Materials 14,000 9,500

REQUIRED:
a.) Prepare schedule of cost of goods manufactured.
b.) Compute the prime cost charged to work in process.
c.) Compute the conversion cost charged to work in process.
d.) Prepare schedule of cost of goods manufactured.
e.) Compute the prime cost charged to work in process. (129,500 + 22,375)
f.) Compute the conversion cost charged to work in process. 89,500

RMI, beg. 14,000

Purchases 125,000
RMI, end (9,500)
DM used 129,500
DL 22,375
FOH 67,125
Total manufacturing cost 219,000
WIP, beg. 25,500
WIP, end (17,000)
COGM 227,500
 FG, beg. 142,500
FG, end (40,000)
COGS 330,000

Conversion cost = 89,500 (DL + FOH)

89,500 = DL + 300% (DL)
89,500 = 4DL
DL = 89,500/4
DL = 22,375

FOH = 300% of DL

A-7 Jing Inc. had a cost of goods manufactured for the month of July equal to P 100,000; raw
materials used P 29,000; cost of goods sold, P 120,000; direct labor, P 28,000; purchases of
materials, P 45,000; cost of goods available for sale, P 125,000; total salaries and wages, P
58,000. Work in process was P 35,000 on July 1 and P 15,000 on July 31. The company uses a
sole account for direct and indirect materials.
Required:
a.) Cost of goods sold statement
b.) Journal entries to record (use periodic and perpetual)
1.) The purchase of materials on account
2.) The use of materials which includes indirect materials of P 2,000.

3.) The accrual payroll in the production department which includes indirect labor of P
11,500.
4.) The distribution of factory labor cost
5.) The transfer of completed work to finished goods
6.) The sales on account, at a mark-up equal to 150% of production cost.

7.) The purchase of materials on account

RMI 45,000
AP 45,000
8.) The use of materials which includes indirect materials of P 2,000.
WIP – DM 27,000
Factory overhead control 2,000
RMI 29,000

9.) The accrual payroll in the production department which includes indirect labor of P
11,500.
 Payroll 58,000
Accrual 58,000

10.) The distribution of factory labor cost

WIP – DL 28,000
Factory overhead 11,500
Salaries exp. – Selling and Admin 18,500
Payroll 58,000

Accrual 58,000
Cash 58,000

11.) The transfer of completed work to finished goods

FG 100,000
WIP 100,000

12.) The sales on account, at a mark-up equal to 150% of production cost.

AR (120,000 x 150%) 300,000
Sales 300,000

Cost of sales 120,000

Finished goods inventory 120,000

Cost of goods sold:

Raw materials used 29,000
Indirect materials (2,000)
DM used 27,000
DL 28,000
FOH 25,000
Manufacturing cost 80,000
WIP, beg. 35,000
WIP, end. (15,000)
COGM 100,000
FG, beg. 25,000
TGAS 125,000
Fg, end (5,000)
COGS 120,000