STATEMENT OF COST OF GOODS MANUFACTURED AND SOLD

Raw Materials, Beg X

Add: Raw Materials NET Purchases X
Less: Raw materials, End (X)
Raw Materials issued to production X
Less: Indirect Materials used (X)
Direct Materials Used X X
Add: Direct Labor incurred X
Manufacturing OH applied X
TOTAL MANUFACTURING COST (TMC) X
Add: Work In Process, Beg X
TOTAL COST OF GOODS PUT INTO PROCESS X
Less: Work In Process, End (X)
COST OF GOODS MANUFACTURED (CGM) X
Add: Finished Goods, Beg X
COST OF GOODS AVAILABLE FOR SALE (COGAS / TGAS) X
Less: Finished Goods, End (X)
COST OF GOODS SOLD (COGS / CGS) X
SPOILED GOODS
CASE 1 – CHARGED TO COMPANY / ALL JOBS / INTERNAL FAILURE
Total Cost of Goods
Less: Cost of Spoiled Goods
Total Cost of Goods Transferred to Finished Goods
Divided by Good Units
Cost per unit

CASE 2 – CHARGED TO CUSTOMER / SPECIFIC JOB / EXACTING SPECIFICATIONS

Total Cost of Goods
Less: Sales Price / NRV of Spoiled Goods
Total Cost of Goods Transferred to Finished Goods
Divided by Good Units
Cost per unit

REWORKED GOODS
CASE 1 – CHARGED TO COMPANY / ALL JOBS / INTERNAL FAILURE
Total Cost of Goods
Divided by Good Units
Cost per unit

CASE 2 – CHARGED TO CUSTOMER / SPECIFIC JOB / EXACTING SPECIFICATIONS

Total Cost of Goods
Add: Rework Cost
Total Cost of Goods Transferred to Finished Goods
Divided by Good Units
Cost per unit
 X
(X)
X
X
X

X
(X)
X
X
X

X
X
X

X
X
X
X
X
PROBLEM 1:
Mango Graham Corporation employs a job order costing system and accounts for various jobs for all of its products.
Cost of production data (in pesos) for the month of October follows:

Work In Process, October 1:

Job 03 Job 04
Direct Materials 2,400 1,500
Direct Labor 3,600 2,880
Applied Overhead 2,340 1,872

Finished Goods October 1:

Job 01 Job 02
Direct Materials 18,000 6,720
Direct Labor 24,000 8,400
Applied Overhead 15,600 5,460

Total manufacturing cost added during the month of October:

Job 03 Job 04 Job 05
Direct Materials 10,920 13,200 36,000
Direct Labor 14,400 16,800 42,000
Applied Overhead 9,360 10,920 27,300

During the month of October, Job 03, Job 04, and Job 05 were completed and sold.
The pre-determined overhead rate was 65% of direct labor cost. The actual overhead at the end of the year was P33,000.
Based on management judgment, any identified OH variance is insignificant.

1. What is the cost of goods manufactured for the month of October?

A. P195,492 B. P180,900 C. P143,700

2. Assuming that Job 06 was also completed, what is the cost of goods manufactured for Job 06?
A. P6,252 B. P20,580 C. P40,920

3. Assuming the information from number 1 above, what is the adjusted cost of goods sold for the month of
A. P19,260 B. P161,640 C. P180,900

SOLUTIONS

Total manufacturing cost added during the month of October:

Job 03 Job 04
Direct Materials 10,920 13,200
Direct Labor 14,400 16,800
Applied Overhead 9,360 10,920
TOTAL 34,680 40,920

TOTAL MANUFACTURING COST (TMC) 197,580

Add: Work In Process, Beg 14,592
TOTAL COST OF GOODS PUT INTO PROCESS 212,172
Less: Work In Process, End 16,680
COST OF GOODS MANUFACTURED (CGM) 195,492
Add: Finished Goods, Beg 78,180
COST OF GOODS AVAILABLE FOR SALE (COGAS / TGAS) 273,672
Less: Finished Goods, End 92,772
COST OF GOODS SOLD (COGS / CGS) 180,900

UNADJUSTED COST OF GOODS SOLD (COGS / CGS) 180,900.00

Applied Manufacturing OH (from Job 03, 04, 05 and 06) 52,260

Actual Manufacturing OH (given) 33,000
OVERAPPLIED MOH 19,260

ADJUSTED COST OF GOODS SOLD (COGS / CGS) 161,640.00

NOTE: Immaterial Overapplied MOH is a deduction to arrive at the adjusted balance of COGS
 of its products.

Job 06
4,800
7,200
?

he year was P33,000.

C. P143,700 D. P180,912

ed for Job 06?

C. P40,920 D. P16,680

ods sold for the month of October?

C. P180,900 D. P200,160

Work In Process, October 1:

Job 05 Job 06 Job 03
36,000 4,800 Direct Materials 2,400
42,000 7,200 Direct Labor 3,600
27,300 4,680 (65% of DL Cost) Applied Overhead 2,340
105,300 16,680 Number 2: D TOTAL 8,340

Finished Goods October 1:

Job 01
(Job 03 & Job 04 were the WIP, Beg) Direct Materials 18,000
Direct Labor 24,000
(Job 06 was not completed during the period) Applied Overhead 15,600
Number 1: A TOTAL 57,600
(Job 01 & Job 02 were the Finished Goods, Beg)
 SQUEEZE
(Job 03, Job 04 and Job 05 were the products sold during the period. Hence, their costs comprise of the COGS)

Number 3: B
ance of COGS
Job 04
1,500
2,880
1,872
6,252

Job 02
6,720
8,400
5,460
20,580
the COGS)
PROBLEM 2: Buko Pandan Company’s Job 501 for the manufacture of 2,200 units, which was completed during August at the

Direct Materials
Direct Labor
Manufacturing OH (includes an allowance for spoilage of P1)
Total Per-Unit Cost

Final inspection of Job 501 disclosed 200 spoiled units which were sold to a local jobber for P6,000.
1. Assume that the spoilage loss is charged to all production or due to internal failure, what would be the un
A. P53

2. Assume that the spoilage loss is mainly attributable to exacting specifications and charged to a specific
A. P53

SOLUTIONS
CASE 1 – CHARGED TO COMPANY / ALL JOBS / INTERNAL FAILURE
Total Cost of Goods (2,200 x 56)
Less: Cost of Spoiled Goods (200 x 56)
Total Cost of Goods Transferred to Finished Goods
Divided by Good Units (2,200 - 200)
Cost per unit

CASE 2 – CHARGED TO CUSTOMER / SPECIFIC JOB / EXACTING SPECIFICATIONS

Total Cost of Goods (2,200 x 55)
Less: Sales Price / NRV of Spoiled Goods
Total Cost of Goods Transferred to Finished Goods
Divided by Good Units (2,200 - 200)
Cost per unit
NOTE: As the spoilage is due to customer specifications / specific job, do not include any allowance for spo
s completed during August at the unit cost is presented below:

P20
18
18
P56

al failure, what would be the unit cost of the product produced on Job 501?
B. P55 C. P56 D. P58.60

ons and charged to a specific job, what would be the unit cost of the product produced on Job 501?
B. P57.50 C. P56.50 D. P58.60

123,200
11,200
112,000
2,000
56

121,000
6,000
115,000
2,000
57.5
include any allowance for spoilage as management does not expect any spoilage.
D. P58.60
PROBLEM 3: During March, Yema Cake company incurred the following costs on Job 109 for the manufacture of 200 cake ba

Direct Materials P660

Direct Labor 800
Manufacturing OH (150% of DL Cost) 1,200
Total Cost P2,660

Cost of reworking 10 batches:

Direct Materials P100
Direct Labor 160

1. Assume that the rework costs were attributable to internal failure or charged to all jobs, what is the cost p
A. P15.80 B. P14.60

2. Assume that the rework costs were attributable to customer-imposed standards, what is the cost per finis
A. P15.80 B. P14.60

SOLUTIONS
REWORKED GOODS
CASE 1 – CHARGED TO COMPANY / ALL JOBS / INTERNAL FAILURE
Total Cost of Goods 2,660
Divided by Good Units 200
Cost per unit 13.3

CASE 2 – CHARGED TO CUSTOMER / SPECIFIC JOB / EXACTING SPECIFICATIONS

Total Cost of Goods 2,660.00
Add: Rework Cost 500.00 Direct Materials
Total Cost of Goods Transferred to Finished Goods 3,160.00 Direct Labor
Divided by Good Units 200.00 MOH
Cost per unit 15.8 Total Rework Cost
NOTE: Do not forget to still include the MOH cost.
e manufacture of 200 cake batches:

to all jobs, what is the cost per finished unit of Job 109?
C. P14.00 D. P13.30

rds, what is the cost per finished unit of Job 109?

C. P14.00 D. P13.30

100
160
240
500