HIGH-LOW METHOD

Month Materials Handling Cost Number of Moves

January P 2,000 100
February 3,090 125
March 2,780 175
April 1,990 200
May 7,500 500
June 5,300 300
July 4,300 250
August 6,300 400
September 5,600 475
October 6,240 425

1. Cost formula using High Low Method

2. If Company estimates that November will have 350 moves, what is the total
estimated materials handling cost?
LEAST-SQUARE METHOD
Month Materials Handling Cost Number of Moves
January P 2,000 100
February 3,090 125
March 2,780 175
April 1,990 200
May 7,500 500
June 5,300 300
July 4,300 250
August 6,300 400
September 5,600 475
October 6,240 425

1. Cost formula using Regression Analysis (Use two decimal places)

2. If Company estimates that November will have 350 moves, what is the total
estimated materials handling cost?
COST OF GOODS
SOLD STATEMENT
P R O F M A R K L E S T E R T. B A L A S A , C PA
 IAMLESTERRIFIC COMPANY
STATEMENT OF COST OF GOODS SOLD
YEAR 2020
Direct Materials, Beginning P 124,000
Add: Net Purchases 250,000
Direct Materials Available for Use 374,000
Less: Direct Materials, Ending (102,000)
Prime Cost DM+DL
Direct Materials Used P 272,000 P412,000
Direct Labor 140,000
Conversion Cost
Manufacturing (factory) overhead 335,000 DL+FOH P475,000
Total Manufacturing Cost P 747,000
Add: Work-in Process, Beginning 124,000
Cost of Goods Put/Placed Into Process P 871,000
Less: Work-in Process, Ending (130,000)
Cost of Goods Manufactured P 741,000
Add: Finished Goods, Beginning 84,000
Cost of Goods Available for Sale 825,000
End: Finished Goods, End (82,000)
COST OF GOODS SOLD P 743,000
PROBLEM NO. 1 - PRODUCT COST

• BB Company manufactures cellphones. For next year, BB predicts that 30,000 units will be
produced, with the following costs:
Direct Materials P150,000
Direct Labor 90,000
Variable OH 30,000
Fixed OH 450,000

1. Calculate the prime cost per unit

2. Calculate the conversion cost per unit
3. Calculate the total variable product cost per unit
4. Calculate the total product manufacturing cost per unit
 ANSWER:

• Unit Prime Cost = DM + DL / Number of Units = P8

• Unit Conversion Cost = DL + OH / Number of Units = P19
• Unit Variable Cost = DM + DL + VOH / Number of Units = P9
• Unit Product Cost = DM + DL + VOH + FOH / Number of Units = P24
PROBLEM NO. 2 - PREPARE A STATEMENT OF COST
OF GOODS MANUFACTURED IN GOOD FORM

• BB Company manufactures cellphones. For next year, BB predicts that 30,000 units will be produced, with
the following costs:
Direct Labor 90,000
Variable OH 30,000
Fixed OH 450,000
BB expects to purchase P143,600 of direct materials. Beginning and Ending inventories for direct materials
and ending inventories for direct materials and work in process are as follows:
Direct Materials Inventory W-IP Inventory
Beginning P 53,400 P 75,000
Ending P 47,000 P 60,000
 BB COMPANY
STATEMENT OF COST OF GOODS MANUFACTURED
FOR THE COMING YEAR
Direct Materials, Beginning P 53,400
Add: Purchases 143,600
Materials Available for Use 197,600
Less: Direct Materials, Ending (47,000)
Direct Materials Used P 150,000
Direct Labor 90,000
Manufacturing (factory) overhead 480,000
Total Manufacturing Cost P 720,000
Add: Work-in Process, Beginning 75,000
Cost of Goods Put/Placed Into Process P 795,000
Less: Work-in Process, Ending (60,000)
Cost of Goods Manufactured P 735,000
PR O BL EM N O . 3 : T H E F O LLO W I N G CO S T D ATA W ER E TA K EN F RO M
TH E REC O RD S O F A M A N U FA CTU RI N G CO M PA N Y:

 
D EP R ECI AT I O N O N FA CTO RY E Q U I P M EN T - - - - - - - - - - - - - - - - - - - - P 1 ,0 0 0
D EP R ECI AT I O N O N SA LES O F FI CE - - - - - - - - - - - - - - - - - - - - - - - - - - - - - 5 00
A D V ERT I S I N G - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - 7 ,0 0 0
FR EI G H T- O U T ( SH I PP I N G ) - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - 3 ,0 0 0
WA G E S O F PR O D U CTI O N W O R K E RS - - - - - - - - - - - - - - - - - - - - - - - - - - - 2 8 , 00 0
RAW MAT ER I A L S U SE D - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - 4 7 ,0 0 0
SA LE S S A L A RI ES A N D CO MM I S S I O N S - - - - - - - - - - - - - - - - - - - - - - - - - 1 0 , 0 00
FA CTO RY REN T - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - 2 , 00 0
FA CTO RY I N S U R A N C E - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - 500
MATE RI A LS H A N D LI N G - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - 1 ,5 0 0
A D MI N I S TR ATI V E S A L A RI ES - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - 2, 0 0 0
 

WH AT IS TH E TO TA L M A N U FA C T U R I N G C O ST ? P _ _ _ _ _ __ _ _ _ _ _ _ _
PROBLEM NO. 4 - COST ASSIGNMENT METHODS
• IamLesterrific Company makes industrial cleaning solvents. Various chemicals, detergent and water are
mixed together and then bottled in 10-gallon drums. IamLesterrific provided the following information for
last year:
• Raw materials purchases P250,000 Administrative Salaries P150,000
• Direct Labor 140,000 Indirect labor salaries 156,000
• Depreciation on factory equipment 45,000 Sales office salaries 90,000
• Depreciation on factory building 30,000 Beg. Bal, Raw Materials 124,000
• Depreciation on headquarters building 50,000 Beg. Bal, W-IP 124,000
• Factory insurance 50,000 Beg. Bal, FG 84,000
• Property Taxes on Factory 20,000 End, Bal Raw Materials 102,000
• Property Taxes on Headquarters 18,000 End Bal, W-IP 130,000
• Utilities for factory 34,000 End, Bal FG 82,000
• Utilities for sales office 1,800
Last year, IamLesterrific completed 100,000 units. Sales revenue equaled P1,200,000 and IamLesterrific paid a
sales commission of 5 percent of sales
REQUIRED:

• 1. Calculate the Direct material used in production for last year.

• II. Calculate the total prime cost
• III. Calculate the total conversion cost
• IV. Prepare a cost of goods manufactured statement for last year.
Calculate the unit product cost.
• V. Prepare a cost of good sold statement for last year
 IAMLESTERRIFIC COMPANY
STATEMENT OF COST OF GOODS MANUFACTURED
FOR LAST YEAR
Direct Materials, Beginning P 124,000
Add: Purchases 250,000
Materials Available for Use 374,000
Less: Direct Materials, Ending (102,000)
Prime Cost DM+DL
Direct Materials Used P 272,000 P412,000
Direct Labor 140,000
Conversion Cost
Manufacturing (factory) overhead 335,000 DL+FOH P475,000
Total Manufacturing Cost P 747,000
Add: Work-in Process, Beginning 124,000
Cost of Goods Put/Placed Into Process P 871,000
Less: Work-in Process, Ending (130,000)
Cost of Goods Manufactured P 741,000
Add: Finished Goods, Beginning 84,000
Cost of Goods Available for Sale 825,000
End: Finished Goods, End (82,000)
COST OF GOODS SOLD P 743,000
OVERHEAD COST
• Depreciation on factory equipment P 45,000
• Depreciation on factory building 30,000
• Factory insurance 50,000
• Property Taxes on Factory 20,000
• Utilities for factory 34,000
• Indirect labor salaries 156,000
• Total Overhead Cost P335,000
PROBLEM NO. 5 - MIA Company had the following
inventories at the beginning and of March 2019.

  March 1, 2019 March 31, 2019

Direct Materials P36,000 P30,000
Work-in-Process 18,000 12,000
Finished Goods 54,000 72,000

The following additional manufacturing cost data

were available for the month of March 2019:
  March 1, 2019
Direct Materials purchased P36,000
Direct labor payroll P18,000
Direct labor rate per hour 7.50
Factory overhead rate per direct  
labor hour 10.00

The cost of goods manufactured for March 2019 was: _________

PROBLEM NO. 6 - OMEGLE CO. PROVIDES YOU WITH THE
FOLLOWING INFORMATION :
 
JAN. 1, 2019 JAN. 31, 2019
INVENTORIES:
MATERIALS P? P50,000
WORK IN PROCESS 80,000 95,000
FINISHED GOODS 60,000 78,000
JANUARY TRANSACTIONS:
PURCHASES OF MATERIALS, 46,000
FACTORY OVERHEAD (75% OF DIRECT LABOR COST) 63,000
SELLING AND ADM. EXPENSES (12.5% OF SALES) 25,000
NET INCOME FOR JANUARY, 25,200

 
1) COMPUTE FOR MATERIALS INVENTORY, JAN. 1 _________
2) COST OF GOODS MANUFACTURED _________
3) COST OF GOODS SOLD (NORMAL) FOR THE MONTH OF
JANUARY, 2019 _________