EXERCISES

E-1 PRODUCTION IN UNITS 8,000

TOTAL COST 10,000
COST PER UNIT 1.25
COST OF GOODS SOLD (5,250 X 1.25) 6,562.50
COST OF ENDING INV (10,000 - 6,562.50) 3,437.50

E-2 COST OF GOODS MANUFACTURED 405,000

ADD: WIP ENDING 48,000
TOTAL WIP 453,000
LESS: TOTAL MANUFACTURING COST
DM 160,000
DL (92,000 / 80%) 115,000
FOH 92,000
367,000
COST OF WIP BEGINNING 86,000

E-3 DM (10,000 X 80%) 8,000

DL (5,000 X 70%) 3,500
FOH
OTHER FOH 5,000
INDIRECT MATERIAL (10,000 - 8,000) 2,000
INDIRECT LABOR (5,000 - 3,500) 1,500
TOTAL FOH 8,500
COST OF GOODS MANUFACTURED 20,000
ADD: OPERATING EXPENSES
SELLING EXP 7,500
ADMN EXP 8,500
TOTAL OPERATING EXP 16,000
TOTAL COST 36,000

E-4 DIRECT MATERIAL 17,200

DIRECT LABOR 15,700
FACTORY OVERHEAD 32,100
TOTAL MANUFACTURING COST 65,000
ADD: WIP BEGINNING 50,000
TOTAL WIP 115,000
LESS: WIP ENDING 40,000
COST OF GOODS MANUFACTURED 75,000
.
E-5 DIRECT MATERIAL 60,000
DIRECT LABOR
DEPTT A: 15,000 DL HOURS 40,000
DEPTT B: 10,500 DL HOURS X 6 63,000
TOTAL DIRECT LABOR 103,000
 FOH APPLIED
DEPTT A: 15,000 DL HOURS X 3.75 56,250
DEPTT B: 10,500 DL HOURS X 4.50 47,250
TOTAL FACTORY OVERHEAD 103,500
TOTAL MANUFACTURING COST 266,500
ADD: WIP BEGINNING 28,200
TOTAL WIP 294,700
LESS: WIP ENDING 24,500
COST OF GOODS MANUFACTURED 270,200
ADD: FINISHED GOODS BEGINNING 15,100
FINISHED GOODS AVAILABLE FOR SALES 285,300
LESSFINISHED GOODS ENDING 16,500
COST OF GOODS SOLD 268,800

E-6 SALES 125,000

LESS: COST OF GOODS SOLD 116,000
GROSS PROFIT 9,000
ADD: NET LOSS 10,000
OPERATING EXP 19,000

E-7 DIRECT MATERIAL 47,000

DIRECT LABOR
DEPTT S: 9,725 DL HOURS X 4.35 42,304
DEPTT T: 11,000 DL HOURS X 3.75 41,250
DEPTT P: 15,475 DL HOURS X 5.00 77,375
TOTAL DIRECT LABOR 160,929
FACTORY OVERHEAD 60,000
TOTAL MANUFACTURING COST 267,929
ADD: WIP BEGINNING 16,250
TOTAL WIP 284,179
LESS: WIP ENDING 18,500
a) COST OF GOODS MANUFACTURED 265,679
FINISHED GOODS BEGINNING 22,000
COST OF GOODS MANUFACTURED 265,679
FINISHED GOODS AVAILABLE FOR SALES 287,679
LESS: FINISHED GOODS ENDING 20,000
b) COST OF GOODS SOLD 267,679

E-8 DIRECT MATERIAL 9,250

DIRECT LABOR 25,000
FOH
INDIRECT MATERIAL 3,545
INDIRECT LABOR 12,000
INS & DEP 16,000
FACTORY OVERHEAD 31,545
 TOTAL MANUFACTURING COST 65,795
LESS: COST OF GOODS MANUFACTURED 64,000
WIP (ENDING) EXCEEDED WIP (BEG) BY 1,795

E-9 ASSIGNMENT 1

E-10 ASSIGNMENT 1

E-11 FINISHED GOODS BEGINNING 30,000

COST OF GOODS MANUFACTURED 400,000
FINISHED GOODS AVAILABLE FOR SALES 430,000
LESS: FINISHED GOODS ENDING 22,000
COST OF GOODS SOLD 408,000
ADD: GROSS PROFIT 60,000
SALES 468,000

E-12 COST OF GOODS MANUFACTURED 151,700

ADD: WIP ENDING 17,600
TOTAL WIP 169,300
LESS: WIP BEGINNING 15,100
TOTAL MANUFACTURING COST 154,200
LESS: CONVERSION COST
DIRECT LABOR 50,000
FOH
UTILITIES 62,500
INDIRECT MATERIAL 5,000
TOTAL FOH 67,500
TOTAL CONVERSION COST 117,500
DIRECT MATERIAL USED 36,700
PROBLEMS
P-1 DM (94,000 - 30,000) 64,000
DL 22,000
FOH
INDIRECT MATERIAL 30,000
INDIRECT LABOR 18,000
HEAT & ELECTRICITY 34,000
TOTAL FOH 82,000
TOTAL MANUFACTURING COST 168,000
ADD: WIP BEGINNING 9,500
TOTAL WIP 177,500
LESS: WIP ENDING 12,000
COST OF GOODS MANUFACTURED 165,500
ADD: FINISHED GOODS BEGINNING 18,000
FINISHED GOODS AVAILABLE FOR SALES 183,500
LESSFINISHED GOODS ENDING 22,000
COST OF GOODS SOLD 161,500
ADD: SELLING, GENERAL & ADMN EXP 16,000
TOTAL OPERATING COST 177,500

P-2 ASSIGNMENT 1

P-3 DM (300,000 X 75%) 225,000

DL (350,000 X 60%) 210,000 40% INDIRECT THEN 60%
FOH
INDIRECT MATERIAL (300,000 - 225,000) 75,000
INDIRECT LABOR (350,000 - 210,000) 140,000
HEAT, LIGHT & POWER 115,000
DEPRECIATION 78,000
PROPERTY TAXES 65,000
REPAIR & MAINTENANCE 42,000
TOTAL FOH 515,000
TOTAL MANUFACTURING COST 950,000
ADD: WIP BEGINNING -
TOTAL WIP 950,000
LESS: WIP ENDING -
a) COST OF GOODS MANUFACTURED 950,000
COST OF GOODS MANUFACTURED 950,000
ADD: OPERATING EXP
SELLING EXP 80,000
GENERAL & ADMN EXP 50,000
TOTAL OPERATING EXP 130,000
b) TOTAL COST 1,080,000
c) FINISHED UNITS SOLD 95,000
FINISHED UNITS IN HAND ENDING 30,000
 PRODUCTION IN UNITS 125,000
UNIT COST (COGM / PROD = 950,000 / 125,000) 7.60
d) DM 225,000
DL 210,000
PRIME COST 435,000
e) DL 210,000
FOH 515,000
CONVERSION COST 725,000
f) SELLING EXP 80,000
GENERAL & ADMN EXP 50,000
PERIOD COST 130,000

P-4 DM 176,000
DL 250,000
FOH 237,500
TOTAL MANUFACTURING COST 663,500
ADD: WIP BEGINNING 75,000
TOTAL WIP 738,500
LESS: WIP ENDING 60,000
a(1) COST OF GOODS MANUFACTURED 678,500
FINISHED GOODS BEGINNING 35,000
COST OF GOODS MANUFACTURED 678,500
FINISHED GOODS AVAILABLE FOR SALES 713,500
LESSFINISHED GOODS ENDING 54,000
a(2) COST OF GOODS SOLD 659,500
SALES 945,000
LESS: COST OF GOODS SOLD 659,500
GROSS PROFIT 285,500
LESS: OPERATING EXP
SELLING EXP 55,000
GENERAL & ADMN EXP 117,000
TOTAL OPERATING EXPENSES 172,000
b) NET INCOME 113,500

P-5 ASSIGNMENT 1

P-10 RAW MATERIAL AVAILABLE FOR USE 164,000

LESS: RAW MATERIAL ENDING 24,000
RAW MATERIAL USED 140,000
LESS: INDIRECT MATERIAL 4,000
DIRECT MATERIAL USED 136,000
DL 120,000
FOH 135,000
TOTAL MANUFACTURING COST 391,000
 ADD: WIP BEGINNING 60,000
TOTAL WIP 451,000
LESS: COST OF GOODS MANUFACTURED 390,000
WIP ENDING 61,000

P-11 TOTAL MANUFACTURING COST 384,000

LESS: FOH
INDIRECT LABOR 38,000
HEAT, LIGHT & POWER 20,000
MAINTENANCE 6,000
INDIRECT MATERIAL 8,000
FACTORY INSURANCE 4,000
DEPRECIATION 35,000
TOTAL FOH 111,000
CONVERSION COST 273,000
LESS: DIRECT MATERIAL
RAW MATERIAL BEGINNING 40,000
PURCHASE OF RAW MATERIAL 158,000
RAW MATERIAL AVAILABLE FOR USE 198,000
LESS: RAW MATERIAL ENDING 70,000
RAW MATERIAL USED 128,000
LESS: INDIRECT MATERIAL 8,000
DIRECT MATERIAL USED 120,000
DIRECT LABOR 153,000
0% INDIRECT THEN 60% DIRECT
P-6 M/S.SATELLITE CORPORATION
STATEMENT OF COST OF GOODS MANUFACTURED
FOR THE PERIOD ENDED ON JUNE 30, 19X2
DIRECT MATERIAL
Raw Material Beginning 36,700
Purchase of Raw Material 525,270
Raw Material available for use 561,970
Less: Raw Material Ending (32,950)
Direct Material used
Direct Labor
FACTORY OVERHEAD
Indirect Labor 525,225
Electricity 250,000
Total Factory Overhead
Total Manufacturing Cost
Add: Work in Process Beginning
Total Work in Process
Less: Work in Process Ending
Cost of Goods Manufactured

M/S.SATELLITE CORPORATION
INCOME STATEMENT
FOR THE PERIOD ENDED ON JUNE 30, 19X2
Sales
Less: Cost of Goods Sold
Finished Goods Beginning 25,950
Cost of Goods Manufactured 2,051,960
Finished Goods available for sales 2,077,910
Less: Finished Goods Ending (22,516)
Cost of Goods Sold
Gross Profit
Less: Operating Exp
Selling Exp 185,000
Admn Exp 133,320
Misc Exp 100,000
Total operating exp
Net Loss
M/S.SATELLITE CORPORATION
STATEMENT OF RETAINED EARNINGSINCOME STATEMENT
FOR THE PERIOD ENDED ON JUNE 30, 19X2
Retained Earnings Beginning
less: Net Loss

Less: Dividends
Retained Earnings Ending
 M/S.SATELLITE CORPORATION
BALANCE SHEET
AS ON JUNE 30, 19X2
ASSETS
Current Assets
Cash 98,750
A/R 125,875
Less: Allowance for Bad Debt (9,250)
Net A/R 116,625
Finished Goods Inventory (Ending) 22,516
Work In Process Inventory (Ending) 35,270
Raw Material Inventory (Ending) 32,950
Total Current Assets
Fixed Assets
Land 52,000
Building 39,480
Less: Accumulated Depreciation (4,000)
Net Building 35,480
Office Equipment 45,000
Less: Accumulated Depreciation (4,500)
Net Office Equipment 40,500
Total Fixed Assets
Total Assets
EQUITIES
Current Liabilities
A/P 165,275
Total current liabilities
Shareholders' Equity
Capital Stock, $20 par 550,000
Paid in capital in excess of par 100,250
Retained Earnings Ending (381,434)
Total shareholders' equity
Total Equities

P-7 ASSIGNMENT 1

P-8 M/S.MUSH'S MARSHMALLOW COMPANY

STATEMENT OF COST OF GOODS MANUFACTURED
FOR THE PERIOD ENDED ON JUNE 30, 19X9
DIRECT MATERIAL
Raw Material Beginning 37,500
Purchase of Raw Material 320,100
Raw Material available for use 357,600
Less: Raw Material Ending (45,300)
Direct Material used
Direct Labor
Factory Overhead
Total Manufacturing Cost
Add: Work in Process Beginning
Total Work in Process
Less: Work in Process Ending
Cost of Goods Manufactured

M/S.MUSH'S MARSHMALLOW COMPANY

INCOME STATEMENT
FOR THE PERIOD ENDED ON JUNE 30, 19X9
Sales
Less: Cost of Goods Sold
Finished Goods Beginning 33,300
Cost of Goods Manufactured 1,073,100
Finished Goods available for sales 1,106,400
Less: Finished Goods Ending (40,200)
Cost of Goods Sold
Gross Profit
Less: Operating Exp
Selling Exp 261,600
Admn Exp 97,800
Total operating exp
Net Profit before Tax
Less: Income Tax
Net Profit
M/S.MUSH'S MARSHMALLOW COMPANY
STATEMENT OF RETAINED EARNINGSINCOME STATEMENT
FOR THE PERIOD ENDED ON JUNE 30, 19X9
Retained Earnings Beginning
Add: Net Profit

Less: Dividends
Retained Earnings Ending
M/S.MUSH'S MARSHMALLOW COMPANY
BALANCE SHEET
AS ON DEC 31, 19X9
ASSETS
Current Assets
Cash 81,000
A/R 187,800
Less: Allowance for Bad Debt (9,000)
Net A/R 178,800
Finished Goods Inventory (Ending) 40,200
Work In Process Inventory (Ending) 29,400
Raw Material Inventory (Ending) 45,300
Prepaid Expenses 5,400
Total Current Assets
Fixed Assets
Factory Equipment 588,000
Less: Accumulated Depreciation (169,500)
Net Factory Equipment 418,500
Office Equipment 184,200
Less: Accumulated Depreciation (73,800)
Net Office Equipment 110,400
Total Fixed Assets
Total Assets
EQUITIES
Current Liabilities
A/P 111,300
Misc.Exp Payable 36,600
Total current liabilities
Shareholders' Equity
Capital Stock, $20 par 600,000
Retained Earnings Ending 161,100
Total shareholders' equity
Total Equities
RED
2

529,020
750,985

775,225
2,055,230
32,000
2,087,230
(35,270)
2,051,960

2
1,942,520

(2,055,394)
(112,874)

(418,320)
(531,194)

TEMENT
2
176,760
(531,194)
(354,434)
(27,000)
(381,434)
 306,111

127,980
434,091

165,275

268,816
434,091
-

RED
9
 312,300
460,500
284,700
1,057,500
45,000
1,102,500
(29,400)
1,073,100

9
1,629,000

(1,066,200)
562,800

(359,400)
203,400
(75,000)
128,400

TEMENT
9
116,700
128,400
245,100
(84,000)
161,100
380,100

528,900
909,000

147,900

761,100
909,000
-
Case-1 Data
Beginning Inventories
Raw Material 30,000
Work in Process 50,000
Finished Goods 90,000
Sales 1,350,000
Manufacturing Overhead 520,000
Gross Profit Rate on sales 40%
Direct Labor Cost is 1/4th of FOH or 25% of FOH
Prime Cost 510,000
Goods available for sales 960,000
Purchase of Raw Material 420,000
COST OF FINISHED GOODS INVENTORY ENDING
Goods available for sales 960,000
Less: Cost of Goods Sold W-1 (810,000)
Finished Goods (Ending) 150,000
W-1
Sales 1,350,000
Less: 40% Gross Profit (1,350,000 x 40%) 540,000
Cost of Goods Sold 810,000
COST OF WORK IN PROCESS ENDING
Prime Cost 510,000
Factory Overhead 520,000
Total Manufacturing Cost 1,030,000
Add: WIP Beginning 50,000
Total Work in Process 1,080,000
Less: Cost of Goods Manufactured W-2 (870,000)
Work in Process (Ending) 210,000
W-2
Goods available for sales 960,000
Less: Finished Goods (Ending) (90,000)
Cost of Goods Manufactured 870,000
COST OF RAW MATERIAL INVENTORY ENDING
Raw Material Beginning 30,000
Purchase of Raw Material 420,000
Raw Material available for use 450,000
Less: Direct Raw Material Used W-3 (380,000)
Raw Material Ending 70,000
W-3
Prime Cost 510,000
Less: Direct Labor (520,000 x 1/4) (130,000)
Direct Material Used 380,000

Case-2 Data
Direct Labor 180,000
 Conversion Cost 600,000
Cost of Goods Manufactured 855,000
Prime Cost 410,000
Work in Process Beginning 65,000
COST OF WORK IN PROCESS ENDING
Prime Cost (DM + DL) 410,000
Factory Overhead 420,000
Total Manufacturing Cost 830,000
Add: Work in Process Beginning 65,000
Total Work in Process 895,000
Less: Cost of Goods Manufactured W-1 (855,000)
Work in Process (Ending) 40,000
W-1
Conversion cost (DL + FOH) 600,000
Less: Direct Labor (180,000)
Factory Overhead 420,000