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Solution To Activity 2

This document contains 9 examples solving various cost accounting problems involving predetermined overhead rates, variable overhead rates, mixed costs, and calculating inventory values. The problems determine costs per unit or meal, values of inventory, purchasing costs, and total manufacturing costs for different companies. Calculations involve determining variable and fixed portions of mixed costs, applying overhead rates, and using account balances to calculate ending inventory values.

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Lee Thomas Arvey Fernando
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36 views

Solution To Activity 2

This document contains 9 examples solving various cost accounting problems involving predetermined overhead rates, variable overhead rates, mixed costs, and calculating inventory values. The problems determine costs per unit or meal, values of inventory, purchasing costs, and total manufacturing costs for different companies. Calculations involve determining variable and fixed portions of mixed costs, applying overhead rates, and using account balances to calculate ending inventory values.

Uploaded by

Lee Thomas Arvey Fernando
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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Download as DOCX, PDF, TXT or read online on Scribd
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Solution to Activity 2 (modified)

1.Yakal Co.

Predetermined Overhead Rate = P120,000/5,000 direct labor hours

= P24/direct labor hour

2. Narra Co. cost or semi-variable cost

Step 1 Determine the variable overhead rate

= difference between the cost at highest activity level and cost at lowest activity level
Divided by the difference between the highest activity level and lowest activity level

= P12,200 - P11,720/ 34,000 - 31,000


= P480/3,00
Variable overhead rate = P0.16 per machine hour

Step 2 Determine the fixed portion of the mixed cost


Total cost at highest level P12,200
Less variable cost at highest level (P0.16 x 34,000) 5,440
Fixed cost P6,760

3. Mahogany Co.
Total manufacturing cost per batch
Meat P3,600
Vegetables 1,440
Direct labor cost 3,800
Variable overhead (trays and utensils) 480
Fixed overhead 16,000
Total 25,320/2,000 meals per batch
Cost per meal P12.66

4. Maple Co.
Direct Material Cost P186,000
Direct Labor Cost 134,000
Overhead costs
Factory rent 3,600
Factory utilities 16,200
Depreciation of Factory equipment 15,800
Supervisor’s salary 6,400
Total manufacturing cost 362,000
Less: Work in Process, End 35,000
Cost of Goods Manufactured 327,000
=======
Unit Cost = P327,000/30,000 units produced = P10.90
5.Secamore Co.
Determine the value of Work in Process destroyed by fire

Sales P230,000
Less: Cost of Sales (60% of Sales) 138,000

Gross Profit (40% of Sales 92,000


=======
Cost of Goods Sold P138,000
Add: Finished Goods Inventory, End 42,500
Cost of Goods available for sale 180,500
Less: Finished Goods Inventory, Beg. 29,000
Cost of Goods Manufactured 151,500
=======
Direct Material Cost P 76,000
Direct Labor cost 44,000
Factory Overhead Cost 42,000
Total Manufacturing Cost 162,000
Add: Work in Process, Beg. 48,000
Total Cost Placed in Process 210,000
Less: Cost of Goods Manufactured 151,500

Value of Work in Process destroyed by fire P 58,500


=========
6. Willow Company

Determine the Unit Manufacturing Cost


Direct Material Inventory, Beg. P19,300
Add: Purchases 275,800
Total Direct Material available for use 295,100
Less: Direct Material Inventory, End 16,000
Direct Material Used 279,100
Direct Labor Cost 153,000
Factory Overhead 267,300
Total Manufacturing Cost 699,400
Add: Work in Process, Beg. 41,200
Total Cost Placed in Process 740,600
Less: Work in Process, End 30,600
Cost of Goods Manufactured 710,000
=======

Unit Manufacturing Cost = P710,000/25,000 units


= P28.40
7. Locust Co.

Determine the value of Ending Finished Goods Inventory

Direct Material Cost (P16 x 25,000units) P400,000


Direct Labor Cost (P5.30 x 25,000 units) 132,500
Variable Overhead cost (P2.90 x 25,000) 72,500
Fixed Overhead cost 320,000
Total Manufacturing Cost /Cost of Goods Manufactured(25,000 units) 925,000
Add: Finished Goods Inventory, Beg. (4,000 units) 148,000
Total Goods available for sale 1,073,000
Less: Cost of Goods Sold (P37 x 26,500 units) 980,500
Finished Goods Inventory, End (2,500 units x P37) P 92,500
========
8. Determine the Finished Goods Inventory, End
Direct Material Cost P80,000
Direct Labor Cost 40,000
Factory Overhead 74,000
Total Manufacturing Cost 194,000
Add: Finished Goods Inventory, Beginning(1,000 units) 9,650
Total Goods Available for Sale 203,650
Less: Cost of Goods Sold 174.600
Finished Goods Inventory, End P 29,050
========
9. Neem Co.
a) variable rate = P20,940-P18,065/ 560-330
= P2,875/238
= P12.50 per purchase order
b) fixed portion: Total Purchasing cost P20,940
Less: variable (P12.50x560) 7,000
Fixed cost 13,940
=====
c) cost formula:
y=a+bx
where y= total semi-variable or mixed cost
a= fixed cost
b = variable rate
x= number of purchase orders

y= 13,940 + (12.50 x 430 purchase orders)


y= P19,315 Purchasing cost next month based on estimated 430 purchase orders
======

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