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Psba Afar 11

AFAR REVIEWER

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5 views

Psba Afar 11

AFAR REVIEWER

Uploaded by

sapilanfrancene
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 PDF, TXT or read online on Scribd
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UNIT 11: JOB ORDER COSTING

Problem 1
The DAVAO DEL NORTE MANUFACTURING COMPANY had the following inventories on April 1, 2020.
Finished goods P 75,000
Work in process 55,500
Materials 66,000
The work in process account controls two jobs
Job 401 Job 402
Materials P9,000 P16,800
Labor 7,500 9,000
Factory overhead 6,000 7,200
P22,500 P33,000

The following information pertains to April operations:


1. Materials purchased on account, P84,000.
2. Materials issued for production, P75,000. Of this amount, P9,000 was for indirect materials; the difference was
distributed: P16,500 to Job 401; P21,000 to Job 402; and P28,500 to Job 403.
3. Materials returned to the warehouse from the factory, P2,400, of which P900 was for indirect materials, the balance
from Job 403.
4. Materials returned to vendors, P3,000.
5. Payroll after deducting P9,075 for withholding taxes, P4,800 for SSS Premiums, P1,125 for Philhealth, and P3,600
for Pag-ibig, was P98,400. The payroll due the employees was paid during the month.
6. The payroll was distributed as follows: P31,200 to Job 401; P37,500 to Job 402, P31,500 to Job 403 and the
balance represents indirect labor.
7. The share of the employer for payroll was recorded – P6,000 for SSS Premiums, P1,125 for Philhealth
Contributions, and P3,600 for Pag-ibig Funds.
8. Factory overhead, other than any previously mentioned, amounted to P45,000. Included in this figure were P9,000
for depreciation of factory building and equipment, and P 2,850 for expired insurance on the factory. The remaining
overhead was unpaid at the end of April.
9. Factory overhead was applied to production at the rate of 80% of direct labor cost.
10. Jobs 401 and 402 were completed and transferred to the finished goods warehouse.
11. Job 401 was shipped and billed at a gross profit of 40% of the cost of goods sold.
12. Cash collections from accounts receivable during April were P105,000.
Requirements:
1. Journal entries to record the above transactions.
2. Job order cost sheets.
3. Cost of goods sold statement.

Problem 2
SOUTH COTABATO MANUFACTURING COMPANY. charges
The COMPOSTELA VALLEY MANUFACTURING C0MPANY has a cycle time of 5.0 days, uses an in process (RIP) account and
charges all conversion costs to Cost of Goods Sold. At the end of each month, all inventories are counted, their conversion
cost components are estimated and inventory account balances are adjusted. Raw materials cost of completed unit is
back-flushed from RIP to Finished Goods; raw material cost of sold units is backflushed from Finished Goods to Cost of
Goods Sold; and conversion costs of ending RIP and FG inventories are adjusted to/from cost of goods sold.

Beginning balance of RIP account, including


P18,600 of conversion costs P 42,000
Beginning balance of FG account, including
P28,500 of conversion costs 54,000
Raw materials purchased on credit 1,050,000
Ending RIP inventory, including P44,100
conversion cost estimate 67,200
Ending FG inventory, including P31,500
conversion cost estimate 59,400
Conversion costs are P375,000 for direct
labor and P516,000 overhead 891,000
Required: Journal entries to record the given information
Problem 3
MISAMIS ORIENTAL MANUFCTURING COMPANY received an order for 50 automatic mixing machines. Because of the
order’s exacting specifications, it is anticipated that defective and spoiled units will exceed the normal rate. The material
cost per unit is P 240, labor is P582, and factory overhead is applied at 100% of direct labor cost. During production, 10
were found to be defective and required the following total additional costs – materials-P 291, labor – P375. On final
inspection, 4 units were classified as seconds and sold for P1,200 each, the proceeds being credited to the order. The
buyer has agreed to accept the remaining good machines, although the acceptable units are fewer than the number
ordered.
Required:
1. Cost of the completed units
2. Entries to record the given transactions.
3. Assuming the imperfection is due to internal failure, compute the cost of the completed units and give the entries to
record the given transactions.

Problem 4
NEGROS OCCIDENTAL MANUFACTURING COMPANY allocates service department budgeted costs to production
departments as a matter of company policy.
The production departments are P1 and P2, the service departments are S1 and S2, and the monthly data are: The factory
overhead rate for P1 is computed based on 20,000 direct labor hours and P2 based on 15,000 machine hours.
Services provided by
Budgeted Factory
Overhead S1 S2
P1 P 564,000 40% 50%
P2 510,000 50% 30%
S1 135,000 - 20%
S2 105,600 10% -

Required: Compute the factor overhead rate for P1 and P2 after distribution of service department costs using:
1. Direct method
2. Step method – start with S1
3. Simultaneous method (algebraic method)

Problem 5
For many years ILOILO MANUFACTURING COMPANY has used a manufacturing overhead based on direct labor hours. A
new plant accountant suggested that the company may be able to assign overhead costs to products more accurately by
using an activity based costing system. The accountant explains that by computing the overhead rate for each production
activity that causes overhead costs, the resulting product costs will reflect an accurate measure of overhead cost. The
direct material cost is P120 per unit. The budgeted hours is 8,030 direct labor hours. The accountant has identified activity
centers to which overhead costs are assigned. The cost pool amounts for these centers and their selected activity drivers
for 2006 are shown below.
COSTS ACTIVITY
ACTIVITY CENTERS DRIVERS
Material handling P60,000 1,200 times
handled
Scheduling & setups 80,000 400 setups
Design section 10,750 100 changes
Number of parts 50,000 500 parts
P 200,750

The company’s products and other operating statistics follows


No. of No. No of
Qty. DLH times of Design No of
Prod Produced Used DL Cost Handled Parts Charges Setups
A 50 100 P2,000 20 10 2 5
B 100 400 8,000 50 15 5 8
Required:
1. Compute the unit cost for each product using direct labor hours as the overhead application rate.
2. Compute the unit cost for each product using activity based costing.

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