GIVEN

Regular Decaf Total

Direct material in pounds 225,000 110,000 335,000
Direct labor hours 18,000 26,000 44,000
Machine hours 14,900 10,100 25,000
Number of setups 800 1,200 2,000
No. of kilograms produced 112,000 55,000 167,000

Total Cost
Direct material 50,250,000 150
Direct labor 2,640,000 60
Manufacturing overhead 2,200,000 88

1) If Best Brew Corporation applies factory overhead using direct labor hours, compute the total production cost

Regular
Direct labor hours 18,000
÷ Total direct labor hours 44,000
Allocation Rate 0.41

Regular Decaf
Direct materials 33,750,000 16,500,000
Direct labor hours 1,080,000 1,560,000
Indirect cost allocated to each job 900,000 1,300,000
Total production cost ₱ 35,730,000 ₱ 19,360,000
Unit cost for each brand ₱ 319.02 ₱ 352.00

2) If Best Brew Corporation applies factory overhead using machine hours, compute the total production cost an

Regular
Machine hours 14,900
÷ Total machine hours 25,000
Allocation Rate 0.60

Regular Decaf
Direct materials 33,750,000 16,500,000
Direct manufacturing labor 1,080,000 1,560,000
Indirect cost allocated to each job 1,311,200 888,800
Total production cost ₱ 36,141,200 ₱ 18,948,800
Unit cost for each brand ₱ 322.69 ₱ 344.52
3) Assume that Best Brew Corporation has established the following activity centers, cost drivers, and costs to ap
cost and the unit cost for each brand.

Cost Pool Cost Driver Cost

Equipment Maintenance # of machine hours ₱ 450,000
Production Setup # of setups ₱ 250,010
Material Handling Pounds of Materials ₱ 670,000
Storage Costs # of kilograms produced ₱ 829,990

Regular Decaf
Direct materials 33,750,000 16,500,000
Direct labor hours 1,080,000 1,560,000
Manufacturing overhead allocated
Equipment Maintenance 268,200 181,800
Production Setup 100,004 150,006
Material Handling 450,000 220,000
Storage Costs 556,640 273,350
Total production cost ₱ 36,204,844 ₱ 18,885,156
Unit cost for each brand ₱ 323.26 ₱ 343.37

4) Explain why the unit cost for each model is different across the three methods of overhead application. How c
organization?

The unit cost for each model is different for the methods used in allocating the overhead is also different. The first
costing system where manufacturing overhead is assigned based on volume count. As can be seen above, the overh
direct labor hours consumed and machine hours used, which is why the unit cost for each is different. On the other
ABC costing system, which allocates overhead based on the various resources used to make the product. There are
method with each having its own individual measure of activity, which is able to provide more accurate rates in allo
these methods provide, the Best Brew Corporation can make better pricing and product mix decisions.
pute the total production cost and the unit cost for each brand.

Decaf
Direct labor hours 26,000
÷ Total direct labor hours 44,000
Allocation Rate 0.59

e the total production cost and the unit cost for each brand.

Decaf
Machine hours 10,100
÷ Total machine hours 25,000
Allocation Rate 0.40
s, cost drivers, and costs to apply factory overhead. Compute the total

Volume Allocation Rate

25,000 18
2,000 125.005
335,000 2
167,000 4.97

overhead application. How can this information benefit the

ead is also different. The first two numbers made use of the simple
s can be seen above, the overhead is applied based on the amount of
each is different. On the other hand, the last number made use of the
o make the product. There are multiple overhead cost pools under this
ide more accurate rates in allocating overhead. With the information
uct mix decisions.
 GIVEN
MAY 2020
Quantity
Department 1 Department 2
Units CC Units CC
Beginning work in process 25,000 60% 20,000 2/5
Started/received 49,000 ?
Finished & transferred 60,000 68000
Ending work in process 12,000 2/3 11000 30%

Costs Department 1 Department 2

Beginning work in process
Transferred in 112,000
Materials 63,750 10,000
Conversion costs 44,747 23,439
Current
Transferred in 339,250
Materials 127,400 71,920
Conversion costs 151,500 132,930

Normal Spoilage 2%
Inspection 3/4

1) Prepare the individual Cost of Production Report for the three departments for May 2020.

Department 1
Actual Equivalent Unit of Production
Direct Materials Conversion Costs

Quantity Schedule
Beginning work in process 25,000
Started/Transferred-in 49,000
Increase -
Total units to account for 74,000

Finished & Transferred from:

Beginning work in process 25,000 10,000
Started this month 35,000 35,000 35,000
Normal spoiled units 980 980 735
 Abnormal spoiled uniits 1,020 1,020 765
Ending work in process 12,000 12,000 8,000
Total units accounted for 74,000 49,000 54,500

Cost Schedule
Beginning work in process 108,497 63,750 44,747
Current period cost 278,900 127,400 151,500
Total cost to account for 387,397 191,150 196,247

Cost per unit 5.38 2.60 2.78

Adjustment for lost units 0.09 0.05 0.04
Adjusted cost per unit 5.47 2.65 2.82

Cost Accounted For As Follows

Beginning WIP, Finished & Transferred
Cost last month 108,497 63,750 44,747
Cost this month 28,184 - 28,184
Total 136,681 63,750 72,931
Started, Finished & Transferred 191,540 92,897 98,643
Total Cost Transferred out 328,221 156,647 171,574
Abnormal spoilage 4,779 2,652 2,127
Ending WIP 54,397 31,851 22,547
Total cost accounted for ₱ 387,397 ₱ 191,150 ₱ 196,247

2) Prepare the pertinent journal entries for May 2020.

Work in process - Department One 278,900

Direct Materials 127,400
Conversion Cost 151,500

Loss from abnormal spoilage 4,779

Work in process - Department One 4,779

Work in process - Department Two 544,100

Work in process - Department One 339,250
Direct Materials 71,920
Conversion Cost 132,930

Work in process - Department Three 724,408

Work in process - Department Two 609,908
Direct Materials 42,500
 Conversion Cost 72,000

Finished goods inventory 609,908

Work in process - Department Three 609,908
 Department 3
Units CC
9,000 2/3
?
70,000
? 2/3

Department 3

67,405
4,500
6,000

619,359
42,500
72,000

Cool Company
Cost of Production Report
For the Month, May 2020

Department 2
Actual Equivalent Unit of Production
Transferred In Direct Materials Conversion Costs

20,000
60,000
-
80,000

20,000 - 10,000 12,000

48,000 48,000 48,000 48,000
1,000 - - -
 - - - -
11,000 11,000 - 3,300
80,000 59,000 58,000 63,300

145,439 112,000 10,000 23,439

544,100 339,250 71,920 132,930
689,539 451,250 81,920 156,369

9.09 5.75 1.24 2.10

145,439 112,000 10,000 23,439

37,600 - 12,400 25,200
183,039 112,000 22,400 48,639
436,320 276,000 59,520 100,800
619,359 388,000 81,920 149,439
- - - -
70,180 63,250 - 6,930
₱ 689,539 ₱ 451,250 ₱ 81,920 ₱ 156,369
 Department 3
Actual Equivalent Unit of Production
Transferred In Direct Materials Conversion Costs

9,000
68,000
17,000
94,000

9,000 9,000 9,000 9,000

61,000 61,000 61,000 61,000
- - - -
 - - - -
24,000 24,000 24,000 16,000
94,000 94,000 94,000 86,000

77,905 67,405 4,500 6,000

733,859 619,359 42,500 72,000
811,764 686,764 47,000 78,000

8.71 7.31 0.50 0.91

78,417 65,754 4,500 8,163

531,492 445,666 30,500 55,326
609,908 511,420 35,000 63,488
- - - -
201,856 175,344 12,000 14,512
₱ 811,764 ₱ 686,764 ₱ 47,000 ₱ 78,000
 GIVEN

Process mix transferred in from process 1 12,000 ₱ 2.00

Plant extract added 8,000 ₱ 4.00
Oils & fragrances added 1,800 ₱ 50.00
Overheads - allocated on the basis of machine hours ₱ 20,000
Labor ₱ 30,000
Machine hours for the month 500 80%

Opening work in progress 1000

Closing work in progress 2000 60%
Loss at first inspection point 10% initial mix
Loss at second inspection point 800 ₱ 5.00

1) Units to account for.

Beginning work in process 1,000.00

Started/ Transferred in 12,000.00
Plant extract added 8,000.00
Oils & fragrances added 1,800.00
Units to account for 22,800.00

Beginning work in process 1,000.00

1st Normal loss 2,000.00
2nd Normal loss 520.00
Abnormal loss 280.00
Ending work in process 2,000.00
Started & completed 17,000.00
Units to account for 22,800.00

2) Equivalent units per cost component units accounted for.

Total Process 1 Plant Extract
Work in process, beginning 1,000.00
Started & completed 17,000.00 17,000.00 17,000.00
1st Normal loss 2,000.00 2,000.00 2,000.00
Abnormal loss 280.00 280.00 280.00
2nd Normal loss 520.00 520.00 520.00
Work in process, ending 2,000.00 2,000.00 2,000.00
Equivalent units accounted for ₱ 22,800.00 ₱ 21,800.00 ₱ 21,800.00

3) Current period costs and cost per EUP.

 Total Process 1 Plant Extract
Period costs ₱ 196,000.00 ₱ 24,000.00 ₱ 32,000.00
Cost per unit ₱ 8.596 ₱ 1.101 ₱ 1.468

4) Allocation of normal loss at

a) 1st inspection

Units Costs
Normal loss 2,000.00 3.303 6,605.50
Allocation
Started and completed 17,000.00 5,910.19
Work in process, ending 2,000.00 695.32
₱ 19,000.00 ₱ 6,605.50

b) 2nd inspection

Units Costs
Normal loss 520.00 9.330 4,851.43
Rejects from Sales 520.00 5.000 - 2,600.00
Allocation 2,251.43
Work in process, beginning 1,000.00 123.16
Started and completed 17,000.00 2,093.78
Abnormal loss 280.00 34.49
₱ 18,280.00 ₱ 2,251.43

5) Value of units started/transferred-in and completed and computation of unit cost.

Started and completed 158,604.48

1st Loss allocation 5,910.19
2nd Loss allocation 2,093.78
Total ₱ 166,608.45
Cost per kilogram ₱ 9.800
incurred during first mixing process

complete
2.50% second mix
per kg sold

Oils & Fragrances Overhead - 1st Mix Overhead - 2nd Mix Labor
1,000.00 1,000.00 1,000.00
17,000.00 17,000.00 17,000.00 17,000.00
2,000.00
280.00 280.00 280.00 280.00
520.00 520.00 520.00 520.00
2,000.00 2,000.00 1,200.00 1,200.00
₱ 20,800.00 ₱ 21,800.00 ₱ 20,000.00 ₱ 20,000.00
Oils & Fragrances Overhead - 1st Mix Overhead - 2nd Mix Labor
₱ 90,000.00 ₱ 16,000.00 ₱ 4,000.00 ₱ 30,000.00
₱ 4.327 ₱ 0.734 ₱ 0.200 ₱ 1.500
 GIVEN
A B
Costs before separation, ₱ 2,000,000
Costs after separation in PhP 500,000 320,000
Production for April, in pounds 80,000 20,000
Sales for April in pounds 64,000 18,000
Selling Price per pound ₱ 43.75 ₱ 65.00

A. Determine the gross profit for April.

A B
Final sales value of total production ₱ 3,500,000 ₱ 1,300,000
Deduct separable costs 500,000 300,000
Net realizable value at split-off point ₱ 3,000,000 ₱ 1,000,000
Weighting 0.7500 0.2500
Joint costs allocated ₱ 1,500,000 ₱ 500,000
Production cost per pound ₱ 25 ₱ 40

C
Final sales value of total production ₱ 60,000
Deduct separable costs 40,000
Net realizable value at split-off point ₱ 20,000

A B
Revenues ₱ 2,800,000 ₱ 1,170,000
Less: Cost of goods sold
Joint costs 1,500,000 500,000
Add: Separable costs 500,000 300,000
Production costs 2,000,000 800,000
Less: Ending Inventory 400,000 80,000
Cost of goods sold 1,600,000 720,000
Gross profit ₱ 1,200,000 ₱ 450,000

GIVEN
Product
A B
Units produced 15,000 9,000
Joint costs ? ?
Sales value at split off ₱ 420,000 ₱ 140,000

B.1) Assuming that joint product costs are allocated using the relative sales value at split-off approach, what was
B.1) Assuming that joint product costs are allocated using the relative sales value at split-off approach, what was

A B Total
Sales value at split-off ₱ 420,000 ₱ 140,000 ₱ 560,000
Weighting 0.75 0.25 1
Joint cost allocated ₱ 120,000.00 ₱ 40,000 ₱ 160,000.00

B.2) Prepare the journal entry to transfer the finished products to separate inventory accounts.

Finished goods inventory - Product A 120,000

Finished goods inventory - Product B 40,000
Work in process inventory 160,000

B.3) Assuming the sales value of X is stable, prepare the journal entries to:
a) place the by-product in stock.

Finished goods inventory - Product X 20,000

Work in process inventory 20,000

b) record the sale of 3,000 units for P10,500 on account.

Accounts receivable 10,500

Finished goods inventory - Product X 10,500
 C

40,000
2,000
2,000
₱ 30.00

Total
₱ 4,800,000
800,000
₱ 4,000,000

Total
₱ 3,970,000

2,000,000
800,000
2,800,000
480,000
2,320,000
₱ 1,650,000

roduct
X Total
6,000 30,000
? 180,000
₱ 20,000 ₱ 580,000

t-off approach, what was the joint cost allocated to Products A and B?
t-off approach, what was the joint cost allocated to Products A and B?

counts.