Cost Accounting Final Grade: One

Problem1:
XYZ Corporation manufactures industrial, the following costs were incurred during the month of August 2006
1- Additional Raw material purchased at cost $86,970
2- Raw material costing $90,419 were used, Direct materials costing $84,608, indirect materials costing $5,811.
3- Wages and salaries totaling $91,884 were earned by the factory employees.
4- Labor charged to operation and the labor cost of $101,932 (direct labor costing $66,597) and (indirect labor) costing $35,335.
Solution

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Problem 2:
For each procedure identify the steps in the manufacturing Cycle which it Occurs: Procurement, Production, Ware housing, Selling. And prepare the
necessary journal entries.

a- Materials are requisitioned and transferred to the factory. $100,000 (D.M)

b- An order is sent to a supplier to obtain more raw materials.
c- A customer’s order is received and filled. $3,000
d- The weekly payroll is recorded. Direct $10,000 and indirect $8,000
e- Finished goods are placed in the appropriate storage area. $2,000
f- New employee interviewed and hired.
g- Finished goods are shipped to the customer.
h- Manufacturing overhead costs are estimated and charged to the product. $3,000
i- A shipment of raw material arrives and is unpacked. $1,000
Solution:

a. Production b. d. Production g. Selling

Procurement e. Warehousing h. Production
c. Selling f. Procurement i. Procurement
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Problem 3:
XYZ Corporation manufactures industrial, the following costs were incurred during the month of August 2006

1- Additional Raw material purchased at cost $86,970

2- Raw material costing $90,419 were used, Direct materials costing $84,608, indirect materials costing $5,811.

3- Wages and salaries totaling $91,884 were earned by the factory employees.
4- Labor charged to operation and the labor cost of $101,932 (direct labor costing $66,597) and (indirect labor) costing $35,335.
5- Overhead costs including utilities, insurance and depreciation totaling $23,086 incurred during the month.

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Cost Accounting Final Grade: One
6- Overhead costs totaling $61,628 are chargeable to jobs worked on during the month.
7- During the month some jobs were completed and transferred to the finished goods ware house, these jobs costing $225,155.
8- During the month, finished goods costing $221,690 were sold to various customers.

Solution:

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Problem 4:
Activities for Alex Company during 2015:

- Beg. Direct Material Inventory ………………………………………. 40,000

- Purchase of Direct Material ……………………………………………………… 123,200
- End. Direct Material Inventory ……………………………………………………… 32,000
- Direct labor………………………………………………………………………………………… 32,000
- Manufacturing overhead ……………………………………………………………………… 24,000
- Beg. Work in process ………………………………………………………………………………… 1,600
- End. Work in process ………………………………………………………………………………… 8,000
- Beg. Finished Goods…………………………………………………………………………………… 48,000
- End. Finished Goods ………………………………………………………………………………… 32,000

Required:

1- Cost of Direct Material used. 2- Cost of Goods Manufactured. 3-Cost of Goods sold.
4- Prime cost and conversion cost.
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Cost Accounting Final Grade: One
Solution

1) Direct material used in production:

Beg. Direct material inventory 40,000

+ purchases of direct material 123,200
----------
= direct material available for use 163,200
- End. Direct material inventory (32,000)
----------
= Direct material used 131,200

2) Cost of Goods Manufactured ‫تكلفة االنتاج التام‬

Direct material used 131,200

+ Direct labor cost 32,000
+ Manufacturing overhead 24,000
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= Total manufacturing cost 187,200
+ Beg. Work in process ‫مخزون تحت التشغيل أول المدة‬ 1,600
- End. Work in process ‫مخزون تحت التشغيل أخر المدة‬ (8,000)
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=Cost of Goods Manufactured ‫تكلفة االنتاج التام الجاهز للبيع خالل المدة‬ 180,800

3) Cost of Goods Sold ‫تكلفة االنتاج أو البضاعة المباعة‬

Cost of goods manufactured 180,800

+ Beg. Finished Goods ‫مخزون أنتاج تام أول المدة‬ 48,000
-------------
= Cost of Goods available for sale 228,800
- End.Finished Goods ‫مخزون أنتاج تام أخر المدة‬ (32,000)
-------------
= Cost of Goods Sold 196,800

4) Prime cost: ‫التكلفة األولية‬

Direct material used + direct labor cost.
131,200 + 32,000 = 163,000

5) Conversion cost: ‫تكلفة التحويل‬

Direct labor cost + manufacturing overhead
32,000 + 24,000 = 56,000

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Cost Accounting Final Grade: One
Problem 5:

The following data was taken from the general ledgar for Martinez Manufacturing at July, 31:
Sales ……………………………………….…………………………………………………………………………….…. $50,000
material inventory (July 1) ……………………………………….……………………………………….…………… 15,000
Work in process inventory (July 1) ……………………………………….………………………………………. 20,000
Finished goods inventory (July 1) ……………………………………….………………………………………. 28,000
material purchased …………………………………………………………………………………………………………….…… 21,000
Direct labor cost ……………………………………………………………………………………………………….……………….. 12,500
Factory overhead ( including $5,000 of indirect material and $2,500 of indirect labor) 11,500
selling and administrative expenses……………………………………….………………………………………. 8,000

inventory at July 31:

materials 16,000
work in process 18,000
finished goods 30,000
required:
1- Prepare a statement of cost of goods manufactured.
2- Cost of goods sold.

Solution:
1- cost of goods manufactured: 2- cost of goods sold

Direct material used

Beg. Material inventory 15,000 Cost of Goods manufactured 41,000
+ purchases of material 21,000 + Beg. Finished goods 28,000
- End material inventory (16,000) = cost of goods available for sale 69.000
- indirect material (5,000) - End. Finished Goods (30,000)
------------
= Direct material used (a) 15,000
+ Direct labor cost (b) 12,500 = cost of Goods Sold 39,000
+Manufacturing overhead (C) 11,500

= Total manufacturing cost (a+b+c) 39,000

+Beg. Work in process 20,000
- End. work in process (18,000)
____________

= cost of goods manufactured 41,000

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Problem 6:
The Following amount related to Micro Corporation.
Finished goods inventory, April, 1, 2006 $98,480
Finished goods inventory, April, 30, 2006 94,290
Cost of Gods Manufactured 135,705

Net sales 170,920

a- Calculate Cost of goods sold?

b- What is the gross profit?

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Cost Accounting Final Grade: One
Solution: (a) (b)

Finished Goods, April $98, 480 Net Sales $170,920

Cost of Goods Manufactured 135,705 Less Cost of Goods Sold 139,895
Total Available $234,185 Gross Profit $31,025
Less Finished Goods, April 30 94,290
Cost of Goods Sold $139,895

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Problem 6:
The new England Company uses a job cost order, A cost data are given below:

Raw materials, January 1, 2006 ……………………………………………………….… $448,543

Raw material, December 31, 2006 ……………………………………………………….… 461,417
Work in process, January 1, 2006 ……………………………………………………….… 383,476
Work in process, December 31, 2006 ……………………………………………………….… 498,182
Finished Goods, January 1, 2006 ……………………………………………………….… 321,932
Finished Goods, December 31, 2006 ……………………………………………………….… 301,647
Raw material purchased ……………………………………………………….… 731,917
Direct labor ……………………………………………………….… 1,182,680
Manufacturing overhead ……………………………………………………….… 814,530
Net sales ……………………………………………………….… 4,708,917

Required:
a- Cost of goods manufactured.
b- Cost of goods sold.
c- Gross profit on sale.
Solution

a) Cost of Goods Manufactured:

Raw Materials January 1, 2006 $448,543

Raw Material Purchases 731,917

Total Raw Materials Available $1,180,460

Less Raw Materials Dec, 31, 2006 461,417

Raw Materials used $ 719,043

Direct Labor 1,182,680

Manufacturing Overhead 814,530

Total Manufacturing Costs $2,716,253

Add Work in Process, Jan 1, 2006 383,463

$3,099,716

Less Work in Process, Dec 31, 2006 498,182

Total Cost of Goods Manufactured $2,601,534

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Cost Accounting Final Grade: One
b) Cost of Goods Sold:

Cost of Goods Manufactured 2,601,534

Finished Goods, January 1, 2006 321,932

Total Goods Available for Sale $2,923,466

Less Finished Goods, Dec 31, 2006 301,647

Cost of Goods Sold $2,621,819

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c) Gross profit = Net sales – Cos of goods sold

= {4,708,917- 2,621,819} = 2,087,098
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Problem 7:

Eight transactions in the manufacturing process in the t- account below. Describe what happened what
happened in each transaction.

Raw Material Work in process voucher payable

(A) 35,000 (B) 28,000 (B)26,000 (G) 58,500 (A) 35,000

(D) 25,000 (E) 3,300
(F) 14,000

Factory payroll clearing Finished Goods Salaries and wages payable

(C) 33,000 (D) 33,000 (G) 58,500 (H) 49,700 (C)

33,000

Manufacturing Overhead Cost of goods sold

(B) 2,000 (F) 14,200

(D) 8,000 (H) 49,700
(E) 3,300

Solution:
The description of each transaction follows:

A. Raw materials are purchased on account.

B. Direct materials of $26,000 and indirect materials of $2,000 were used and charged to Work in Process and
Manufacturing Overhead Control.

C. Factory wages of $33,000 were earned and charged to Factory Payroll Clearing.

D. Direct labor of $25,000 and indirect labor of $8,000 were used and charged to Work in Process and
Manufacturing Overhead Control.

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Cost Accounting Final Grade: One
E. Manufacturing Overhead Control was debited for the cost of other overhead incurred.

F. Manufacturing Overhead of $14,200 was applied to jobs.

G. Goods costing $58,500 were completed and transferred to Finished Goods.

H- Cost of goods sold during the month was $49,700.The cost was transferred from the
Finished Goods account to the Cost of Goods Sold account.
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Problem 8:
The Auto Products Company maintains a raw material inventory account for all materials used in its factory operations.
Purchases of both direct and indirect materials. The balance on January, 1, 2006, for the raw materials account was
$450,933. Purchases of raw materials were $962,091. The ending inventory on December 31, 2006, was $438,946. Calculate
the following:
a- What was the raw material available for use?
b-What was the cost of raw materials used in factory operations?
c- Materials requisitions show that of the total raw materials used during the year, indirect material amounted to $73,170.
What was the amount of direct materials used during the year.

Solution:

Raw Materials, Beginning Inv. $ 450,933

Purchases 962,091

Raw Materials Available for Use $1,413,024

b. Raw Materials Available for Use $1,413,024

Less Raw Materials Ending Inventory 438,946

Raw Materials Used $ 974,078

c. Raw Materials Used $974,078

Less Indirect Materials Used 73,170

Direct Materials Used $900,908

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Problem 9:
During May the Manufacturing overhead for Gray manufactures had various debit posting that totaled $66,493
and a credit posting for $69,736. What was the manufacturing overhead for the month overapplied or
underapplied? By what amount

Solution:

Over applied. The credit was $3,243 more than the total debits.

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Cost Accounting Final Grade: One
Problem 10:

Miller Corporation manufactures industrial, the following costs were incurred during the month of August 2006
Raw material purchased $182,640
Raw material used: Direct materials $120,290, indirect materials $24,630.
Factory wages earned $92,740.
Factory wages allocated: direct labor $77,820, indirect labor $14,920
Voucher allocated for manufacturing overhead costs incurred $22,800
Depreciation on factory Building $30,490
Depreciation on factory Equipment $7,480.
Manufactured overhead costs applied to job worked on $79,423.
Finished goods transferred to ware house $281,460.
Finished goods sold and shipped to customers $198,150 (cost)
Finished goods sold and billed to customers $297,225 (selling price)

Solution:

DR CR

a- Raw material 182,640

Voucher payable 182,640

Work in process 120,290

b-
manufacturing overhead 24,630
144,920
Raw material

c- Factory payroll clearing 92,740

92,740
Salaries and wages payable

77,820
14,920
d- Work in process 92,740
Manufacturing overhead
Factory payroll clearing 22,800

e- Manufacturing overhead 22,800

Voucher payable
37,970
f- Manufacturing overhead
g- Accumulated Depreciation- Building 30,490
Accumulated Depreciation - Equipment 7,480
79,423
h- Work in process
Manufacturing Overhead 79,423

i- Finished goods 281,460

Work in process 281,460

Cost of Goods Sold 198,150

j-
Finished Goods 198,150

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Cost Accounting Final Grade: One
Accounts Receivable 297,225
Sales revenue ‫بيع بضائع للعمالء علي الحساب‬ 297,225
k-

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Problem 11:
The data for the year ended June 30, 2007, that follow relate to the Gradner Manufacturing Corporation
Raw materials, July, 1, 2006 ……………………………………………………….… $60,000
Raw materials, June, 30, 2007 ……………………………………………………….… 52,000
Work in process inventory, July 1, 2006 ……………………………………………………….… 24,600
work in process inventory, June, 30, 2007 ………………………………………………………. 26,000
Material purchased ……………………………………………………….… 203,600
Direct labor ……………………………………………………….… 118,200
Indirect labor ……………………………………………………….… 11,080
Payroll taxes Expense- Factory ……………………………………………………….… 9,800
Utilities "one third related to the factory" ……………………………………………… 16,400
Repair and maintenance ……………………………………………………….… 4,200
Indirect materials and supplies ……………………………………………………….… 15,480
Depreciation- Factory equipment ……………………………………………………….… 5,100
Insurance " one fourth related to the factory" …………………………………………………… 2,460
Rent – Factory Building ……………………………………………………….… 57,000

Instructions: Prepare the statement of cost of goods manufactured for the year ended.
Note: In this instance, Indirect Materials and Supplies are not included in the Raw Materials Inventory.

Solution:

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Cost Accounting Final Grade: One
Problem 12:

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Problem 13:

Answer

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Cost Accounting Final Grade: One

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Problem 14:

Answer

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Cost Accounting Final Grade: One

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Problem 15:

Raw material purchased: $102,340.

Raw material used: Direct material, $83,005 and indirect material, $26,715.
Factory wages earned: $138,240.
Factory wages allocated: direct labor, $104,620 and indirect labor $33,620.
‫تمرين مهم وشامل‬
Other overhead costs incurred: $29,568.
‫الزم تدرب علية بأيدك ألنة هياخد‬
‫وقت‬
Estimated manufacturing overhead applied to job worked $87,829.
Finished goods transferred to ware house: $271,783.
Finished goods sold and shipped to customers: $275,333
Finished sold and billed to the customer $382,257 (selling price)
Instruction:
1- prepare the general journal entries.
2- post the general journal entry to the general ledger account, Raw material $86,280 Dr, Work in process $68,837 Dr,
Finished goods $42,090 Dr.
3- Prepare a statement of cost of goods manufactured.
4- Prepare income statement, assume selling expenses $49,741, administrative expenses pf 21,800 and Estimated federal
income taxes of $14,153

Answer

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Cost Accounting Final Grade: One

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Cost Accounting Final Grade: One

Problem 1:
The Siegel company uses 8000 pounds of material st400 every day in production. It takes 12 days for an order to
be delivered and if the company always wants to have a 3-day supply on hand, what is the point at which it should
reorder material st400?

Solution:

Reorder point = ( Daily usage X Lead time ) + Safety stock

( 8,000 X 12 ) + (8,000 x 3) = 120,000 pounds

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Problem 2:

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Problem 3:

Calculate the ending balance of material No.6798 (brass lock assemblies) based on the following information from
the materials ledger card:

Units amount per unit

Beginning balance 183 $12.50

Issued 159 $12.50

Received 225 12.50

Solution:

Beginning Balance 183

Plus: Received 225

Less: Issued (159)

Units Available 249 x $12.50 per unit = $3,112.50

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Cost Accounting Final Grade: One
Problem 4:
Voucher No.10-16 was prepared from a purchase invoice for $25,840 and a debit memorandum for $1,100 (for
damaged goods returned). What is the gross amount of the voucher?

Solution:

Purchase Invoice $25,840

Less: Debit Memorandum (1,100)

Gross Amount of Voucher $24,740

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Problem 5:
Calculate the net amount of the following disbursement vouchers:
a. Gross amount of invoice: $25,730; terms: 3/10, n/30; debit memorandum: $1,380.
b. Gross amount of invoice: $125,703; terms: 4/20, n/60; debit memorandum: $5,460. (H.W)

Solution:
a) Purchase Invoice $25,730.00

Less: Debit Memorandum (1,380.00)

Gross Amount of Voucher $24,350.00

Less: Discount (730.50) ($24,350 x .03)

Net Amount of Disbursement Voucher $23,619.50

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Problem 6:
Identify which departments are responsible for each of the following procedures
a. Issuing purchase requisition
b. Issuing purchase order
c. Recording approved vouchers
d. Preparing checks to pay vouchers
e. Counting goods received

Solution:
(a) Storeroom Supervisor

(b) Purchasing Department

(c) Accounting Department (Voucher Clerk)
(d) Treasurer’s Department or Accounting Department
(e) Storeroom (Receiving Clerk)

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Cost Accounting Final Grade: One
Problem 7:

The following information relates to materials purchases for the Edwards company:

Material A material B

Annual demand for material 4,000 lb 63,375 lb

Cost ti place an order $10 $10

Cost to carry an item $2 $3

Safety stock 250 lb 750 lb

Lead time 20 days 1o days

Daily usage 15 lb 250 lb

Instructions

1. Calculate the economic order quantity (EOQ) for each material.

2. Calculate the recorder point for each material.

3. How many days late can an order be before the Edwards company will run out of each material ?

4. How many times during the year will the Edwards company have to place an order?

Solution:

1- EOQ = √

EOQ (A) = √2 x 4,000 x 10

_________ __-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
= 200
2

EOQ (B) = √2 x 63,375 x 10 = 650

_______________________________________________________________________________________

2- Reorder point = Daily usage x lead time + safety stock

(A) = ( 15 x 20 ) + 250 = 550

(B)= ( 250 x 10 ) + 750 = 3,250

3- Days for order to be late before material run out. ‫عدد األيام التي سينفا خاللها المخزون أاا تأخرت الللبية‬

= Safety stock / Daily usage

(A) = 250 / 15 = 16.7 days

(B) = 750 / 250 = 3 days

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Cost Accounting Final Grade: One
4- Times to place an order during year ‫عدد الللبيات أو أوامر الشراء التي يجب ان تتم خالل السنة‬

= Annual Demand / EOQ

(A) = 40,000 / 200 = 20 times
(B) = 63, 375 / 650 = 97 times

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Problem 8:
The following are transactions of the Bulter company for the month of October 2006.

Oct. 4.Purchase requisition 1275 for 4,800 units of material 254 is prepared by the storeroom clerk. The material is to be
ordered from the Westmoreland county corporation for $21.50 per unit. Terms are 1/10, n/30.
5. Purchase order 10-48 is completed for materials requisitioned on requisition 1275.
21. materials ordered from the Westmoreland county corporation on purchase order 10-48 are received.
Of the 4,800 units received, 510 are rejected for imperfections and returned at once. Receiving report 10-11 is prepared.
The purchase invoice is included in the carton.
21. a debit memorandum to the Westmoreland county corporation for materials returned is prepared
21. Materials received today from the Westmoreland count corporation are transferred to the storeroom and entered in
the materials ledger.
24.Disbursement voucher 10-141 to the Westmoreland county corporation is prepared for the amount owned on the firm
invoice
25 A check to the Westmoreland county corporation for the amount due, less discount, is prepared and mailed.
Record in general journal form the transactions needing.

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