Cost Accounting and Control

The Pioneer Press is wholly owned by the. The bulk of the work is done for other university departments, which pay as
though the Press were no outside business enterprise. The Press also publishes and maintains a stock of books for
general sale.

The following data pertain to 2021 (in thousands):

Direct materials and supplies purchased on account P800

Direct materials issued to the production departments 710
Supplies issued to various production departments 100
Labor used directly in production 1,300
Indirect labor incurred by various departments 900
Depreciation – buildings and factory equipment 400
Miscellaneous factory overhead incurred by various departments 550
Factory overhead applied at 160% of direct labor ?
Cost of goods manufactured 4,120
Sales 8,000
Cost of goods sold, normal 4,020
Inventories: December 31, 2020
Materials 100
Work in Process 60
Finished goods 500

Required:
Compute for:
a) Manufacturing costs
b) Actual factory overhead
c) Materials inventory, December 31, 2021
d) Work in Process, December 31, 2021
e) Cost of goods sold actual
f) Over or under applied factory overhead

Required:
a) Manufacturing costs = Direct Materials + Direct labor + Applied factory overhead
= P710,000 + P1,300,000 + (P1,300,000 × 160%)
= P710,000 + P1,300,000 + P2,080,000
= P4,090,000

b) Actual factory overhead = Supplies + Indirect labor + Depreciation of building and factory
equipment + Miscellaneous
= P100,000 + P900,000 + P400,000 + P550,000
= P1,950,000

c) Raw materials inventory, Jan 1, 2020 P 100,000

Purchases 800,000
Available for use 900,000
Raw materials used (710,000)
Raw materials inventory 190,000
Less: Indirect materials used (supplies) 100,000
Raw materials inventory, Dec. 31, 2021 P90,000

d) Manufacturing cost P4,090,000

Work in process, Jan. 1, 2020 60,000
Cost of goods manufactured (4,120,000)
Work in process, Dec. 31, 2021 P30,000

e) Cost of goods sold (normal) P4,020,000

Overapplied factory overhead (130,000)
Cost of goods sold (actual) P3,890,000

f) Applied factory overhead (a) P2,080,000

Applied factory overhead (b) (1,950,000)
Over or under applied factory overhead P130,000