2 types of Costing Methodology: Manufacturing

*Job Order Costing- simple way of costing, easily quantified or measured

furniture = RM wood
food processing= non bulk production
inventory is easily done manually
* Process Costing = mass production

RM => FG
meat => process => langonisa
1 kl pork =>process => Inc FG
Merchandising Business Trading business BUY AND SELL
Merchandise Inventory => Products bought and sold
BUY THE GOODS =LOW PRICE
SELL THE GOODS =HIGHER PRICE

RTW 50% OF COST IS YOUR SELLING PRICE

1000 UNITS EACH P75

SP
Sales (SP * Unit sold) with VAT 25,200.00 112.5
VAT 2,700.00
Sales (SP * Unit sold) 22,500.00
Cost of Sales (1,000 @P75)
(200@75) 15,000.00
Gross Profit 7,500.00 Balances
Operating Expenses:

2/1/2023-Purchased in cash of 1,000 units of T-shirt at P75 purchase price with 12% VAT
Debit Credit
Merchandise Inventory-T-shirt 75,000.00
Input Tax (Asset) 9,000.00
Cash 84,000.00
2/14/2023 Sold 200 units of T-shirt at 50% mark up in cash
a) Cash 25,200.00
Sales (200x112.50) 22,500.00 Balance
Output Tax Payable 2,700.00

b) Cost of Sales 15,000.00

MI-Tshirt (200@P75) 15,000.00

2/28/23 Paid for the following expenses: Rental expense 5,000; Light and Water 2,000;Salaries exp-4,000
Rental expense 5000
Light and water expense 2000
Salaries expense 4000
Cash 11,000
2/28/23 Purchased 500 T-shirt at P89.60 inclusive VAT on account Balance
MI-Tshirt 40,000.00
Input Tax (Asset) 4,800.00
Accounts Payable 44,800
2/28/23 Sold 900 pcs of Tshirt at P160 with VAT
Cash (900xP160) 144,000.00
Sales 128,571.43
Output Tax 15,428.57

Cost of Sales 68,000

MI-T-shirt 68,000
Inventory Subsidiary Ledger(COST) T-shirt
Date In-(Purchase) Out ( Sold) Balance
2/1/2023 1000 units@75 =75,000 1000 units @75=P75,000
2/14/2023 200 units @75=15000 800 units @75=P60,000
2/28/2023 500 units @P80=40,000 800 units @75=P60,000
500 units @P80=40,000
Balance 1300 units P100,000
2/28/2023 First -In , First-Out (FIFO) 800 units @ P75=60000 0
100 units @P80= 8000 400 units @P80=P32,000
900 units =P68,000 400 units @P80=P32,000
Weighted Average
Date In-(Purchase) Out ( Sold) Balance
2/1/2023 1000 units@75 =75,000 1000 units @75=P75,000
2/14/2023 200 units @75=15000 800 units @75=P60,000
2/28/2023 500 units @P80=40,000 800 units @75=P60,000
500 units @P80=40,000
Balance 1300 units P100,000
2/28/2023 weighted average 900x76.92= 69,230.77 400 @76.92=30,769.23

FIFO
100,000
 75 84 9
37.5 GP/u
112.5 22,500.00 13.5 2700
126 13.5 126

Asset Liabilities
Cash Input Tax MI Accounts PayRent Payable Loan Payable
309,000.00 5000 200,000
(84,000.00) 9,000.00 75,000.00
225,000.00 9,000.00 75,000.00 5,000.00 200,000.00

25,200.00
334,200.00 250,200.00 9,000.00 75,000.00 5,000.00 200,000.00

(15,000.00)
319,200.00 250,200.00 9,000.00 60,000.00 5,000.00 200,000.00

-11,000
308,200.00 239,200.00 9,000.00 60,000.00 5,000.00 200,000.00
40,000.00
4,800.00
44,800
353,000.00 239,200.00 13,800.00 100,000.00 44,800.00 5,000.00 200,000.00
1000 units @75=P75,000
800 units @75=P60,000 60000
800 units @75=P60,000
500 units @P80=40,000
1300 units P100,000
0
400 units @P80=P32,000
400 units @P80=P32,000

1000 units @75=P75,000

800 units @75=P60,000
800 units @75=P60,000
500 units @P80=40,000
1300 units P100,000 76.9230769231
400 @76.92=30,769.23 69230.76923
30769.23077
 Capital
Output Tax Payable
104,000

- 104,000.00

2,700.00 22,500.00
2,700.00 126,500.00 334,200.00

(15,000.00)
2,700.00 111,500.00 319,200.00

-5000
-2000
-4000

2,700.00 100,500.00 308,200.00

2,700.00 100,500.00 353,000.00 -

1. Job Order Costing 2. Process Costing
Document Controls = Internal Controls
Purchase Requisition Form(PR) -internal document for purchase authorization - request is done by the user dept.
Purchase Order(PO) Form =>from us to the supplier
Delivery Receipt (DR) from supplier going to us (Quantity and quality are correct)
Sales Invoice(SI) = evidence of sales transaction on the part of the seller => Purchase Invoice(PI)
Purchases xxx
Cash
Cash Receipts or Official Receipt (OR)- evidence of cash payment
VAT Registered
Purchase
total invoice 655
divided by 1.12% (100%) 584.821428571
VAT - Input Tax 70.1785714286
Sales Inv
Purchaser Seller
Sales Invoice

Total 584.82142857143 701.785714286

VAT 70.178571428572 84.2142857143
Total 655 786
Debit Credit
1. Asset, Expense (gastos) Increase
2. Liab(Utang), Capital, Revenue(Kita) Increase

Assets = Liab +
1.Castro invested Cash of P100,000 1) 100,000
DR CR 2) 200,000 200,000
Cash 100,000 300,000 200,000
Castro, Capital 100,000 3) -1000
2. Loan from the bank of P200,000 299,000 200,000
Cash 200,000 4) 20,000
Loan Payable 200,000 total 319,000 200,000
3. Utilities expense of P1,000 5) (10,000.00)
Utilities exp(PLDT) 1000 total 309,000.00 200,000.00
Cash 1000 6) 5000
4. Render services for fee of P20,000 cash total 309,000.00 205,000.00
Inc in cash => Inc in asset = debit 66%
Service fee=> Inc in revenue =credit Castro Services
Cash 20000 Balance Sheet
Service fee 20000 31-Jan-23
5. Paid salaries expense of employees 10,000 Assets
Inc in expense => debit salaries exp Cash 309,000
Dec. of cash => decrease in asset = credit Total Asset
Salaries expense 10,000 Liabilities and Capital
Cash 10,000 Liabilities:
6. Received rental bill P5,000 =but did not pay yet Rent Payable 5000
Inc in rental expense => Inc Exp = debit Loan Payable 200,000
Inc in liability=> credit Capital
Rental expense 5000 Castro, Capital 100,000
Rental payable 5000 Add: Net Income 4,000
Cash Total Liabilities and Capital
Debit Credit
1 100,000 1,000 3
2 200,000 10,000 5
4 20,000
320,000 11,000
309,000
the user dept.

xxx

Sold with VAT

131 786 880.32 225.32
VAT-Outpt tax 94.32 VAT-Outpt tax 94.32
70.1785714286 selling price 880.32 VAT-input tax 70.17857

Tax due 24.14143

Sales 701.7857
Purch 584.8214 Selling Price 786
Inco 116.9643 SP w/ VAT 786 Purchase Price 584.8214
14.0357142857 tax 0.12 SP 701.79 84.214285714286 116.9643
tax d 14.03571 655 14.03571
Mark up 46.786
Assetliab + Capital
Rev (Inc) Total 701.79
Exp (Dec) Vat 84.214 to the BIR 84.21429
Total 786 Input tax 70.17857
Capital plus less Exp Tax due 14.03571
100,000

100,000
-1000 1000
99,000
20000 ###
119,000
(10,000.00) 10000
109,000.00
(5,000.00) 5000
104,000.00
34%
Castro Services
Income Statement
For the 1st Month
Service Fee 20,000
Operating Expenses
309,000 Salaries Expense 10,000
lities and Capital Rental Expense 5,000
Utilities expense 1,000 16,000
Net Income 4,000 20%
205000
Int on Loan 24% 2.000%
ROI
104,000 ROA 4,000 1.29%
309,000 309,000
Return 2%
 94.32

201.1786
0.12
24.14143
RULES OF DEBIT OR CREDIT Debit Credit
1. Asset, Expense (gastos) Increase
2. Liab(Utang), Capital, Revenue(Kita) Increase

ASSET EQUALS TO = LIABILITIES AND (+) CAPITAL (+REVENUE) (-EXPENSE)

(-EXPENSE)
1. INC IN LIAB CREDIT
2. DEC IN CAPITAL DEBIT
3. INC IN REVENUE CREDIT
4. DEC IN ASSET CREDIT
5. DEC IN EXPENSE CREDIT
6.DEC IN REVENUE DEBIT 26/27 96 A
7. INC IN EXPENSE DEBIT 14/16 88 B
8. INC IN CAPITAL CREDIT 28/29 97 A
9.INC IN ASSET DEBIT 19/21 90 B
 A B
10. INC IN REVENUE CREDIT 28/29 4/5
11. DEC IN LIAB DEBIT 29/29 17/17
12. INC IN EXPENSE DEBIT 28/28 17/17
13. INC IN CAPITAL CREDIT 30/30 17/18
14.INC IN LIABILITY CREDIT 30/31 17/18
15. DEC IN ASSET CREDIT 30/31 17/18