Republic of the Philippines

JOSE RIZAL MEMORIAL STATE UNIVERSITY

The Premier University in the Province of Zamboanga del Norte
Gov. Guading Adaza St., Sta. Cruz, Dapitan City
Province of Zamboanga del Norte

Cost Accounting and Control – 2nd Sem AY 21-22

Quiz for Module 1

Name: JASPER JOHN C. NACUA

Class Schedule: TTH; 8:30 AM – 10:00 AM

PROBLEM 1

Bea Company, a merchandising firm, has the following revenues and expenses for the last
three months:

BEA COMPANY
Comparative Income Statement
For the Three Months Ended June 30

Apri May June

l
Sales in units 3,000 3,750 4,500
Sales revenue P450,000 P562,500 P675,000
Cost of goods sold 168,000 210,000 252,000
Gross Margin 282,000 352,500 423,000
Less Operating
Expenses:
Shipping Expense 64,000 73,750 83,500
Insurance Expense 8,000 8,000 8,000
Depreciation Expense 45,000 45,000 45,000
Salaries and 114,000 135,00 156,00
Commissions
Total Operating 231,000 261,750 292,500
Expenses
Net Income (loss) 51,000 90,750 130,500

Requirements:
a. Identify each of the company’s expenses (including cost of goods sold) as being
either variable, fixed, or mixed

Cost of Goods Sold Variable

Shipping Expense Mixed

Insurance Expense Fixed

Depreciation Expense Fixed

Salaries and Commissions Mixed

 b. By use of the high-low method, separate each mixed expense into variable and
fixed elements. State the cost formula for each mixed expense.
Month Units Sold Shipping Expense
April 3,000 64,000
May 3,750 73,750
June 4,500 83,500

Variable Cost Rate or per Unit = Cost at highest activity – Cost at lowest activity
Highest activity – Lowest activity
= P83,500 – 64000
P4,500 – 3000
= P19,500 / 1,500
Variable Cost per Unit = P13.00

Fixed Cost = Total cost at highest activity – (Variable cost per unit x Highest activity stated in
units)
= P83,500 – (13 x 4,500)
= P83,500 – 58,500
Fixed Cost = P25,000

Fixed Cost = Total cost at lowest activity – (Variable cost per unit x Lowest activity stated in
units)
= P64,000 – (13 x 3,000)
= P64,000 – 39,000
Fixed Cost = P25,000

COST FORMULA:
Total Shipping Cost = P25,000 + (P13 x Units sold)

Applying the original formula of Y = a + bX, the formula would be:

Y = P25,000 + 13X

Month Units Sold Shipping Expense

April 3,000 114,000
May 3,750 135,000
June 4,500 156,000
Variable Cost Rate or per Unit = Cost at highest activity – Cost at lowest activity
Highest activity – Lowest activity
= P156,000 – 114,000
4,500 – 3,000
= P42,000 / 1,500
Variable Cost per Unit = P28.00

Fixed Cost = Total cost at highest activity – (Variable cost per unit x Highest activity stated
in units)
= P156,000 – (28 x 4,500)
= P156,000 – 126,000
Fixed Cost = P30,000

Fixed Cost = Total cost at lowest activity – (Variable cost per unit x Lowest activity stated
in units)
= P114,000 = (28 x 3,000)
= P114,000 – 84,000
Fixed Cost = P30,000

COST FORMULA:
Total Salaries and Commissions = P30,000 + (P28 x Units sold)

Applying the original formula of Y = a + bX, the formula would be:

Y = P30,000 + 28X
 c. Prepare the income statement for June 30 using the contribution format. (Sales
for June is 5,500 units.)

BEA COMPANY
Income Statement
For the month ended, June 30

Sales (5,500 x 150) P825,000

Less: Variable Expense

Cost of Goods Sold (5,500 x 56) P308,000
Shipping Expense (5,500 x 13) 71,500
Commission (5,500 x 28) 154,000 (533,500)

Contribution Margin P291,500

Less: Fixed Expense

Insurance Expense P 8,000
Depreciation Expense 45,000
Shipping Expense 25,000
Salaries Expense 30,000 (108,000)

NET INCOME (LOSS) P183,500

*Cost of Goods Sold per Unit = 252,000 / 4,500 = P56

PROBLEM 2

Xander Company makes industrial cleaning solvents. Various chemicals, detergent, and
water are mixed together and then bottled in 10-gallon drums. Xander provided the following
information for last year:

Raw materials purchases P250,000

Direct labor 140,000
Depreciation on factory equipment 45,000
Depreciation on factory building 30,000
Depreciation on headquarters building 50,000
Factory insurance 15,000
Property taxes:
Factory 20,000
Headquarters 18,000
Utilities for factory 34,000
Utilities for sales office 1,800
Administrative salaries 150,000
Indirect labor salaries 156,000
Sales office salaries 90,000
Beginning balance, Raw materials 124,000
Beginning balance, WIP 124,000
Beginning balance, Finished goods 84,000
Ending balance, Raw materials 102,000
Ending balance, WIP 130,000
Ending balance, Finished goods 82,000

Last year, Xander completed 100,000 units. Sales revenue equalled P1,200,000, and Xander paid
sales commission of 5% of sales.

Compute for the following: (keep your solutions neat and direct)

a. Direct materials used in production for last year

Solution:
Beginning Balance, Raw Materials P124,000
Raw Materials Purchases 250,000
Less: Ending Balance, Raw Materials (102,000)
Direct Materials P272,000

b. Total prime cost

Solution:
Direct Labor P140,000
Direct Materials 272,000
Total Prime Cost P412,000

c. Total manufacturing overhead cost (6 costs)

Solution:
Indirect Labor Salaries P156,000
Depreciation on Factory Equipment 45,000
Depreciation on Factory Building 30,000
Factory Insurance 15,000
 Property Tax – Factory 20,000
Utilities for Factory 34,000
Total Manufacturing Overhead Cost P300,000

d. Total conversion cost

Solution:
Direct Labor P140,000
Manufacturing Overhead 300,000
Total Conversion Cost P440,000

e. Total manufacturing costs

Solution:
Direct Materials P272,000
Direct Labor 140,000
Manufacturing Overhead 300,000
Total Manufacturing Costs P712,000

f. Cost of goods manufactured

Solution:
Total Manufacturing Cost P712,000
Beginning Balance, WIP 124,000
Less: Ending Balance, WIP (130,000)
Cost of Goods Manufactured P706,000

g. Unit product cost (Round to whole centavo)

Solution:
Total Product Cost P712,000
Divided by: Number of Units Produced / 100,000
Unit Product Cost P7.12 or 7

h. Cost of goods sold

Solution:
Beginning Balance, Finished Goods P84,000
Cost Goods Manufactured 706,000
Less: Ending Balance, Finished Goods (82,000)
Cost of Goods Sold P708,000

i. Gross margin

Solution:
Sales Revenue P1,200,000
Less: Cost of Goods Sold (708,000)
Gross Margin P492,000
j. Selling Expenses (3 costs)

Solution:
Sales Commission (1.2M x 5%) P60,000
Sales Office Salaries 90,000
Utilities for Sales Salaries 1,800
Selling Expenses P151,800