10

Problem 6-9

1, Fixed overhead rate (P42,000 / 60,000 DLH) P 0.70

Variable overhead rate (P168,000 / 60,000 DLH) 2.80
Total overhead rate P 3.50

2. Actual direct labor hours 62,400

Overhead rate X P3.50
Applied overhead P218,400

3. Actual manufacturing overhead P213,100

Applied manufacturing overhead 218,400
Overapplied overhead (F) P 5,300

4. Fixed overhead volume variance:

Applied fixed overhead (62,400 x .70) P 43,680
Budgeted fixed overhead 42,000
Volume variance (F) P 1,680

Spending variance:
Actual overhead P213,100
Budgeted overhead based on Std. hours:
Fixed overhead P 42,000
Variable (62,400 x P2.80) 174,720 216,720
Controllable variance (F) P 3,620

Problem 6-10

a. Actual manufacturing overhead P 60,000

Budgeted manufacturing overhead 64,000
Controllable variance (F) P 4,000

Applied manufacturing overhead P 58,000

Budgeted manufacturing overhead 64,000
Volume variance (U) P 6,000

b. Applied manufacturing overhead P 30,000

Volume variance (F) 14,000
Budgeted manufacturing overhead 16,000
Controllable variance (F) 2,000
Actual manufacturing overhead P 18,000

c. Actual manufacturing overhead P 48,000

Controllable variance (U) 12,000
Budgeted manufacturing overhead 36,000
Applied manufacturing overhead 48,000
Volume variance (F) P 12,000
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d. Budgeted manufacturing overhead P 36,000

Controllable variance (F) 2,000
Actual manufacturing overhead P 34,000

Budgeted manufacturing overhead P 36,000

Volume variance (F) 4,000
Applied manufacturing overhead P 40,000

e. Actual manufacturing overhead P 36,000

Controllable variance (F) 6,000
Budgeted manufacturing overhead 42,000
Applied manufacturing overhead 40,000
Volume variance P 2,000

f. Actual manufacturing overhead P 54,000

Controllable variance (U) 12,000
Budgeted manufacturing overhead 42,000
Volume variance (U) 4,000
Applied manufacturing overhead P 38,000

g. Actual manufacturing overhead P 32,000

Controllable variance -0-
Budgeted manufacturing overhead 32,000
Applied manufacturing overhead 32,000
Volume variance P -0-

Problem 6-11

1. Work in process, Oct. 1 P109,000

Current cost:
Direct materials 90,000
Direct labor (P204,000 x 7/17) 84,000
Applied overhead (7,000 P9) 63,000
Total cost of Job 20 P346,000

2. 4,000 DLH x P9 = P 36,000

3. 17,000 total direct labor hours x P9 = P153,000

4. Supplies P 4,000
Indirect labor 30,000
Supervisory salaries 83,000
Building occupancy costs 7,000
Factory equipment costs 12,000
Other factory costs 10,000
Total actual manufacturing overhead P150,000

5. Close to cost of goods sold account.

6, No. The amount should be apportioned to the Work in Process Inventory

account, Finished Goods Inventory account and Cost of Goods Sold.
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Problem 6-12

1. Indirect materials and supplies P 30,000

Indirect labor 106,000
Employee benefits 46,000
Depreciation 24,000
Supervision 40,000
Total actual manufacturing overhead P246,000

2. P140,000 actual direct labor cost x 160% = P224,000

3. Actual manufacturing overhead P246,000

Applied manufacturing overhead 224,000
Underapplied overhead P 22,000

Problem 6-13

1. Work in Process Finished Goods

Direct materials P 18,000 P 20,000
Direct labor 36,000 40,000
Applied overhead:
WIP (4,000 hours x P7.20) 28,800
FG (10,000 hours x P7.20) 72,000
Total inventory cost P 82,800 P132,000

2. Supervision P 37,000
Indirect labor 58,100
Utilities 45,600
Depreciation – factory building 15,000
Property tax 8,000
Freight-in 13,000
Depreciation – factory equipment 15,000
Insurance 6,000
Repairs and maintenance 16,500
Miscellaneous 19,800
Total actual manufacturing overhead P234,000

3. Actual manufacturing overhead P234,000

Budgeted manufacturing overhead (P141,750 + P85,050) 226,800
Controllable variance (U) P 7,200

Budgeted manufacturing overhead P226,800

Applied manufacturing overhead 230,400
Volume variance (F) P 3,600

Net overhead variance (U) P 3,600

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Problem 6-13 (continued)

Manuel Company
Statement of Cost of Goods Manufactured and Sold
Month Ended January 31, 2010

Direct materials used:

Materials inventory, Jan. 1 P 42,000
Purchases (P216,000 – P10,100) 205,900
Total available 247,900
Materials inventory, Jan. 31 18,000 P 229,900
Direct labor 512,000
Applied manufacturing overhead 230,400
Manufacturing cost 972,300
Work in process inventory, Jan. 1 65,000
Total cost of goods placed in process 1,037,300
Work in process inventory, Jan. 31 82,800
Cost of goods manufactured 954,500
Finished goods inventory, Jan. 1 36,000
Goods available for sale 990,500
Finished goods inventory, Jan. 31 132,000
Cost of goods sold at normal 858,500
Underapplied overhead 3,600
Cost of goods sold at actual P 862,100