Chapter 1 Old exam Paper Extra Class Ch 1

Question 1
The following balances are extract from Star Company’s records for the
year 202

Raw materials, January 1, 2020……………………. $ 20,000

Raw materials, December 31, 2020.......................... $?
Work in process, January 1, 2020………………….. $ 35,000
Work in process, December 31, 2020………………. $ 25,800
Finished goods, January 1, 2020 (4,500 units)... $ 112,500
Finished goods, December 31, 2020 (1,000 units)… $?
Supplies, January 1, 2020……………………………. $ 5,000
Supplies, December 31, 2020……………………….. $ 3,000
Raw materials, purchases………………………….. $ 220,000
Supplies purchases…………………………………… $ 18,000
Sales revenues (18,500 units sold)……………….. $ 925,000
Sales discount………………………………………. $ 2,000
Delivery expense on sales…………………………. $ 40,000
Utilities………………………………………………… $ 20,000
Insurance expense…………………………………. $ 30,000
Depreciation expenses………………………………. $ 18,750
Advertising…………………………………………… $ 12,000
Sales and administrative salaries…………………... $ 80,000
Factory salaries and wages (of which are indirect $ 9,000
salaries and wages)…………….. $ 225,000
Fringe benefits……………………………………… $ 68,000
Other manufacturing overheads…………………… $ 4,000
Other sales and administrative expenses…………. $ 18,500

Other data for the year 2020:

a. Indirect materials used of the year amounted to $18,000.

b. Some 80% of the utilities cost and 75% of the supplies used apply to
factory operations. The remaining amounts apply to selling and
administrative activities.

c. Depreciation expense is for production operation at 80%, the

remaining a mounts apply to period cost.

d. The company allocated insurance expense according to the proportion

of spaces occupied by each activity.

Activity Spaces occupied

Production 10,000 square metre
Sales & administrative 5,000 square metre

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e. The factory salaries and wages ($ 225,000), direct labor wages of the
units produced is based on a total of 6,800 labor hours worked in the year,
of which 200 labor hours were idle time. The company’s normal hours for
labor is 6,000 hours for the year at the rate of $ 30 per hour, overtime is
paid at one time and a half of the normal rate.

f. Only 60% of the fringe benefits applies to factory operations, the

remainder applies to selling and administrative activities.

g. The factory fringe benefits of data (f) is computed from total hours
worked of the year at $6 per hour. The company treats that part to fringe
benefits relating to direct labor as added direct labor cost, the remainder
is for manufacturing overhead.

h. Prime cost of the year amounted to $444,600.

i. Firs-in, Fist-out (FIFO) inventory system is used.

Required : Using the above given data, answer the following.

Questions – determine the cost of the following: Your Answer Here

Example of answer 6000

1. Direct materials used 207000

2. Direct labor cost 237600

3. Factory insurance 20000

4. Idle time 6000

5. Overtime premium 12000

6. Factory fringe benefit 1200

7. Total manufacturing overhead 116200

8. Total cost of goods manufactured 570000

9. Cost of goods manufactured per unit 38

10. Ending finished goods December 31, 2020 38000

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 Direct material Used 207000
1.
Direct Labor 237600
Total Overhead :
1 Indirect Material 18000
2. Idle time cost for factory 6000
3. Overtime Premium For Factory 12000
4. Indirect Labor 9000
5. Fringe Benefit 1200
6. Supplies in factory 15000
7. Utility for factory 16000
8. Insurance for Factory 20000
9. Depreciaiton For factory 15000
10. Other Manufacturing Overhead 4000
Total Factory Overhead 116200
Total Manufacturing Cost (207000 + 237600 + 116200) 560800
Add Work in Process Beginning balance 35000
Less Work in Process Ending Balance 25800
Cost of goods Manufacturing 570000

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 Unit Per unit Amount

CGM 15000 38 570000

FG BB 4500 25 112500

CGM 15000 38 570000

Available For sales 19500 682500

FG EB 1000 38 FiFo method 38000

COGS 18500 644500

Sales Revenue 18500 50 925000

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 Sales Revenue 925000
Less Sales Discount 2000
Net Sales 923000
Less Cost of goods Sold 644500
Gross Profit 278500
Less Operating Expense or Period Cost
1. Supplies ถ้า งงให้ไปดู เฉลยละเอียดใน excel 5000

2. Delivery Expense on sale 40000

3. Utility Exp For S&A 20000 x 20% 4000
4. Insurance Exp for S&A 30000 x 33.3333% 10000
5. Depreciation Exp for S&A 18750 x 20% 3750
6. Advertising 12000
7. S&A Salary 80000
8. Fringe Benefit For S&A ในexcel มีอธิบาย 27200

9. Other S&A Expense 18500

Total operating Expese 200450
Net Operating Income 78050

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Question 2
Milo Company
Income Statement
For the year ended December 31, 2021

Sales revenues ($ 32 per unit sold)

$995,200
Add Sales discount…………………… $ 8,200
Shipping expense on finished goods sold 5,000
13,200
Net sales
982,000
Less Operating expenses:
Supplies purchases………………. 1,800
Raw materials purchases…… 200,000
Freight in on raw materials purchases… 1,200
Raw materials purchases discount… 6,000
Raw materials purchases returns and allowances 8,000
Utilities………………………………… 30,000
Rent expense……………………. 20,000
Indirect raw materials used………. 10,200
Depreciation expense Factory… 12,000
Sales and administrative salaries… 160,000
Depreciation expense – Administrative… 3,000
Advertising………………………. 2,000
Other selling and administrative expenses… 400
Factory salaries and wages…………
(included indirect salaries and wages)… 280,000
Other factory overheads……………… 18,000
Factory fringe benefits (6,300 labor Hours @ $ 15) 94,500
847,100
Net operating income (loss)……………………. $ 134,900

The above income statement is an incorrect statement for a manufacturing

firm. You are given the following supporting information.
a. Only 80% of the utilities and supplies expenses apply to factory, the
remaining balance apply to sales and administrative offices.

b. Rent expense is apportioned to factory and selling and administrative

operations according to the spaces (square metre) occupied as follows:

Spaces occupied
Factory………………………………… 13,000 square metre
Sales and administrative……………. 12,000 square metre

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 C. The company treats that part of fringe benefits relating to direct labor
as added direct labor cost, and the remainder balances as part of
manufacturing overhead.

d. Factory salaries and wages ($280,000)

The amount for the direct labor wages is based on total of 6,300 labor
hours worked for the year, of which 120 hours are idle time. The company’s
normal hours for direct labor is 6,000 hours for the year at the rate of $40
per hour overtime is paid at a time and one-half of the normal rate.

e. Inventories and Supplies accounts balances are as follows :

Beginning of the year End of the year

Inventories

Raw materials…………… $ 5,000 $ 2,000

Work in process………. $10,000 $ 3,700

Finished goods………… 8,000 units @ $ 20 1,400 units

Supplies……………………… $ 200 $-0-

f. First-in, First-out (FIFO) inventory method is used.

Required: Fill in the following balances for the year 2021.

Fill in only the amount. Dollar sign ($), and comma (,) are not
required.

Answer

1. Total direct materials used.

2. Total direct labor cost incurred.

3. The amount of the indirect factory salaries and wages.

4. Total manufacturing overhead of the year.

5. Units produced of finished goods in 2021.

6. Total cost of goods manufactured of the year.

7. The average manufacturing cost of finished goods

produced in 2021.

8. Total cost of finished goods on December 31, 2021.

9. Total period cost of the year.

10. The net operating income of 2021.

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 Raw Material beginning 5000
Add Net Purchase Raw material 200000 -6000 -8000 +1200 187200
Raw material Available For use 192200
Less Raw material Ending Balance 2000
Raw material Used 190200
Less Indirect material used 10200

Direct
11. material Used 180000
Direct Labor 339900
Total Overhead :
1.Indirect Material 10200
2.Idle time cost for factory 4800
3.Overtime Premium For Factory 6000
4Indirect Labor 22000
5.Fringe Benefit 1800
6Supplies in factory 1600
7Utility for factory 24000
8Rent for Factory 10400
9Depreciaiton For factory 12000
10Other Manufacturing Overhead 18000
Total Factory Overhead 110800
Total Manufacturing Cost (180000 + 339900 + 110800) 630700
Add Work in Process Beginning balance 10000
Less Work in Process Ending Balance 3700
Cost of goods Manufacturing 637000

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 Unit Per unit Amount

CGM 24500 26 637000

FG BB 8000 20 160000

CGM 24500 26 637000

Available For Sales 32500 797000

FG EB 1400 26 36400

COGS 31100 760600

Sales Revenue 31100 32 995200

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 Sales Revenue 995200
Less Sales Discount 8200
Net Sales 987000
Less Cost of goods Sold 760600
Gross Profit 226400
Less Operating Expense or Period Cost
1. Supplies ถ้า งงให้ไปดู เฉลยละเอียดใน excel 400

2. Shipping Expense on FG Sold 5000

3. Utility Exp For S&A 30000 x 20% 6000
4. Rent Exp for S&A 20000 x 48% 9600
5. S&A Salary 160000
6. Depreciation Admin 3000
7. Advertising 2000
8. Other S&A Exp 400

Total operating Expese 186400

Net Operating Income 40000

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Question 3
Income statement of Faster Company for the current year is as follows:

Faster Company

Income Statement

For the Year Ended December 31, 2007

Sales (3,000 units) $240,000

Less: Operating Expenses:

Indirect labor $ 4,000

Raw materials & supplies purchases 80,000

Utilities 20,000

Wages expenses 41,700

Other manufacturing overhead 9,500

Advertising 20,000

Other selling & administrative expenses 25,000 200,200

Net Operating
Income $39,800

The income statement above was prepared by a new assistant, who has
had little experience in manufacturing operations. As such, the president
of Faster Company had asked you to review the income statement.

Additional information of the company is as follows:

a. Some 70% of the utilities are applicable to factory operations and

the remaining amount is for selling and administrative expenses.

b. The total wage expenses of $41,700 is allocated to the following:

Total hours Wage rates

Regular hours (10 hours as idle) 2,010 $20 per hour

Overtime hours 50 $30 per hour

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c. Ninety percent (90%) of raw materials and supplies used is for
factory operations, of which 20% are as indirect materials; the
remaining 10% applies to selling and administrative purposes.
d. Inventory balances at the beginning and end of the year were:

December
January 1 31

Raw materials &

supplies $30,000 $10,000

Work in process 0 4,200

750 units @
Finished goods $45 250 units

The finished goods inventory is being carried for the year under First-In,
First-Out (FIFO) method.

Required:

1. Prepare a detailed schedule of cost of goods manufactured for the

year 2007.
2. Prepare a traditional income statement of the current year.

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 Raw Material beginning Balance 30000
Add Net Purchase Raw material 80000
Raw material Available For use 110000
Less Raw material Ending Balance 10000
Raw material Used 100000
Less Indirect material used 100000 x 90% x 20% 18000
Supplies 100000 x 10% 10000
Direct
1. material Used 72000
Direct Labor 41000
Total Overhead :
1.Indirect Material 18000
2.Idle time cost for factory 200
3.Overtime Premium For Factory 500
4Indirect Labor 4000
5.Fringe Benefit 0
6.Utility for factory 24000
7. Other Manufacturing Overhead 18000
Total Factory Overhead 46200
Total Manufacturing Cost (72000 + 41000 +46200) 159200
Add Work in Process Beginning balance 0
Less Work in Process Ending Balance 4200
Cost of goods Manufacturing 155000

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 unit Per unit Amount

CGM 2500 62 155000

FG BB 750 45 33750

CGM 2500 62 155000

Available for sale 3250 188750

FG EB 250 62 15500

COGS 3000 173250

Sales Revenue 3000 80 240000

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 Sales Revenue 240000
Less Cost of goods Sold 173250
Gross Profit 66750
Less Operating Expense or Period Cost
1. Supplies 10% x 100000 10000
2. Utility Exp For S&A 20000 x 30% 6000
3. Advertising 20000
4. Other S&A Exp 25000

Total operating Expese 61000

Net Operating Income 5750

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Question 4
Income statement of Zen Company for the year 2009 is as follow

Zen Company

Income Statement

For the year ended December 31,2009

Sale revenues ($35 per unit sold) $70,000

Less Operating expenses

Cost of goods available for sales $59,000

Salaries and wages expenses 31,900

Advertising expense 9,000

Utilities 8,000

Indirect materials used 1,720

Purchases of raw materials 15,000

Purchases of office supplies 1,000

Purchase discount ( raw material purchase 300

Other manufacturing overhead 4,000

Other operating expenses 2,000

Total operating expenses (131,920)

Net operating income (loss) $(61,920)

Additional information of the company is as follows:

1 Prime cost of the year totaled $28,480.

2 Some 80% of the utilities are allocated to production operations

and the remaining amount is for selling and administrative
expenses.

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3 The total salaries and wages expenses of $31,900 is distributed to
the following:
Direct laborers ??????

Normal hours 520 hours (include 20 hours idle): wage rate $20

Overtime hours 150 hours: wage rate $30

Production supervisory salaries ??????

Sales and administrative salaries 12,000

Total salaries and wages $31,900

4 Inventory and office supplies accounts balances at the beginning

and end of the year were:
January 1 December 31

Office supplies $0 $ 750

Raw materials $ 3,000 $ ???

Work in process $ ??? $ 3,700

Finished goods 750 units@$12 1,250 units

5 Zen company applied First in First out inventory method in 2009

Required: Prepare for Zen Company the following statements of 2009:

1 A detailed schedule of cost of goods manufactured.

2 A corrected traditional income statement

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Direct Material Use 28480 – 13000 15480
Direct Labor 13000
Total Overhead :
1.Indirect Material 1720
2.Idle time cost for factory 400
3.Overtime Premium For Factory 1500
4Indirect Labor = Supervisor 15800
5.Fringe Benefit 0
6.Utility for factory 8000 x 80% 6400
7. Other Manufacturing Overhead 4000
Total Factory Overhead 19020
Total Manufacturing Cost (15480 +13000 +19020) 47500
Add Work in Process Beginning balance 50000 +3700 -47500 6200
Less Work in Process Ending Balance 3700
Cost of goods Manufacturing 59000 – (750 *12) 50000

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 Unit Per unit Amount

CGM 2500 20 50000

FG BB 750 12 9000

CGM 2500 20 50000

Available 3250 59000

FG EB 1250 20 FIFO method 25000

COGS 2000 34000

Sales Revenue 2000 35 70000

20
 Sales Revenue 70000
Less Cost of goods Sold 34000
Gross Profit 36000
Less Operating Expense or Period Cost
1.Supplies 0+ 1000 – 750 250
2.S&A Salary 12000
3.Advertising 9000
4.Utility 8000 x 80% 6400
5. Other Operating 2000
Total operating Expese 29650
Net Operating Income 6350

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Question 5
The income statement of Snail Company for 2017 follows:

Snail Company
Income Statement Sales
For the year ended December 31, 2017
Sales $ 792,000

Less Operating expenses:

Purchases of raw materials $ 188,000

Factory salaries and wages expenses 33,450

Advertising expenses 18,900

Prepaid Insurance 72,000

Rental of facilities 60,000

Sales commissions 80,000

Electricity 90,000

Miscellaneous manufacturing overhead 5,450

Interest expense 2,900 (550,700)

Net operating income $ 241,300

Thai Farmers Bank has requested Snail Company to rectify the Income Statement. The following information is
provided:

a. Selling price of the product is $36 per unit

b. Inventory balances at the beginning and end of the year are as follows:
January 1,2017 December 31,2017
Raw materials $ 35,000 $ 13,000
Work-in-process $ 22,500 $ 5,000
Finished Goods $ 90,000 * ??
*Cost per unit is $18 per unit

c. A 3-year insurance policy was purchased on September 1, 2017 for $72,000; eighty percent of the
expired insurance I for factory

d. Details of Factory salaries and wages expenses $33,450 are as follows:

Total number of hours worked is 480 hours, including Idle time of 30. hours and overtime hours for
90 hours. The company's basic wage rate is $50 per hour. The company's union contract states that
employees are to be paid time and a half for overtime hours. The company's fringe benefits cost $15
for each hour of employee time (either regular time or overtime). The company treats all fringe
benefits as part of manufacturing overhead cost.
e. Rent on facilities is allocated 80% to the factory.
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 f. Company produces 20,000 units during the year 2017.
g. First-in, First-out is used to account for the unsold finished goods.

h. Electricity is assigned to each department according to the number of kilowatt hour ued:
Department Kilowatt hour used
Factory 88,000
Selling and Administrative 12,000
Required:

1. Prepare a schedule of Cost of goods manufactured for the year ended December 31,2017.

2. Prepare a Traditional Income Statement for the year ended December 31, 2017,

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 Raw Material beginning 35000
Add Net Purchase Raw material 188000
Raw material Available For use 223000
Less Raw material Ending Balance 13000
Raw material Used 210000
Less Indirect material used 0

Direct
1. material Used 210000
Direct Labor 22500
Total Overhead :
1.Indirect Material 0
2.Idle time cost for factory 1500
3.Overtime Premium For Factory 2250
4Indirect Labor 0
5.Fringe Benefit 480 hrs x 15 7200
6Insurance for Factory 8000 x 80% 6400
7 Rent for factory 60000 x 80% 48000
8Electricity for factory 90000 x 88% 79200
9Miscellenoeuse For factory 5450
Total Factory Overhead 150000
Total Manufacturing Cost (210000 + 22500 +150000 ) 382500
Add Work in Process Beginning balance 22500
Less Work in Process Ending Balance 5000
Cost of goods Manufacturing 400000

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 Unit Per unit Amount

CGM 20000 400000

FG BB 5000 18 90000

CGM 20000 20 400000

Available For sale 25000 490000

FG EB 3000 20 FIFO method 60000

CGS 22000 430000

Sales Revenue 22000 36 792000

25
 Sales Revenue 792000
Less Cost of goods Sold 430000
Gross Profit 362000
Less Operating Expense or Period Cost
1.Advertising Expense 18900
2.Insurance Exp 8000 x 20 % 1600
3.Rent 60000 x 20 % 12000
4.Sales Commission 80000
5.Electricity 90000 x 12% 10800
Total operating Expese 123300
Net Operating Income 238700
Less Interest Exp 2900
Net Income 235800

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Question 6
Blue Sky Company has its income statement for the most recent month as follows:
Blue Sky Company
Income Statement
For one month ended March 31,2010
Sales revenues ($ 220 per unit sold)
$107,800
Less Operating expenses
Entertainment and travel 1,250
Selling and administrative salaries 7,000
Factory salaries and wages expenses 21,100
Office supplies expenses 200
Shipping cost on finished goods sold 1,800
Indirect materials used 1,700
Raw materials purchases (material only) 30,000
Purchase return and allowance ( raw materials purchases ) 300
Depreciations – Machinery 1,200
Depreciations – Office equipment 700
Utilities 12,500
Advertising 3,500
Other manufacturing overhead 4,000
Other selling administrative expenses 1,000 (
86,250 )
Net operating income
$ 21,550
The above income statement is an incorrect statement for a manufacturing firm. You are
required to reprepare a correct income statement with the following supporting information.
a. Utilities be apportioned 80% to manufacturing, and the remain is for selling and administrative
expenses.
b. Factory salaries and wages expenses $21,100 are distributed as follows:
Direct laborers’ wages expense
Normal labor 120 hours @ $ 60
Idle hour 10 hour @ $ 60
Overtime hour 30 hours @ $ 90
Fringe benefits 160 hours @ $ 35 $ 16,100
Supervisory salaries $ 5,000 $ 21,100
The company treats part of the fringe benefits relating to direct labor as added direct labor cost, and the
remaining balance as part of manufacturing overhead.

27
c. Inventory account balances of the month.
March 1 March 31
Raw materials (material only) $ 6,000 $ 4,500
Work in process $ 6,850 $ 4,350
Finished goods 145 unit @ 155 55 unit
d. First-in, First-out (FIFO) inventory method I used.
Required: (Abbreviations are not allowed)
Prepare the following for Blue Sky Company for the month ended March 31,2010:
1. Affected schedule of cost of good manufactured. 2. Affected schedule income statement.

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 Raw Material beginning 6000
Add Net Purchase Raw material 29700
Raw material Available For use 35700
Less Raw material Ending Balance 4500
Raw material Used 31200
Less Indirect material used 1700

Direct
1. material Used 29500
Direct Labor 14250
Total Overhead :
1.Indirect Material 1700
2.Idle time cost for factory 600
3.Overtime Premium For Factory 900
4Indirect Labor 5000
5.Fringe Benefit 10 x 35 350
6.Depreciation for Factory 1200
7.Utility for factory 12500 x 80% 10000
8.Other MOH 4000
Total Factory Overhead 23750
Total Manufacturing Cost (29500 + 14250 +23750) 67500
Add Work in Process Beginning balance 6850
Less Work in Process Ending Balance 4350
Cost of goods Manufacturing 70000

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 Unit Per unit Amount

CGM 400 175 70000

FG BB 145 155 22475

CGM 400 175 70000

Available For sales 545 92475

FG EB 55 175 FIFO method 9625

Cogs 490 82850

Sales Revenue 490 220 107800

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 Sales Revenue 107800
Less Cost of goods Sold 82850
Gross Profit 24950
Less Operating Expense or Period Cost
1.Entertainment and Travel 1250
2.S&A Salary 7000
3.Office supplies Exp 200
4.Shipping cost on FG Sold 1800
5.Depreciation Office equipment 700
6. Utility 12500 x 20% 2500
7. Advertising 3500
8. Other S&A 1000
Total operating Expese 17950
Net Operating Income 7000

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