NAME:___________________________________ SECTION:______ XINTEGMAS – MODULE 02

EXERCISE 01: The following cost data were taken from the records of 9. Estimated total cost at 90 units ___________
a manufacturing company: 10. Estimated total cost at 120 units ___________
Depreciation on factory equipment P1,000
Depreciation on sales office 500 EXERCISE 05: Goljess Company is a manufacturing company whose
Advertising 7,000 total factory overhead costs fluctuate considerably from year to year
Freight-in (shipping) 3,000 according to increases and decreases in the number of direct labor-
Wages of production workers 28,000 hours worked in the factory. Total factory overhead costs at high and
Raw materials used 47,000 low levels of activity for recent years are given below:
Sales salaries and commissions 10,000 LOW HIGH
Factory rent 2,000 Direct labor hours 50,000 75,000
Factory insurance 500 Total factory overhead costs P14,250,000 P17,625,000
Materials handling 1,500
Administrative salaries 2,000 The factory overhead costs above consist of indirect materials, rent,
and maintenance. The company has analyzed these costs at the
Based upon the above information, what was the manufacturing 50,000-hour level of activity as follows:
costs incurred during the year? _______________
Indirect materials (Variable) P5,000,000
EXERCISE 02: The following data pertains to Ashborn Co.'s Rent (Fixed) 6,000,000
manufacturing operations: Maintenance (Mixed) 3,250,000
Direct material purchase P50,000 Total overhead costs P14,250,000
Ending direct materials inventory 35,000
Beginning work in process inventory 90,000 To have data available for planning, the company wants to break
Ending work in process inventory 110,000 down the maintenance cost into its variable and fixed cost elements.
Cost of goods manufactured 120,000
Conversion costs 100,000 Required:
1. Estimate how much of the P17,625,000 factory overhead
Identify the following: cost at the high level of activity consists of maintenance cost.
1. Prime cost incurred ___________ ___________
2. Total production costs ___________ 2. By means of the high-low method, estimate a cost formula
3. Direct materials used ___________ for maintenance. _____________________
4. Beginning direct materials inventory ___________ 3. Express the company’s total overhead costs in the linear
5. Materials available for production ___________ equation form Y = a + bX. _____________________
4. What total overhead costs would you expect to be incurred
EXERCISE 03: The following data pertains to Lam Co.'s manufacturing at an operating activity level of 70,000 direct labor hours?
operations: ___________
Inventories April 1 April 30
Direct materials P18,000 P15,000 EXERCISE 06: For a simple regression analysis model that is used to
Work-in-process 9,000 6,000 allocate factory overhead, an internal auditor finds that the
Finished goods 27,000 36,000 intersection of the line of best fit for the overhead allocation with the
Additional information for the month of April: y-axis is P5,000 The slope of the trend line is 20. The independent
Direct materials purchases P42,000 variable, factory wages, amounts to P900,000 for the month. What is
Direct labor payroll 30,000 the estimated amount of factory overhead to be allocated for the
Direct labor rate per hour P7.50 month? __________
Factory overhead rate per direct labor hour 10.00
EXERCISE 07: If the coefficient of correlation between two variables is
1. Prime cost incurred was ___________ -0.97, how might a scatter diagram of these variables appear? _____
2. Conversion cost incurred was ___________ a. A least squares lines that slopes up to the right.
3. Cost of goods manufactured was ___________ b. A least squares lines that slopes down to the right.
c. A least squares lines that slopes down to the left.
EXERCISE 04: A cost accountant has compiled the actual costs for six d. Random points
different levels of activity. This cost data is shown below:
Observation Units Cost EXERCISE 08: What coefficient of correlation results from the
H 20 P200 following data? _____
I 40 200 X Y
J 60 600 2 4
K 80 800 4 8
L 100 1,000 6 12
M 100 1,200 8 16
10 20
Using the high-low point method with relevant range of 40 to 100
units, identify the following: EXERCISE 09: The coefficient of correlation that indicates the
1. Rate of variable cost per unit ___________ strongest linear association between the dependent and
2. Estimated annual fixed cost ___________ independent variables is: _____
3. Linear cost function equation _____________________ a. -0.09 b. 0.50 c. -0.90 d.0.05
4. Estimated total cost at 90 units ___________
5. Estimated total cost at 120 units ___________ EXERCISE 10: Company A manufactures product X. The worker needs
to spend 9 hours per unit during the trial period. Based on past
Using the least-squares method with relevant range of 20 to 80 units, experience, the workers will improve their speed for 85% which
identify the following: means the accumulative time will decrease by 15% every time the
6. Rate of variable cost per unit ___________ output double. Calculate the average workers’ time spent per unit on
7. Estimated annual fixed cost ___________ the 8th unit. __________
8. Linear cost function equation _____________________