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Cost Flow
Cost Flow
The insurance company wants to know the approximate cost of the inventories as
a basis for negotiating a settlement.
Compute for the Feb 20, 2022: (1) direct materials inventory, (2) work in process
inventory (3) finished goods inventory
The records of the Eunice Equipment Company show the following
information for the three months ended June 30, 2022.
Materials Purchased P 1,946,700
Inventories: April 1, 2022
Finished goods (100 equipment) P 43,000
Materials P 268,000
Direct Labor P 2,125,800
Factory Overhead (40% variable) P 764,000
Marketing Expenses (all fixed) P 516,000
General and Administrative expenses (all fixed) P 461,000
Sales (12,400 equipment) P 6,634,000
Compute for (1) unit cost for each equipment manufactured, (2) gross profit
per unit sold (3) income per unit sold
SYSTEM of COST ACCUMULATION
Compute for (1) Direct Materials Used (2) Work In Process Inventory Dec 31, 2022
BEGINNING BALANCE:
JenJen Printers, Inc. shows the balances on June 1, 2022
Materials P 50,000
Work In Process P 40,000
Finished Goods P 30,000
RAW MATERIALS PURCHASED:
Additional raw materials were purchased during the month of June at a cost of P 86,900
on account.
Materials P 86,900
Accounts Payable P 86,900
RAW MATERIALS USED:
During the month, raw materials costing P 90,400 were used as follows:
Direct Materials chargeable to WIP P 84,600
Indirect Materials chargeable to FO P 5,800
Total P 90,400
Work in Process P 84,600
Factory Overhead P 5,800
Materials P 90,400
FACTORY WAGES EARNED:
During the month, wages and salaries totaling P102,300 were earned by the factory
employees and charged from the factory payroll, deductions were recorded as follows:
Withholding Tax P1,300; SSS Contribution P200; Pag-ibig Contribution P300
Factory Payroll P 102,300
Withholding Taxes Payable P 1,300
SSS Contribution Payable P 200
Pag-ibig Contribution Payable P 300
Accrued Salaries/Wages Payable P 100,500
LABOR CHARGED TO PRODUCTION:
An analysis of the records indicates that labor costs of P 102,300 should be allocated as:
Direct Labor chargeable to WIP P 66,500
Indirect Labor chargeable to FO P 35,800
Total P 102,300
Work in Process P 66,500
Factory Overhead P 35,800
Factory Payroll P 102,300
MANUFACTURING OVERHEAD COSTS:
In addition to the indirect materials, indirect labor and other overhead costs, such as
utilities, insurance and depreciation totaling P 23,500 were incurred during the month.
Factory Overhead P 23,500
Accounts Payable/Other Accounts P 23,500
MANUFACTURING OVERHEAD APPLIED TO PRODUCTS:
It is estimated that 80% of the direct labor costs is chargeable to jobs worked on during
the month of June.
Work In Process P 53,200
Factory Overhead P 53,200
(Direct Labor 66,500 x 80%)
Compute for (1) Manufacturing Costs (2) Actual Factory Overhead (3) Materials Inventory Dec 31, 2022 (4)
Work in Process, Dec 31, 2022 (5) Over/Under applied factory overhead
Joshua Manufacturing Company presented the following data:
1. Cost of goods manufactured, and cost of goods sold were P375,000 and P300,000
respectively.
2. Purchases of raw materials amounted to twice as much net income before tax
3. Gross margin based on sales was 40%. There were no purchase returns but sales return
amounted to P 10,000
4. Inventory valuation were as follows:
- Raw Materials – On hand at end of the period was one third as much as at start.
- Work In Process – No beginning inventory, but P25,000 was on hand at end of period.
- Finished Goods – End of period was four times as large as at start.
5. Breakdowns of costs incurred in manufacturing was as follows:
Raw Materials 50%
Direct Labor 30%
Manufacturing Overhead 20%
6. Selling expense amounted to four times as much as general expenses
7. Net income after taxes amounted to P52,000. Income tax rate is 35%
Prepare the Cost of Goods Manufactured Statement and the Statement of Comprehensive Income
Madtack Company’s beginning and ending inventories for the month of November are:
Nov 1 Nov 30
Direct Materials P67,000 P62,000
Work in process 145,000 171,000
Finished goods 85,000 78,000
Madtack uses one overhead control account and charges overhead to production at 70% of direct
labor cost. The company does not formally recognize over/underapplied overhead until year-end.
Compute for the (1) Prime Cost (2) Total Manufacturing Cost (3) Cost of goods transferred
to finished goods (4) Cost of goods sold.
The following information below pertains to the 2022 operation of Hobi Company:
Jan 1 Dec 31
Finished Goods P80,000 P?
Work In Process 20,000 ?
Materials 15,000 23,000
Accounts Payable 7,000 5,000
Accrued Payroll 11,000 14,000
Accounts Receivable 45,000 65,000
1. All Sales were on account, with a mark-up equal to 28% of the sales price.
2. The accounts payable account was used for materials purchases only.
3. Factory Overhead was applied at 150% direct labor cost.
4. Miscellaneous factory overhead cost totaled P 60,000.
5. Direct Materials issued to production cost, P 80,000
6. Payment of accounts payable totaled P 102,000
7. There was only one job in process at the end of the period, with charges to date of materials costing
P10,000 and direct labor P8,000.
8. Collection of accounts received totaled P480,000.
9. Cost of goods manufactured was P320,000
10. Payrolls totaling P172,000 were paid in cash.
Prepare the Statement of Cost of Goods Manufacture and Sold