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Problem For Chapter 3

The manufacturing costs for July at the Palmer Company are missing. Work in process was $185,000 on July 31. Materials purchased was $160,000 and overhead of $125,000 was applied at 75% of direct labor. Cost

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Clarisse Angela Postre
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446 views3 pages

Problem For Chapter 3

The manufacturing costs for July at the Palmer Company are missing. Work in process was $185,000 on July 31. Materials purchased was $160,000 and overhead of $125,000 was applied at 75% of direct labor. Cost

Uploaded by

Clarisse Angela Postre
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© © All Rights Reserved
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Problem 2: Following are the three months incomplete cost of goods sold statement of Kulang Kulang Company:

March April May


Direct Material Beg 95,000 L ? 50,000
Add Net Purchases A  ? 170,000  W ?
Total available for use B ? M ? 200,000
Less Direct Material End  C  ?  N  ?  X ?
Direct Materials Used 150,000 O ? 140,000
Direct Labor D ? 175,000 Y ?
Factory Overhead  E  ? P  ?  Z ?
Total Manufacturing Cost 300,000 462,500 AA ?
Add Work in Process Beg  F  ?  Q  ? 37,500
Total goods put into process G ? R ? BB ?
Less Work in Process end  H  ?  S  ? 20,000
Cost of Goods Manufactured I ? 440,000 CC ?
Add Finished Goods Beg 30,000 T  ? 25,000
Total goods available for sale J ? 475,000 DD ?
Less Finished Goods end K ? U ? 30,000
Cost of Goods Sold 300,000 V ? 332,500
Overhead is approximately equal to 60% of Labor Cost

Problem 3: The Palmer Company had the following inventories at the beginning and end of July:
July 1 July 31
Work in process.............................. ? 185,000
Finished goods..................................... 65,000 115,000
During July, the cost of materials purchased was P160,000 and factory overhead of P125,000 was applied at
a rate of 75% of direct labor cost. July cost of goods sold was P240,000. The material inventory at July 31
increased by P25,000, which also represent 125% percent of materials inventory at July 1.
1. How much was the cost work in process in July 1?
2. How much would be the total manufacturing cost for July?

Problem 4: On January 31, 2013, the general ledger accounts of KK Manufacturing Company are incomplete because the
accountant had to undergo an emergency operation on ulcer. The treasurer, an old friend of yours, supplied with the following
information:
 Material s inventory January 1, 2013 and the purchases for the month were P30,000 and P70,000 respectively.
 During the month the work in process account was debited for P40,000 for the requisitioned of direct materials and
credited for P80,000 for the units completed for the month. Work in Process January 1, 2013 balance is P2,000.
 The finished goods inventory balance as of January 1 was P20,000 and a credit entry of P60,000 to this account was
made during the month.
 The accrued payroll account balance for January 1, 2013 was 2,000, while the gross factory payroll for the month was
P80,000.
 Applied factory overhead is credited for all indirect costs that are applied to the production orders.
 Time tickets for the month totaled 11,000 direct labor hours. All factory workers receive P6 per hour.
 Indirect costs are applied at a rate of P4 per direct labor hour.
After giving you a few minutes to look over the above data, your old friend asks you the following:
1) Materials January 31, balance, 2) Total direct labor cost during the month, 3) Total overhead charge to production, 4)
January 31, balance of Work in process and 5) January 31, balance of Finished Goods account.

Problem 5: Peña Manufacturing Company presented the following data:


 Cost of goods manufactured and cost of goods sold were P375,000 and P300,000 respectively.
 Purchases of raw materials amounted twice as much as net income before taxes.
 Gross margin based on sales was 40%. There were no purchases returns but sales returns amounted to P10,000.
 Inventory valuations were as follows:
o Raw Materials – on hand at end of period was 1/3 as large as at start.
o Work in process – No beginning inventory, but P25,000 was on hand at the end of period.
o Finished goods – End of period was four times as large as at start.
 Breakdown of cost incurred in manufacturing was as follows:
o Raw materials 50%
o Direct Labor 30%
o Manufacturing Overhead 20%
 Selling expenses amounted to four times larger than general expenses.
 Net income after taxes amounted to P52,000. Income tax rate is 35%
Required:
1. Cost of goods Sold statement
2. Income statement.

Problem 2. A certain company incurred a total manufacturing cost of P130,000, distributed as follows: Direct
Materials – P60,000, Direct Labor –P40,000, and factory overhead P30,000. At the end of the period it was
determined that the work in process increased by P20,000, while the finished goods decreased by P8,000.
How much would be the cost of goods sold for the period?
Problem 3. The cost of goods manufactured of XXX Corporation for the month was P105,000, while the raw
materials used was P50,000. At the end of the month work in process decreased by P20,000, while finished
goods increased by P15,000. Labor cost was determined to be 50% of raw materials used. How much would
be the cost of goods sold and the factory overhead for the month?
TMC 130,000
Increase in WIP (20,000)
Decrease in FG 8,000
COGS 2 pts 118,000

DM 50,000
DL 25,000
FOH 2 pts 10,000
TMC 85,000
Dec in WIP 20,000
COGM 105,000
Inc. in FG (15,000)
COGS 1 pt 90,000
You are asked to bring the following incomplete accounts of SYM Company updated through May 2015.
Direct Materials Accounts Payable
| 5/31/15 P20,000 | 4/30/15 P 10,000
| |
Work in Process Factory overhead control
4/30/15 P2,000| P55,000 |
| |
Finished Goods Cost of Goods Sold
4/30/15 P25,000| |
| |
Additional information:
(a) The overhead is applied by using a budgeted rate that is set at the beginning of each year by forecasting the years overhead and relating it to
forecasted machine hours. The budget for 2015 called for a total of 15,000 machine hours and P750,000 of factory overhead.
(b) The accounts payable is for direct materials purchases only. The balance on May 31, was P12,000. Payment of P78,000 were made during
May.
(c) The finished goods inventory as of May 31 was P7,000.
(d) The cost of goods sold during the month was P165,000.
(e) On May 31, there was only one unfinished Job in the factory. Cost record shows that P1,000 (40 hours) of direct labor and P2,000 of direct
materials had been charged to Job. Thirty machine hours were used on that Job.
(f) Total of 940 direct labor hours were worked during the month of May. All factory workers earn the same rate of pay.
(g) All ‘actual” overhead incurred during May has already been posted.
(h) A total of 1,000 machine hours was used during May.
Required:
1) Cost of Goods Sold Statement
2) Compute for the under/over applied overhead
3) Prepare all necessary journal entries

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