Cost Accounting Chapter 3
Cost Accounting Chapter 3
Valleydale Company incurred the following costs during the month: Direct Labor, P120,000; Factory
Overhead, P108,000; and Direct Materials Purchases, P160,000. Inventories were costed as follows:
Beginning Ending
Finished Goods 27,000 26,000
Work in Process 61,500 57,500
Direct Materials 37,500 43,500
Required:
1. Calculate the costs of goods manufactured
= Direct Materials Used + Direct Labor Used + WIP, beg – WIP, end
= 154 000 = 120 000 = 108 000 = 61 500 – 57 500
= 386 000
2. Calculate the cost of goods sold
= COGM + Finished goods, beg – Finished goods, end
= 386 000 + 27 000 – 26 000
= 387 000
Problem 2
For July, Beerton Company had cost of goods manufactured equal to P50,000; direct materials used,
P16,000; cost of goods sold, P60,000; direct labor, P24,000; purchases of materials, P25,00; cost of
goods available for sale, P70,000.. Work in process was P15,000 on July 1 and P25,000 on July 31.
Compute the following:
1. Finished goods, ending
= Goods avail. for sale – COGS
= 70 000 – 60 000
= 10 000
2. Finished goods, beginning
= Goods avail. for sale- COGM
= 70 000 – 50 000
= 20 000
3. Total manufacturing cost
= Goods put into process – WIP, beg
= 75 000 – 15 000
= 60 000
*FOH = MC – DMU – DL
= 60 000 – 16 000 – 24 000
= 20 000
Problem 3
Merton Company’s purchases of materials during March totaled P110,000 and the cost of goods sold for
March was P345,000. Factory overhead was 50% of direct labor cost. Other information pertaining to
Merton Company’s inventories and production for March is as follows:
Beginning Ending
Finished Goods 102,000 105,000
Work in Process 50,000 46,000
Direct Materials 20,000 26,000
Required:
1. Prepare a schedule of cost of goods manufactured
Merton Company
Cost of Goods Sold Statement
For the month of March
The data given are available from the records of Quicksilver Company
A B
Direct materials used 41,500 (g) 55 000
Direct labor 15,000 20,000
Manufacturing overhead 30,000 25,000
Total manufacturing costs (a) 86 500 100,000
Work in process, beg 5,000 (h) 15 000
Work in process, end (b) 12 500 10,000
Sales 112,500 (i) 148 500
Sales discounts 7,500 6,000
Cost of goods manufactured 79,000 105,000
Finished goods, beg (j) 7 500 20,000
Goods available for sale 86,500 (j) 125 000
Cost of goods sold (k) 80 500 (k) 112 500
Finished goods, end 6,000 12,500
Gross profit (e) 24 500 30,000
Operating expense 13,500 (l) 14 000
Net income (m) 18 500 16,000
Problem 5
Bayo Dress Shop makes evening dresses. The following information has been gathered from the
company records of 2016, the first year of company operations. Work in Process Inventory at the end of
the year was P100,000.
Raw materials purchased on account, of which only 75% were paid P2,350,000
Raw materials issued to production, of which 25% is indirect materials 1,940,000
Accrued factory payroll, (80% is direct labor) 1,350,000
Depreciation of sewing and computer equipment 80,000
Utilities paid 320,000
Factory insurance expired 17,500
Factory rent including P50,000 deposit 960,000