Raw materials, beg.

Net materials purchased

Less: Raw materials, end
Indirect raw materials used
Direct materials used
Work in process, beg.
Add: Total manufacturing costs
Direct materials 1,600
Direct labor 48,000
Factory overhead-applied 700
Total cost of goods put into process
Less: Work in process, end
Cost of goods manufactured
Finished goods, beg.
Add: Total cost of goods manufactured
Total cost of goods available for sale
Less: Finished goods, end
Cost of goods sold
Less: Over-applied factory overhead
Actual COGS

A B C
Direct materials 29,250 36,000 22,500
Direct labor 58,500 18,000 31,500
Factory overhead 32,500 24,000 36,000
Total manufacturing costs 120,250 78,000 90,000
Work in process, beg. 16,250 12,000 13,500
Work in process, ending 19,500 6,000 18,000
Cost of goods manufactured 117,000 84,000 85,500
Finished goods,beg. 6,500 15,000 18,000
Total goods available for sale 123,500 99,000 103,500
Finished goods, ending 13,000 9,000 18,000
Cost of goods sold 110,500 90,000 85,500
Sales 195,000 126,000 162,000
Gross profit 84,500 36,000 76,500
OPEX 58,500 21,000 54,000
Net operating income 26,000 15,000 22,500
 7400000 0.451219512
9000000 0.548780488
16400000
 25,000 Raw materials inventory, beg.
240,000 Add: Net raw materials purchases
Total raw materials available for use
- Less: Raw materials, end
180,000 Indirect raw materials used
70,000 Direct materials used
840,000 Direct labor
Factory overhead-applied
Total Manufacturing Costs
Add: Work In process, beg.
910,000 Total cost of goods put into process
- Less: Work in process, end
909,500 Cost of goods manufactured
320,000 Add: finished goods, beg.
2,000,000 Total goods available for sale
2,320,000 Less: Finished goods, end
- 140,000 Cost of goods sold
207,500
- 232,000
- 24,500

Gross margin 207500

D
22,500
30,000
67,500
120,000
33,750
22,500
131,250
26,250
157,500
26,250
131,250
300,000
168,750
101,250
67,500
 25,000
240,000
265,000
85,000
-
180,000
660,000

840,000
70,000
910,000
190,000
720,000
320,000
1,040,000
210,000
830,000
Problem 17 Variable cost per unit 12
Number of Mufflers replacements 800 1,000
Total costs:
Fixed cost 18,000 18,000
variable cost 9,600 12,000
Total cost 27,600 30,000

Cost per muffler replacement

Fixed cost 23 18
Variable cost 12 12
Total cost per muffler replacement 35 30

Number of muffler replacement 480

x service fee @50 50
Total sales 24,000
Less: Variable cost 5,760
Fixed cost 18,000
Total income 240

Problem 19
Variable cost per unit 0.40

Units produced 800,000 960,000 1,200,000

TOTAL Production Costs
Total variable cost 320,000 384,000 480,000
Total fixed cost 480,000 480,000 480,000
Total costs 800,000 864,000 960,000

TOTAL cost per unit

Variable cost per unit 0.40 0.40 0.40
Fixed cost per unit 0.60 0.50 0.40
Total cost per unit 1.00 0.90 0.80

Production volume 1,000 units 2,000 units

DM 4.00 per unit 4.00 per unit
DL 3.5 per unit 3.5 per unit
FOH 10.00 per unit 6.2 per unit

Total variable manufacturing cost

DM 4.00
 DL 3.50
FOH 2.40
TOTAL Variable cost p 9.90

Average cost
Units Produced per unit TOTAL Manufacturing cost
FOH High level of activity 2,000 6.20 12,400
Low level of activity 1,000 10.00 10,000

Units Produced Overhead Cost

High level of activity 2,000 12,400
Low level of activity 1,000 10,000
Difference/Change 2,400 1,000
Variablec cost per uni 2.40
Fixed cost 7,600 7,600
 1,200

18,000
14,400 Total overhead cost
32,400 Less: Utilities (variable)
supervisory salaries (fixed)
A. Maintenance cost
15
12 B. Variable cost per unit
27
High level of activity
Low level of activity
Difference/Change
Variablec cost per unit
Fixed cost

y = a + bx
y = 27,000 + 1.60x

y = a + bx
C. y = (63,000+27,000) + (1.60+ 0.80)x
y = 90,000 + 2.40x
Total factory overhead costs = 90,000 + (2.40* 225,000)
D. 630,000

Least Square regression

Level of Act. Total Cost
Period X Y XY
1 2,250 19,000 42,750,000
2 5,500 26,000 143,000,000
3 6,000 28,000 168,000,000
4 2,750 20,000 55,000,000
5 4,500 23,500 105,750,000
6 5,250 26,000 136,500,000
7 3,750 22,000 82,500,000
8 2,500 20,500 51,250,000
9 5,750 26,000 149,500,000
10 3,000 21,500 64,500,000
11 4,250 24,000 102,000,000
12 5,000 25,000 125,000,000
 13 3,250 22,000 71,500,000
14 4,750 24,000 114,000,000
15 4,000 23,000 92,000,000
62,500 350,500 1,503,250,000
4166.667

1 350,500 = 15a + 62500b

4,167(350,500=15a + 62500b)
1,460,533,500 = 62,505a + 260,437,500b

2 1,503,250,000= 62500a +281,250,000b

1,503,250,000= 62500a +281,250,000b
1,503,250,000= 62500a +281,250,000b

Equation 1 1,460,533,500 = 62,505a + 260,437,500b

Less: Equation 2 1,503,250,000= 62500a +281,250,000b

42,716,500 = 20,812,500b

42,716,500/20,812,500
b = 2.05

Substitute
350,500 = 15a + 62500b
350,500 = 15a + 62,500(2.05)
350,000 = 15a + 128,125
350,500 - 128,125 = 15a
222,375 = 15a
222,375/15
a 14,825

y = 14,825 + 2.05x
 738,000
216,000
63,000
459,000

Machine hours Overhead Costs

1,680 1,074
1,300 903
380 171
0.45
318 318
High Low

180,000
Variable cost 144,000 0.8

.40* 225,000)

x2
5,062,500
30,250,000
36,000,000
7,562,500
20,250,000
27,562,500
14,062,500
6,250,000
33,062,500
9,000,000
18,062,500
25,000,000
 10,562,500
22,562,500
16,000,000
281,250,000

260,437,500b
81,250,000b
Formula: Economic quantity order per unit (EQO)

2QO
EOQ =
C

where;
Q = desired annual quantity in units
O = Cost per order
C = Carrying cost per order

No. of orders per year =

Annual ordering cost =
Average inventory =
Annual carrying cost =
Total ordering and carrying cost =

Illustration 1
The company is engaged in the sale of toys. The cost per order is P1,000and its carrying cost per unit is P25.
The company has a demand of 50,000 units per year.

Order size (EOQ) 2,000

Cost per order 1,000
Carrying cost per order 25
Annual demand units 50,000

Average
Order size (EOQ) # of orders Ordering cost Total ordering cost inventory

2,000 25 1,000 25,000 1,000

Order Point Safety Stock

Usage 10,000 Max daily usage 12,000

x Lead time 6 Less: Ave daily usage - 10,000
TOTAL 60,000 TOTAL 2,000
Add: Safety stock 12,000 x lead time 6
Order Point 72,000 Safety Stock 12,000

Absolute maximum inventory Average Inventory (Add safety stock)

Order Point 72,000 EOQ 100,000

Less: Min. use x lead time 48,000 Divide: 2 2
TOTAL 24,000 TOTAL 50,000
Add: EOQ 100,000 Add: Safety stock 12,000

TOTAL Average
Inventory
Absolute maximum inven 124,000 62,000

Order size # of orders Order cost Average inventory Carrying cost

100 200.00 4,000.00 50.00 250.00
200 100.00 2,000.00 100.00 500.00
300 66.67 1,333.33 150.00 750.00
400 50.00 1,000.00 200.00 1,000.00
500 40.00 800.00 250.00 1,250.00
600 33.33 666.67 300.00 1,500.00
700 28.57 571.43 350.00 1,750.00
800 25.00 500.00 400.00 2,000.00
 Annual quantity/EOQ
# of orders x cost per order
EOQ/2
Average inventory x carrying cost per order
Annual ordering + Annual carrying cost

g cost per unit is P25.

Carrying cost per

unit Total carrying cost Total CC and OC

25 25,000 50,000

Reorder Point Normal maximun inventory

Lead time 6 Order point

x normal use/day Less: Ave use x lead time
Add: safety stock TOTAL
Reorder Point Add: Order quantity (EOQ)
Normal maximun inventory
TOTAL OC and CC
4,250.00
2,500.00
2,083.33
2,000.00
2,050.00
2,166.67
2,321.43
2,500.00
 72,000
60,000
12,000
100,000
112,000
Problem 5

Hours Worker
Employee Name Hourly Rate
Sun Mon Tue Wed Thu
Brian 900 6 8 8 8 8
Chris 950 0 8 7 10 9
Regie 750 1 8 9 8 10
Tom 900 5 8 10 8 8
Jack 1,000 9 8 8 6 7

In excess of 40 is one and half times the regular rate

The regular rate for hours worked on Sunday is twice the regular rate.

Brian Chris

Regular wages 36,000 Regular wages 38,000

Double pay 10,800 Double pay
46,800 38,000

Overtime pay&premium 10,800 Overtime pay&premi 12,825

TOTAL Gross Earnings 57,600 TOTAL Gross Earnings 50,825

Tom Jack

Regular wages 31,500 Regular wages

Double pay 9,000 Double pay
40,500

Overtime pay&premium 21,600 Overtime pay&premium

TOTAL Gross Earnings 62,100 TOTAL Gross Earnings
ker
Fri Sat TOTAL
8 8 54
7 8 49
9 8 53
9 8 56
10 8 56

Regie

Regular wages 29,250

Double pay 1,500
30,750

Overtime pay&premi 14,625

TOTAL Gross Earnings 45,375

31,000
18,000
49,000

24,000
73,000
Problem 19
Service used by
Department Cost Personnel Security Maintenance Cutting
Personnel 1,000,000 100,000.00 100,000.00 300,000.00
Security 400,000 40,000.00 40,000.00 120,000.00
Maintenance 100,000 10,000.00 10,000.00 40,000.00
Cutting 800,000
Sewing 1,200,000
Finishing 600,000

A. Direct Method
Personnel Security Maintenance Cutting Sewing
Direct costs 1,000,000 400,000 100,000 1,200,000
Personnel 375,000 500,000
Security 150,000 100,000
Maintenance 50,000 25,000
TOTAL Costs 575,000 1,825,000

B. Step Method
Personnel Security Maintenance Cutting Sewing
Direct costs 1,000,000 400,000 100,000 800,000 1,200,000
Personnel - 1,000,000.00 100,000.00 100,000.00 300,000.00 400,000.00
500,000
Security - 500,000.00 55,555.56 166,666.67 111,111.11
255,555.56
Maintenance - 255,555.56 127,777.78 63,888.89
TOTAL FOH - - - 1,394,444 1,775,000
Direct labor hours 40000 60000
FOH Rate 34.86 29.58

C. Reciprocal Method
A B C
Personnel Security Maintenance

where;
A = 1,000,000 + 10%B + 10%C
B = 400,000 + 10%A + 10% C
C = 100,000 + 10%A +10%B

B = 400,000 + 10%A +10%C

B = 400,000 + 10% (1,000,000 + 10%B + 10%C) + 10%C
C = 100,000 + 10% (1,000,000 + 10%B +10%C) + 10%B
B = 400,000 + 100,000 + 1%B +1%C + 10%C
B = 500,000 + 1%B + 11%C
99%B = 500,000 + 11%C C is unknown
C = 100,000 + 10%A + 10%B
C = 100,000 + 10% (1,000,000 + 10%B + 10%C) + 10%B
C = 100,000 + 100,000+1%B+1%C + 10%B
 C = 200,000 + 11%B + 1%C
100%C - 1%C = 200,000 + 11%B
99%C = 200,000 + 11%B
Divide both sides by 99% 200,000/99% 11%/99%
C= 202,020.20 11.11%B

99%B = 500,000 + 11%C

99%B = 500,000 + 11% (202,020.20 + 11.11%B) 1.2221
99%B = 500,000 + 22,222.22 + 1.22B
97.78%B = 522,222.22
B = 534,078.76 534,078.76

Compute for C
C = 202,020.20 + 11.11%(534,078.76)
C = 202,020.20 + 59,336.15
C = 261,356.35 262,356.35

Compute for A 1,079,543.50

A = 1,000,000 + 10%B + 10%C
A = 1,000,000 + 10%(534,078.76)+10%(261,356.35)
A = 1,000,000 + 53,407.87 + 26,135.63
A = 1,079,543.5

Personnel Security Maintenance Cutting Sewing

Direct costs 1,000,000 400,000 100,000 800,000 1,200,000
Personnel - 1,079,544 107,954 107,954 323,863 431,817
- 534,079
Security 53,408 - 53,408 160,224 106,816
- 262,356
Maintenance 26,236 26,236 - 104,943 52,471
TOTAL FOH 100 111 - 994 1,389,029 1,791,104
Direct labor hours 40000 60000
FOH Rate 34.73 29.85
 TOTAL
Sewing Finishing
400,000.00 100,000.00 800,000.00
80,000.00 120,000.00 320,000.00
20,000.00 20,000.00 80,000.00

Finishing
600,000
125,000
150,000
25,000
900,000

Finishing TOTAL
600,000
100,000.00 1,000,000

166,666.67 360,000

63,888.89 80,000.00
930,556
20000
46.53

%C) + 10%B
Finishing TOTAL
600,000
107,954 1,000,000

160,224 400,000

52,471 100,000
920,649
20000
46.03