1

Cost is the amount of a resource by which a company sacrificed to produced a product or render a service, for the
purpose of generating revenue. For a manufacturing business, common costs include raw materials used, labor costs,
and factory overhead)

2
Manufacturing costs, also known as product costs, are costs which are directly attributed to a product or service which
includes direct material, direct labor, and factory overhead.

Direct materials cost is a cost attributed to the materials which are easily traced or can be physically seen in a product.

Indirect materials cost is a cost attributed to the materials which are not seen physically on the product but are
relevant to complete the production of the said product.

Direct labor cost is a cost attributed to the wages and other benefits paid to the employees who are in the front-line or
the employees who are physically converting the raw materials into finished products.

Indirect labor cost is a cost attributed to the wages and other benefits paid to the employees who are not physically
converting the inputs into outputs but are necessary and have significant contribution to the production of products.

Factory overhead is a cost composed of the indirect material and indirect labor costs plus other costs such as the
depreciation expense of a factory equipment, supplies, and factory utilities which are necessary for the operation.

3 Purchased Materials 225,000.00

Office Supplies (10%) 22,500.00
Supplies used for January 450.00
Supplies used for Production 101,250.00
Direct materials 75,937.50
Indirect Materials 25,312.50

Depreciation- Office Machine 9,000.00

Salaries 150,000.00
Selling and Administrative Salaries 15,000.00
Direct Labor 105,000.00
Indirect Labor 30,000.00

Utilities 110,000.00
Selling and Administrative 27,500.00
Factory Overhead (Utilities) 82,500.00
Taxes 45,000.00
Selling and Administrative 30,000.00
Factory building 15,000.00

Other Factory Overhead (unpaid) 100,000.00

a service, for the
als used, labor costs,

oduct or service which

ally seen in a product.

roduct but are

are in the front-line or

o are not physically

duction of products.

osts such as the

or the operation.

A Payments associated to product cost

RM Inventory 101,250.00
Direct materials 75,937.50
Indirect materials 25,312.50
Direct labor 105,000.00
Indirect labor 30,000.00
Utilities 82,500.00
Taxes 15,000.00
Factory building rental 85,000.00
Total payments associated to product costs 520,000.00

B Total Manufacturing Cost

Direct Materials 75,937.50

Direct Labor 105,000.00
Factory Overhead
 Indirect Materials 25,312.50
Indirect Labor 30,000.00
Utilities paid 82,500.00
Taxes 15,000.00
Factory building rental 85,000.00
Other Factory Overhead 100,000.00
Total Factory Overhead 337,812.50
Total Manufacturing Cost 518,750.00

C Capitalizable costs

Raw Materials Inventory 101,250.00

Work in Process, end 15,000.00
Finished Goods, end 125,937.50
Office Supplies (unused) 22,050.00
Office Machine 540,000.00
Depreciation- office machine 9,000.00 531,000.00
Total Capitalizable costs 795,237.50

D Average cost of each unit completed in january

Total Manufacturing Costs 518,750.00

WIP, end 15,000
CGM 503,750.00
FG, beg (in units) 92
Average Cost per unit 5,475.54

E Costs to be inventoried as of the end of January

Raw Materials Inventory 101,250.00
Work in Process 15,000.00
Finished Goods, end 125,937.50
Total Inventoriable costs 242,187.50

F Expired costs as of the end of January

Manufacturing Costs
Direct Materials 75,937.50
Direct Labor 105,000.00
Factory Overhead
Indirect Materials 25,312.50
Indirect Labor 30,000.00
Utilities 82,500.00
Taxes 15,000.00
Factory Building rental 85,000.00
Other Factory Overhead 100,000.00 337,812.50
Total Expired Manufacturing Costs
Nonmanufacturing Costs
 Office Suppies 450.00
Depreciation- Office Machine 9,000.00
Salaries 15,000.00
Utilities 27,500.00
Taxes 30,000.00
Delivery 80,000.00
Total expired nonmanufacturing costs
Total Expired Costs

G Expired product costs as of the end of January?

Sale (in units) 69.00

Average Cost per unit 5,475.54
Total expired product cost 377,812.50
518,750.00
161,950.00
680,700.00
1 Raw Materials Inventory 110,000.00
Accounts Payable 110,000.00
To record purchase of materials

WIP Inventory 94,000.00

Factory Overhead Control 8,000.00
Raw Materials Inventory 102,000.00
To record issuance of indirect materials

Payroll 160,000.00
Salaries Payable 160,000.00
To record total payroll for the period

Work in Process Inventory 104,000.00

Factory Overhead Control 24,000.00
Salaries Expense 32,000.00
Payroll 160,000.00
To charge salaries to appropriate cost objects

Work in Process Inventory 78,000.00

Applied Factory Overhead 78,000.00
To record applied overhead costs

Fatory Overhead Control 48,840.00

Accumulated Depreciation 21,300.00
Prepaid Insurance 1,200.00
Cash 26,340.00
To record actual overhead costs

Accounts Payable 227,000.00

Insurance Payable 35,700.00
Cash 262,700.00
To record paid liabilities

Accounts Receivable 384,000.00

Sales 384,000.00
To record sales

Finished Goods Inventory 337,700.00

Work in Process Inventory 337,700.00
To record CGM

Cost of Goods Sold 323,700.00

Finished Goods Inventory 323,700.00
 To record unadjusted COS

Cost of Goods Sold 2,840.00

Factory Overhead Control 2,840.00
To close underapplied FOH
 RM Inventory WIP Inventory
beg 135,300.00 8,000.00 indirect mat beg 243,200.00
purchases 110,000.00 94,000.00 DM(squeeze) DM 94,000.00
102,000.00 DL 104,000.00
end 143,300.00 Applied FOH 78,000.00

end 181,500.00

FG Inventory FOH Control

beg 86,700.00 323,700.00 CGS Salary 24,000.00
CGM 337,700.00 indirect mat 8,000.00
actual FOH 48,840.00
end 100,700.00 80,840.00
2,840.00
WIP Inventory Statement of Cost of Goods Manufactured
337,700.00 CGM For the period ended January 31, 2022

WIP Inventory, beg

Manufaturing costs for the period
RM Inventory
Beg. Balance
Purchases
RM available
Ending balance
FOH Control Indirect Materials
78,000.00 Applied FOH Total RM used
Direct labor
Applied FOH
Total manufacturing costs for the period
2,840.00 closing entry Total costs to account for
WIP Inventory, end
Cost of Goods Manufactured

Statement of Cost of Goods Sold

For the period ended January 31, 2022

FG Inventory, beg
Cost of goods manufactured
Cost of goods available for sale
FG Inventory, end
Cost of goods sold- normal costing
Underapplied FOH
Cost of Goods Sold- actual costing
ost of Goods Manufactured
d ended January 31, 2022

243,200.00

135,300.00
110,000.00
245,300.00
- 143,300.00
- 8,000.00
94,000.00
104,000.00
78,000.00
276,000.00
519,200.00
- 181,500.00
337,700.00

t of Cost of Goods Sold

d ended January 31, 2022

86,700.00
337,700.00
424,400.00
- 100,700.00
323,700.00
2,840.00
326,540.00
1 a. Actual Costing
a Raw Materials Inventory 50,000.00
Accounts Payable 50,000.00
To record purchase of materials

b Work in Process Inventory 17,000.00

Raw Materials Inventory 17,000.00
To record issuance of direct materials

c Work in Process Inventory 38,000.00

Salaries Payable 38,000.00
To record direct labor cost

d Factory Overhead Control 28,000.00

Accounts Payable 16,000.00
Accumulated Depreciation 12,000.00
To record overhead costs

e Factory Overhead Control 2,500.00

Raw Materials and supplies 2,500.00
To record issuance of indirect materials

b. Normal Costing

a Raw Materials Inventory 50,000.00

Accounts Payable 50,000.00
To record purchase of materials

b Work in Process Inventory 17,000.00

Raw Materials Inventory 17,000.00
To record issuance of direct materials

c Work in Process Inventory 38,000.00

Salaries Payable 38,000.00
To record direct labor cost

d Work in Process Inventory 45,600.00

Factory Overhead Control 45,600.00
To record applied overhead costs

Factory Overhead Control 28,000.00

Accounts Payable 16,000.00
Accumulated Depreciation 12,000.00
To record actual overhead costs

e Factory Overhead Control 2,500.00

 Raw Materials and supplies 2,500.00
To record issuance of indirect materials

2 a. Actual Costing

Factory Overhead Control 815,500.00

Cash (property tax and insurance, repairs) 314,000.00
Raw Materials Inventory (indirect mat, lubrication) 148,000.00
Supplies 34,000.00
Salaries Payable (indirect labor, supervision) 181,000.00
Utilities Payable (power, heat and light) 101,500.00
Accumulated Depreciation 37,000.00
To charge overhead costs to production

Work in Process Inventory 815,500.00

Factory Overhead Control 815,500.00
To charge FOH to production

b. Normal Costing
Actual Direct Labor Hours 35,000
Applied cost
Indirect Materials 2 per hr 70,000.00
Supplies 1 per hr 35,000.00
Indirect Labor 79,000 fixed 79,000.00
Supervision 48,000 fixed 48,000.00
Lubrication 0.50 per hr + 8,000 fixed 25,500.00
Power 1.70 per hr + 6,000 fixed 65,500.00
Heat and Light 0.60 per hr + 16,000 fixed 37,000.00
Property tax and insurance 18,000 fixed 18,000.00
Repairs and maintenance 8 per hr + 24,000 fixed 304,000.00
Depreciation 73,000 fixed 73,000.00
Total Applied Cost 755,000.00

Journal Entry
Work in Process Inventory 755,000.00
Applied Factory Overhead 755,000.00
To charge applied overhead cost to production

3 a. Payroll 785,000.00
Salaries Payable 785,000.00
To record total payroll for the period
b Salaries Payable 785,000.00
Cash 639,775.00
Income tax payable 78,500.00
SSS Payable 47,100.00
Philhealth payable 7,850.00
Pag-ibig Payable 11,775.00

c Philhealth Payable (785,000 x 2%) 15,700.00

d 0

e Indirect labor 75,000.00

Payroll deductions (factory labor) 89,595.00
Income tax 54,300.00
SSS contribution 21,720.00
Philhealth contribution 5,430.00
Pag-ibig contributions 8,145.00 89,595.00
Total costs charged to FOH Control 164,595.00
 c . Overapplied/ under-applied Overhead

Factory Overhead Control

815,500.00

underapplied 60,500.00

Journal Entry
Cost of Goods Sold 60,500.00
Factory Overhead Control 60,500.00
To close underapplied FOH

50,000.00
Budgeted cost
100,000.00
50,000.00
79,000.00
48,000.00
33,000.00
91,000.00
46,000.00
18,000.00
424,000.00
73,000.00
962,000.00
actory Overhead Control
755,000.00
1 Hours(x) Maintenance Cost (y) 2 Month
High 800 9,800 Mar
Low 500 7,400 Apr
300 2,400 May
Jun
1.1) Variable rate per hour Jul
Total
y
b=
x Mean

2,400 𝑏= (∑▒ 〖𝑥𝑦

2.1)−𝑛 (𝑥 ̅)(𝑦 ̅) 〗 )/(∑▒ 〖𝑥 ^
b=
300

b= 8.00 per hour

b=

1.2) Fixed cost per month

b=
TVC = bX
= 8 x 500 hours b=
TVC = 4,000.00

TFC/ a = 7,400 - 4,000 2.2) 𝑎= 𝑦 ̅−𝑏𝑥 ̅

TFC = 3,400.00 per month
a=

a=
 Labor Hours (x) OH Cost (y) xy x^2 3
b=
600 5,000.00 3,000,000.00 360,000.00
650 5,400.00 3,510,000.00 422,500.00
450 4,350.00 1,957,500.00 202,500.00
b=
750 5,600.00 4,200,000.00 562,500.00
550 4,650.00 2,557,500.00 302,500.00
3,000 25,000.00 15,225,000.00 1,850,000.00 b=

600 5,000.00

−𝑛 (𝑥 ̅)(𝑦 ̅) 〗 )/(∑▒ 〖𝑥 ^2−𝑛 〖 (𝑥 ̅) 〗 ^2 〗 )

TVC =
=
TVC =

15,225,000 - 5(600)(5,000) TFC/ a =

1,850,000 - 5(600)^2 a =

225,000.00 3.1) Ingredients and Direct Labor ( P

50,000.00 Indirect Labor (8,000 + 0.6 x28
Other overhead cost (25,000 fi
4.5 per hour Budgeted Total Cost

𝑎= 𝑦 ̅−𝑏𝑥 ̅
3.2) Indirect Labor (8,000 + 0.6 x28
Other overhead cost (25,000 fi
Total Estimated Factory OH
5,000 - (4.5)(600) Estimated Production
Predetermined OH Rate
2,300.00 per month Actual Production
Total Applied Factory OH
 26,000 - 20,000
30,000 - 20,000

6,000
10,000

0.60 per hour

bX IDL cost equation = 8,000 + 0.6X

0.60 x 20,000
12,000.00

20,000 - 12,000
8,000.00 per month

ngredients and Direct Labor ( P1/unit x 28,000) 28,000.00

ndirect Labor (8,000 + 0.6 x28,000) 24,800.00
Other overhead cost (25,000 fixed) 25,000.00
Budgeted Total Cost 77,800.00

ndirect Labor (8,000 + 0.6 x28,000) 24,800.00

Other overhead cost (25,000 fixed) 25,000.00
Total Estimated Factory OH 49,800.00
Estimated Production 28,000.00
Predetermined OH Rate 1.78
Actual Production 27,500.00
Total Applied Factory OH 48,950.00
ABSORPTION COSTING

Sales 250,000 225,000 260,000

2020 2021 2022
Sales (P 125 per unit) 31,250,000.00 28,125,000.00 32,500,000.00
Less: Cost of Sales
DM (P 30/unit) 7,500,000.00 6,750,000.00 7,800,000.00
DL (P 28/unit) 7,000,000.00 6,300,000.00 7,280,000.00
Variable OH (P 6/unit) 1,500,000.00 1,350,000.00 1,560,000.00
Fixed OH (P 18/unit) 4,500,000.00 4,050,000.00 4,680,000.00
Gross Profit 10,750,000.00 9,675,000.00 11,180,000.00
Less: Operating Expenses
Variable S & A Exp. (P 6/unit) 1,500,000.00 1,350,000.00
Fixed S & A Exp. 1,200,000.00 1,200,000.00 1,200,000.00
Net Income 8,050,000.00 7,125,000.00 9,980,000.00

VARIABLE COSTING

Sales 250,000 225,000 260,000

2020 2021 2022
Sales (P 125 per unit) 31,250,000.00 28,125,000.00 32,500,000.00
Less: Variable Costs
DM (P 30/unit) 7,500,000.00 6,750,000.00 7,800,000.00
DL (P 28/unit) 7,000,000.00 6,300,000.00 7,280,000.00
Variable OH (P 6/unit) 1,500,000.00 1,350,000.00 1,560,000.00
Variable S & A Exp. (P 6/unit) 1,500,000.00 1,350,000.00 1,560,000.00
Contribution Margin 13,750,000.00 12,375,000.00 14,300,000.00
Less: Fixed Costs
Fixed OH 4,500,000.00 4,500,000.00 4,500,000.00
Fixed S & A Exp. 1,200,000.00 1,200,000.00 1,200,000.00
Net Income 8,050,000.00 6,675,000.00 8,600,000.00
1 Applied OH = Predetermined OH Rate x Actual Direct Labor Hours 2 WIP Inventory, beg
= 23.1 x 12,600 DM
Applied OH = 291,060.00 DL
Applied OH (20,000x1.5)
Total cost to account for
WIP Inventory, end

Cost of Goods Manufactured

FG Inventory, end

Cost of Goods Sold- normal

Underapplied FOH
Cost of Goods Sold- actual
 3 Journal entries
WIP Inventory, beg 11,900.00 a. Materials Inventory
26,000.00
20,000.00
Applied OH (20,000x1.5) 30,000.00 76,000.00 b. Work in process
Total cost to account for 87,900.00 Factory OH Control
WIP Inventory, end
DM 2,800.00
DL 1,800.00 c. Work in process
Applied OH (1,800 x 1.5) 2,700.00 Factory OH Control
Ending balance- Job 779 - 7,300.00 Office Salaries
Cost of Goods Manufactured 80,600.00
FG Inventory, end
Ending balance- Job 776 - 4,000.00 d. Factory OH Control
Cost of Goods Sold- normal 76,600.00
Underapplied FOH 2,000.00
Cost of Goods Sold- actual 78,600.00
e. Salaries Payable

f. Work in process

g. Finished goods

h. Cash

COS

i. COS
Journal entries
Materials Inventory 30,000.00 Materials Inventory
Accounts Payable 30,000.00 beg. 10,000.00
purch. 30,000.00
Work in process 15,000.00
Factory OH Control 1,500.00
Materials Inventory 16,500.00 Work in process
beg 1,000.00
Work in process 20,000.00 DM 15,000.00
Factory OH Control 3,500.00 DL 20,000.00
Office Salaries 5,000.00 Applied FOH 20,000.00
Salaries Payable 28,500.00

Factory OH Control 20,000.00 Finished goods

Accumulated Depreciation- Factory Equipment 1,000.00 CGM 34,000.00
Various Accounts 19,000.00

Salaries Payable 14,250.00

Cash 14,250.00

Work in process 20,000.00 FOH

Applied FOH 20,000.00 IM 1,500.00
Salaries 3,500.00
Finished goods 34,000.00 other OH 20,000.00
Work in process 34,000.00

21,000.00
Sales 21,000.00

15,000.00
Finished goods 15,000.00

5,000.00
Applied OH 5,000.00
 B. Statement of Cost of Goods
Materials Inventory Item 1 Ash
15,000.00 DM beg 1,000.00 Statement of C
1,500.00 IM DM 4,000.00 For the p
23,500.00 end DL 5,000.00
Applied FOH (squeeze) 5,000.00 Work in process, beg
Work in process 15,000.00 CGM Manufacturing costs for the pe
34,000.00 CGM Materials inventory
Item 2
DM 5,000.00
DL 7,000.00
22,000.00 end Applied FOH (squeeze) 7,000.00
19,000.00 CGM
Finished goods Total materials used
15,000.00 COS Item 3 DL
19,000.00 end DM 6,000.00 Applied FOH
DL 8,000.00 Total manufacturing costs for t
Applied FOH (squeeze) 8,000.00 Total costs to account for
22,000.00 CGM Work in process, end
Cost of Goods Manufactured
FOH Finished goods, end
20,000.00 Applied OH Cost of Sale- normal
5,000.00 underapplied OH Underapplied FOH
Cost of Sale- actual

C. Gross Profit
Sales
Cost of Sale
Gross Profit
B. Statement of Cost of Goods Sold
Ashton Ashtig Mfg. Company
Statement of Cost of Goods Manufactured and Sold
For the period ended January 31, 2021

Work in process, beg 1,000.00

Manufacturing costs for the period
Materials inventory
Beg. Balance 10,000.00
Purchases 30,000.00
Materials available 40,000.00
Ending Balance - 23,500.00
Indirect material - 1,500.00
Total materials used 15,000.00
20,000.00
Applied FOH 20,000.00
Total manufacturing costs for the period 55,000.00
Total costs to account for 56,000.00
Work in process, end - 22,000.00
Cost of Goods Manufactured 34,000.00
Finished goods, end - 19,000.00
Cost of Sale- normal 15,000.00
Underapplied FOH 5,000.00
Cost of Sale- actual 20,000.00

C. Gross Profit
21,000.00
Cost of Sale 20,000.00
Gross Profit 1,000.00
1 a. Cash 1,500.00 3 a.
Proceeds from sale of scrap 1,500.00

b. Cash 1,500.00
WIP Invty-Job #10 1,500.00

c. Cash 1,500.00
Factory Overhead Control 1,500.00

2 a. Scrap Inventory 2,000.00 b.

WIP Inventory-Job #10 2,000.00

b. Scrap Inventory 2,000.00

Factory Overhead Control 2,000.00
Direct Materials 2,800.00
Direct Labor 1,500.00
FOH (1,200 - 500) 700.00 Loss on Abnormal Spoilage
Unit Cost 5,000.00 Work in Process
No. of units produced 6,000.00
Total Cost 30,000,000.00
Loss from Abnormal Spoilage (5,000 x 180) - 900,000.00
Adjusted Total Cost 29,100,000.00 5820 5,000.00

No. of units produced 6,000.00

Unit Cost 5,000.00
Total Cost 30,000,000.00
Cost of Rework (1,800*180) 324,000.00
Adjusted Total Cost 30,324,000.00
No. of units produced 6,000.00
New Unit Cost 5,054.00
900,000.00
900,000.00
1. A. EVEN APPLICATION

A. WEIGHTED AVERAGE
DEPT 1 DEPT 2
QUANTITY SCHEDULE QUANTITY SCHEDULE
WIP, beg 2,000 WIP, beg
USIP 18,000 TI
UTAF 20,000 UTAF

WD EUP
FT 15,000 100% 15,000
WIP, end 5,000 25% 1,250 FT
UAAF 20,000 16,250 WIP, end
UAAF
COST DATA
WIP, beg 10,950 COST DATA
CPC 176,900
TCTAF 187,850 Beg
EUP 16,250 CPC
Cost per EUP 11.56 TCTAF
EUP
COST ASSIGNMENT Cost per EUP
FT 173,400
WIP, end 14,450 COST ASSIGNMENT
TCAAF 187,850
FT
WIP, end
TCAAF

B. FIFO
DEPT 1 DEPT 2
QUANTITY SCHEDULE QUANTITY SCHEDULE
WIP, beg 2,000 WIP, beg
USIP 18,000 TI
UTAF 20,000 UTAF

WD EUP
FT: WIP, beg 2,000 50% 1,000
FT: USIP 13,000 100% 13,000 FT: WIP, beg
WIP, end 5,000 25% 1,250 FT: TI
UTAF 20,000 15,250 WIP, end
UTAF
COST DATA Cost per EUP
WIP, beg 10,950 -
CPC 176,900 11.6 COST DATA
CTAF 187,850
 WIP, beg
COST ASSIGNMENT CPC
FT: WIP, beg 10,950.00 Total
Cost to complete 11,600.00 22,550.00 EUP
FT: USIP 150,800.00 Cost per EUP
Total FT 173,350.00
WIP, end 14,500.00 COST ASSIGNMENT
TCAAF 187,850.00
FT: WIP, beg
FT: USIP
Total FT
WIP, end
TCAAF
 B. UNEVEN APPLICATION
wip beg usip utaf
A. Weighted Average
DEPT 2 DEPT 1
ITY SCHEDULE QUANTITY SCHEDULE
5,000
15,000
20,000 WIP, beg
USIP
EUP UTAF
ACTUAL TI TMC
15,000 15,000 15,000 FT
5,000 5,000 2,000 WIP, end
20,000 20,000 17,000 UAAF

COST DATA
TI TMC Total
12,000 57,500 69,500 WIP, beg
173,400 76,000 249,400 CPC
185,400 133,500 318,900 TCTAF
20,000 17,000
9.27 7.85 17.12 Cost per EUP

SSIGNMENT COST ASSIGNMENT

TI TMC Total
139,050 117,750 256,800 FT
46,350 15,700 62,050 WIP, end
185,400 133,450 318,850 TCAAF

B. FIFO
DEPT 2
ITY SCHEDULE QUANTITY SCHEDULE
5000
15000
20000 WIP, beg
USIP
EUP UTAF
ACTUAL
TI TMC
5,000 - 3,000
10,000 10,000 10,000 FT: WIP, beg
5,000 5,000 2,000 FT: USIP
20,000 15,000 15,000 WIP, end
UTAF

COST DATA
Beg. Invty TI TMC Total
 69,500 69,500 WIP, beg
173,350 76,000 249,350 CPC
69,500 173,350 76,000 318,850 Total
15,000 15,000
11.56 5.07 16.63 Cost per EUP

SSIGNMENT COST ASSIGNMENT

Beg. Invty TI TMC Total
69,500.00 - 15,210.00 84,710.00 FT: WIP, beg
115,600.00 50,700.00 166,300.00 FT: USIP
251,010.00 Total FT
57,800.00 10,140.00 67,940.00 WIP, end
69,500.00 173,400.00 76,050.00 318,950.00 TCAAF
N APPLICATION

ghted Average
DEPT 1 DEPT 2
TITY SCHEDULE QUANTITY SCHEDULE
EUP
Actual Units Materials Conversion Actual Units
2,000 WIP, beg 5,000
18,000 USIP 15,000
20,000 UTAF 20,000

15,000 15,000 15,000 FT 15,000

5,000 5,000 1,250 WIP, end 5,000
20,000 20,000 16,250 UAAF 20,000

COST DATA
Materials Coversion Total TI
4,000 6,950 10,950 WIP, beg 12,000
89,900 87,000 176,900 CPC 157,200
93,900 93,950 187,850 TCTAF 169,200

4.70 5.78 Cost per EUP 8.46

SSIGNMENT COST ASSIGNMENT

Materials Coversion Total TI
70,500.00 86,700.00 157,200.00 FT 126,900.00
23,500.00 7,225.00 30,725.00 WIP, end 42,300.00
94,000.00 93,925.00 187,925.00 TCAAF 169,200.00

DEPT 1 DEPT 2
TITY SCHEDULE QUANTITY SCHEDULE
EUP
Actual Units Materials Conversion Actual Units
2,000 WIP, beg 5,000
18,000 USIP 15,000
20,000 UTAF 20,000

2,000 - 1,000 FT: WIP, beg 5,000

13,000 13,000 13,000 FT: USIP 10,000
5,000 5,000 1,250 WIP, end 5,000
20,000 18,000 15,250 UTAF 20,000

COST DATA
Beg. Invty Materials Conversion Total Beg. Invty
 10,950 10,950 WIP, beg 69,500
89,900 87,000 176,900 CPC
10,950 89,900 87,000 187,850 Total 69,500

4.99 5.70 10.69 Cost per EUP

SSIGNMENT
Beg. Invty Materials Conversion Total COST ASSIGNMENT
10,950.00 - 5,700.00 16,650.00 Beg. Invty
64,870.00 74,100.00 138,970.00 FT: WIP, beg 69,500.00
155,620.00 FT: USIP
24,950.00 7,125.00 32,075.00 Total FT
10,950.00 89,820.00 86,925.00 187,695.00 WIP, end
TCAAF 69,500.00
 2

A. Cost Assigned to F and Trasferred using FIFO

DEPT 2
DEPT 1
EUP QUANTITY SCHEDULE
TI Materials Conversion
Actual Units
WIP, beg 15,000
USIP 20,000
UTAF 35,000
15,000 15,000 15,000
5,000 1,250 2,000
20,000 16,250 17,000 FT: WIP, beg 15,000
FT: USIP 15,000
WIP, end 5,000
Materials Coversion Total UAAF 35,000
17,500 40,000 69,500
8,500 67,500 233,200 COST DATA
26,000 107,500 302,700 Beg. Invty
WIP, beg 12,510
1.60 6.32 16.38 CPC
TCTAF 12,510

Materials Coversion Total Cost per EUP

24,000.00 94,800.00 245,700.00
2,000.00 12,640.00 56,940.00 COST ASSIGNMENT
26,000.00 107,440.00 302,640.00 Beg. Invty
FT: WIP, beg 12,510.00
FT: USIP
Total FT
WIP, end
DEPT 2 TCAAF 12,510.00

EUP
TI Materials Conversion B. Weighted Average
DEPT 1
QUANTITY SCHEDULE

Actual Units
WIP, beg 15,000
- 3,750 3,000 USIP 20,000
10,000 10,000 10,000 UTAF 35,000
5,000 1,250 2,000
15,000 15,000 15,000 FT 30,000
WIP, end 5,000
UAAF 35,000
TI Materials Conversion Total
 69,500 COST DATA
155,620.00 8,500 67,500 231,620 Materials
155,620.00 8,500 67,500 301,120 WIP, beg 8,145
CPC 10,860
10.37 0.57 4.50 15.44 TCTAF 19,005

Cost per EUP 0.58

TI Materials Conversion Total COST ASSIGNMENT

- 2,137.50 13,500.00 85,137.50 Materials
103,700.00 5,700.00 45,000.00 154,400.00 FT 17,400.00
239,537.50 WIP, end 1,450.00
51,850.00 712.50 9,000.00 61,562.50 TCAAF 18,850.00
155,550.00 8,550.00 67,500.00 301,100.00
and Trasferred using FIFO

DEPT 1 DEPT 2
QUANTITY SCHEDULE
EUP EUP
Materials Conversion Actual Units TI
WIP, beg 9,000
USIP 30,000
UTAF 39,000

7,500 5,000 FT: WIP, beg 9,000 -

15,000 15,000 FT: USIP 22,000 22,000
2,500 2,000 WIP, end 8,000 8,000
25,000 22,000 UTAF 39,000 30,000

COST DATA
Materials Conversion Total Beg. Invty TI
12,510 WIP, beg 16,326
10,860 9,843 20,703 CPC 31,185.00
10,860 9,843 33,213 Total 16,326 31,185.00

0.43 0.45 0.88 Cost per EUP 1.04

COST ASSIGNMENT
Materials Conversion Total Beg. Invty TI
3,225.00 2,250.00 17,985.00 FT: WIP, beg 16,326.00 -
6,450.00 6,750.00 13,200.00 FT: USIP 22,880.00
31,185.00 Total FT
1,075.00 900.00 1,975.00 WIP, end 8,320.00
10,750.00 9,900.00 33,160.00 TCAAF 16,326.00 31,200.00

DEPT 1 DEPT 2
QUANTITY SCHEDULE
EUP EUP
Materials Conversion Actual Units TI
WIP, beg 9,000
USIP 30,000
UTAF 39,000

30,000 30,000 FT 31,000 31,000

2,500 2,000 WIP, end 8,000 8,000
32,500 32,000 UAAF 39,000 39,000
 COST DATA
Coversion Total TI Materials
4,365 12,510 WIP, beg 9,000 3,996
9,843 20,703 CPC 30,600 30,636
14,208 33,213 TCTAF 39,600 34,632

0.44 Cost per EUP 1.02 0.89

COST ASSIGNMENT
Coversion Total TI Materials
13,200.00 30,600.00 FT 31,620.00 27,590.00
880.00 2,330.00 WIP, end 8,160.00 7,120.00
14,080.00 32,930.00 TCAAF 39,780.00 34,710.00
 DEPT 2

EUP
Materials Conversion

- 6,000
22,000 22,000
8,000 7,000
30,000 35,000

Materials Conversion Total

16,326
30,636 38,850 100,671
30,636 38,850 116,997

1.02 1.11 3.17

Materials Conversion Total

- 6,660.00 22,986.00
22,440 24,420.00 69,740.00
92,726.00
8,160 7,770.00 24,250.00
30,600.00 38,850.00 116,976.00

EPT 2

EUP
Materials Conversion

31,000 31,000
8,000 7,000
39,000 38,000
Coversion Total
3,330 16,326
38,850 100,086
42,180 116,412

1.11

Coversion Total
34,410.00 93,620.00
7,770.00 23,050.00
42,180.00 116,670.00
A.1. FIFO method; lost units: normal and continuous A.2. WA method; lost units: norma

QUANTITY SCHEDULE QUANTITY SCHEDULE

WIP, beg 3,200
USIP 22,000
UTAF 25,200
DM CC
FT: WIP, beg 3,200 1,920 2,400
FT: USIP 16,500 16,500 16,500
WIP, end 4,000 1,600 2,000
Normal Spoilage (Continuous) 1,500 - -
UAAF 25,200 20,020 20,900
COST DATA
COST DATA
EUP Unit Cost
WIP, beg 3,248.00
CPC: DM 9,360.00 20,020 0.47
CC 7,672.00 20,900 0.37
TIC 16,720.00 22,000 0.76
Total Cost Added 37,000.00 1.60
Adjustment for lost units 0.056 COST ASSIGNMENT
TCTAF 37,000.00 1.656

COST ASSIGNMENT
FT: WIP, beg 3,248.00
To complete:
DM 902.40
CC 888.00 5,038.40
FT: USIP 27,324.00
Total cost to FT units 32,362.40
WIP, end
DM 752.00
CC 740.00
TIC 3,264.00 4,756.00
TCAAF 37,118.40
A.2. WA method; lost units: normal and lost at end A.3 FIFO method; lost units: nor

QUANTITY SCHEDULE QUANTITY SCHEDULE

WIP, beg 3,200
USIP 22,000
UTAF 25,200
DM CC
F&T 19,700 19,700 19,700
WIP, end 4,000 1,600 2,000
Normal Spoilage (Discrete) 1,500 1,500 1,500
UAAF 25,200 22,800 23,200

COST DATA
DM CC TIC Total COST DATA
WIP, beg 800.00 800.00 1,648.00 3,248.00
CPC 9,360.00 7,672.00 16,720.00 33,752.00
TCTAF 10,160.00 8,472.00 18,368.00 37,000.00

Unit Cost 0.45 0.37 0.73 1.55

COST ASSIGNMENT
F&T 32,860.00 COST ASSIGNMENT
WIP, end
DM 720.00
CC 740.00
TIC 2,920.00 4,380.00
TCAAF 37,240.00
A.3 FIFO method; lost units: normal and at 80% completion B.1 FIFO

QUANTITY SCHEDULE QUANTITY SCHEDULE

WIP, beg 3,200
USIP 22,000
UTAF 25,200
DM CC
FT: WIP, beg 3,200 1,920 2,400
FT: USIP 16,500 16,500 16,500
WIP, end 4,000 1,600 2,000
Normal Spoilage (Discrete) 1,500 600 1,200
UAAF 25,200 20,620 22,100

COST DATA COST DATA

EUP Unit Cost
WIP, beg 3,248.00
CPC: DM 9,360.00 20,620 0.45
CC 7,672.00 22,100 0.35
TIC 16,720.00 22,000 0.76
Total Cost Added 37,000.00 1.56
COST ASSIGNMENT
COST ASSIGNMENT
FT: WIP, beg 3,248.00
To complete:
DM 864.00
CC 840.00 4,952.00
FT: USIP 25,740.00
Adjustment for N. Spoilage
DM 270.00
CC 420.00
TIC 1,140.00 27,570.00
Total cost to FT units 32,522.00
WIP, end
DM 720.00
CC 700.00
TIC 3,040.00 4,460.00
TCAAF 36,982.00
B.1 FIFO
DEPT 1
QUANTITY SCHEDULE QUANTITY SCHEDULE
WIP, beg 1,000
USIP 5,000
UTAF 6,000
DM CC
FT: WIP, beg 1,000 - 500
FT: USIP 3,000 3,000 3,000
WIP, end 1,600 1,600 800
Normal Spoilage (Discrete) 400 400 100
UAAF 6,000 5,000 4,400

COST DATA COST DATA

EUP Unit Cost
WIP, beg 13,010.00
CPC: DM 15,000.00 5,000 3.00
CC 43,830.00 4,400 9.96
TCTAF 71,840.00 12.96

COST ASSIGNMENT
FT: WIP, beg 13,010.00 COST ASSIGNMENT
To complete:
DM -
CC 4,980.00 17,990.00
FT: USIP 38,880.00
Adjustment for N. Spoilage 1,432.174 40,312.17
Total cost to FT units 58,302.17
WIP, end
DM 4,800.00
CC 7,968.00 12,768.00
Adjustment for N. Spoilage 763.826 13,531.83
TCAAF 71,834.00
 B. 2. WAVE
DEPT 2
QUANTITY SCHEDULE QUANTITY SCHEDULE
WIP, beg 800
USIP 4,000
UTAF 4,800
DM CC
FT: WIP, beg 800 400 600
FT: USIP 1,200 1,200 1,200
WIP, end 1,800 900 450
Normal Spoilage (Discrete) 1,000 500 250
UAAF 4,800 3,000 2,500
COST DATA
COST DATA
EUP Unit Cost
WIP, beg 10,800.00
CPC: DM 17,990.00 3,000 6.00
CC 59,850.00 2,500 23.94
TIC 58,302.17 4,000 14.58
TCTAF 146,942.17 44.52
COST ASSIGNMENT
COST ASSIGNMENT
FT: WIP, beg 10,800.00
To complete:
DM 2,400.00
CC 14,364.00 27,564.00
FT: USIP 53,424.00
Adjustment for N. Spoilage 9,426.00 62,850.00
Total cost to FT units 90,414.00
WIP, end
DM 5,400.00
CC 10,773.00
TIC 26,244.00 42,417.00
Adjustment for N. Spoilage 14,139.00 56,556.00
TCAAF 146,970.00
 DEPT 1
QUANTITY SCHEDULE QUANTITY SCHEDUL
WIP, beg 1,000
USIP 5,000
UTAF 6,000
DM CC
F&T 4,000 4,000 4,000
WIP, end 1,600 1,600 800
Normal Spoilage (Discrete) 400 400 320
UAAF 6,000 6,000 5,120

COST DATA COST DATA

DM CC Total
WIP, beg 5,000.00 8,010.00 13,010.00
CPC 15,000.00 43,830.00 58,830.00
TCTAF 20,000.00 51,840.00 71,840.00

Unit Cost 3.33 10.13 13.46

COST ASSIGNMENT COST ASSIGNMENT

F&T 53,840.00
Adjustment for N. Spoilage
DM 1,332.00
CC 3,241.60 58,413.60
WIP, end
DM 5,328.00
CC 8,104.00 13,432.00
TCAAF 71,845.60
 DEPT 2
QUANTITY SCHEDULE
WIP, beg 800
USIP 4,000
UTAF 4,800
DM CC
F&T 2,000 2,000 2,000
WIP, end 1,800 900 450
Normal Spoilage (Discrete) 1,000 1,000 800
UAAF 4,800 3,900 3,250

COST DATA
DM CC TIC Total
WIP, beg 2,500.00 5,000.00 3,300.00 10,800.00
CPC 17,990.00 59,850.00 58,413.60 136,253.60
TCTAF 20,490.00 64,850.00 61,713.60 147,053.60

Unit Cost 5.25 19.95 12.86 38.06

COST ASSIGNMENT
F&T 76,120.00
Adjustment for N. Spoilage
DM 5,250.00
CC 15,960.00
TIC 12,860.00 110,190.00
WIP, end
DM 4,725.00
CC 8,977.50
TIC 23,148.00 36,850.50
TCAAF 147,040.50
 NO. 1
After Increase Increase Original Quantity Schedule
WIP, beg 1,080 180 900 WIP, beg 900
USIP 2,760 460 2,300 USIP 2,300
WIP, end 1,800 300 1,500 Total Increase 640
UTAF 3,840

USIP 2,760 460 2,300 FT: WIP, beg 1,080

WIP end 1,800 300 1,500 FT: USIP 960
FT: USIP 960 160 800 WIP, end 1,800
640 UAAF 3,840

Cost Data
WIP, beg 3,395.00
CPC:
Liquid Latex 8,000.00
DM (other) 16,940.00
CC 10,980.00
TIC 12,000.00
TCTAF 51,315.00

Cost Assignment
FT: WIP, beg 3,395.00
To complete:
Liquid Latex 2,246.40
DM (other) -
CC 3,175.20
FT: USIP
Total cost of FT units
WIP, end
Liquid Latex 3,744.00
DM (other) 11,052.00
CC 3,780.00
TIC 7,830.00
TCAAF
 Vol.: end of
period

WIP, end 4600

Liquid Latex DM (other) CC TIC

Orig. Volume
1,080 - 756 -
960 960 960 960 From X 24,000
1,800 1,800 900 1,800 WIP, end 5,000
3,840 2,760 2,616 2,760 Completed 19,000

Vol.: beg of
period
WIP, beg 1,800
3,840 2.08
2,760 6.14
2,616 4.20
2,760 4.35
16.77

8,816.60
16,099.20
24,915.80

26,406.00
51,321.80
 NO. 2
Evap. Quantity Schedule
Stage of Completion: Evap. Orig. Volume: end of
During the
end of period Rate Volume period
period

50% 8% 5000

Evap.
Stage of Completion: Evap. Volume: end of
During the
end of period Rate period
period

40% 8% 4,600 400

100% 20% 15,200 3,800

Evap. Cost Data

Stage of Completion: Evap. Orig. Volume: end of
During the
beg of period Rate Volume period
period
50% 10% 2,000 1,000 800

Cost Assignment
Quantity Schedule DEPT. 1
WIP, beg 1,800 Quantity Schedule
USIP 24,000 WIP, beg
UTAF 25,800 USIP
TMC TIC UTAF
FT: WIP, beg 1,000 500 -
FT: USIP 15,200 15,200 15,200 FT: WIP, beg
WIP,end 4,600 1,680 4,200 FT: USIP
Evaporation 5,000 - - WIP, end
UAAF 25,800 17,380 19,400 UAAF

Cost Data Cost Data

WIP, beg 7,930.00 WIP, beg
CPC: CPC
DM 15,096.00 17,380 0.87 TCTAF
CC 30,192.00 17,380 1.74
TIC 32,436.00 19,400 1.67 Cost Assignment
TCTAF 85,654.00 4.28 FT: WIP, beg
To complete
Cost Assignment FT: USIP
FT: WIP, beg 7,930.00 Total cost of FT units
To complete: WIP, end
DM 435.00 TCAAF
CC 870.00 9,235.00
FT: USIP 65,056.00
Total cost of FT units 74,291.00
WIP, end
DM 1,461.60
CC 2,923.20
TIC 7,014.00 11,398.80
TCAAF 85,689.80
 NO. 3
DEPT. 1 DEPT. 2
Quantity Schedule
3,000 WIP, beg 2,000
3,000 USIP 3,500
6,000 UTAF 5,500
TMC
3,000 600 FT: WIP, beg 2,000
1,800 1,800 FT: USIP 2,700
1,200 600 WIP, end 800
6,000 3,000 UAAF 5,500

Cost Data
282,000.00 WIP, beg 195,700.00
984,000.00 3,000 328 CPC 619,200.00
1,266,000.00 TCTAF 814,900.00

Cost Assignment
282,000.00 FT: WIP, beg 195,700.00
196,800.00 478,800.00 To complete 144,000.00
590,400.00 FT: USIP
1,069,200.00 Total cost of FT units
196,800.00 WIP, end
1,266,000.00 TCAAF
 NO. 3
EPT. 2 DEPT 3
Quantity Schedule
WIP, beg 1,000
USIP 4,800
UTAF 5,800
TMC TMC
1,000 FT: WIP, beg 1,000 250
2,700 FT: USIP 2,800 2,800
600 WIP, end 2,000 475
4,300 UAAF 5,800 3,525

Cost Data
WIP, beg 450,000.00
4,300 144.00 CPC:
This dept. 1,290,150.00 3,525
TIC-Dept 1 1,069,200.00 4,800
TIC-Dept 2 728,500.00 4,700
TCTAF 3,537,850.00
339,700.00
388,800.00 Cost Assignment
728,500.00 FT: WIP, beg 450,000.00
86,400.00 To complete 91,500.00 541,500.00
814,900.00 FT: USIP 2,082,500.00
Total cost of FT units
WIP, end
Started 173,850.00
TIC-Dept 1 423,225.00
TIC-Dept 2 294,500.00 891,575.00
Not yet started
TIC-Dept 1 22,275.00
TCAAF
 366.00
222.75
155.00
743.75

2,624,000.00

913,850.00
3,537,850.00
ITEM 1
1st Quarter 2nd Quarter 3rd Quarter
Sales 860,000.00 940,000.00 990,000.00
COS
RM, beg 75,000.00 65,000.00 50,000.00
Purchases 280,000.00 360,000.00 400,000.00
RM Available 355,000.00 425,000.00 450,000.00
RM, end - 65,000.00 - 50,000.00 - 45,000.00
DM used 290,000.00 375,000.00 405,000.00
DL 140,000.00 140,000.00 140,000.00
FOH 210,000.00 210,000.00 210,000.00
TMC 640,000.00 725,000.00 755,000.00
WIP, beg - - -
TCPIP 640,000.00 725,000.00 755,000.00
WIP, end - - -
CGM 640,000.00 725,000.00 755,000.00
FG, beg 150,000.00 140,000.00 130,000.00
COGAS 790,000.00 865,000.00 885,000.00
FG, end - 140,000.00 - 130,000.00 - 120,000.00
COS - 650,000.00 - 735,000.00 - 765,000.00
Gross Profit 210,000.00 205,000.00 225,000.00
OPEX
Selling & General - 112,000.00 - 112,000.00 - 112,000.00
Income before tax 98,000.00 93,000.00 113,000.00
Income tax - 19,600.00 - 18,600.00 - 22,600.00
Net Income 78,400.00 74,400.00 90,400.00
 ITEM 2
4th Quarter July August
960,000.00 Sales in Units 30,000 45,000
Desired Ending Inventory 6,750 9,000
45,000.00 Total 36,750 54,000
300,000.00 Beginning Inventory - 4,000 - 6,750
345,000.00 Units to be produced 32,750 47,250
- 40,000.00 Cost to produce per unit 2.75 2.75
305,000.00 CGM 90,062.50 129,937.50
140,000.00
210,000.00
655,000.00
-
655,000.00
-
655,000.00 Actual Standard
120,000.00 3.A DM Variance 7,200 9,180
775,000.00 DL Variance 20,160 20,196
- 110,000.00 VOH Variance 18,500 16,983
- 665,000.00 FOH Variance 27,200 28,611
295,000.00 TMC Variance 73,060 74,970

- 112,000.00
183,000.00
- 36,600.00
146,400.00
 ITEM 3
September Total
60,000 135,000 b. MPV (1.5-2)*4800 - 2,400.00 F SQ = 1800*2.55
7,500 23,250 MQV (4800-4590)*2 420.00 F
67,500 158,250 Total Materials Cost Variance - 1,980.00 F
- 9,000 - 19,750
58,500 138,500
2.75 2.75 c. LRV (2.8-2.64)*7200 1,152.00 U SH = 1800*4.25
160,875.00 380,875.00 LEV (7200-7650)*2.64 - 1,188.00 F
Total DL Cost Variance - 36.00 F

d. 1 Total VFOH Variance 18500-(7650*2.22) 1517

2 Total FFOH Variance 27200-(7650*3.74) -1411

3 Four-way Analysis
-1,980 F VFOH Spending Variance (2.57-2.22)*7200
-36 F VFOH Efficiency Variance (7200-7650)*2.22
1,517 UF Total VFOH Variance
-1,411 F
-1,910 F FFOH Spending Variance (27200-31790)
FFOH Volume Variance (31790-28611)
Total FFOH Variance

e. 1 Total Actual FOH 45,700.00

Total Standard FOH 45,594.00
Net FOH Variance 106.00 UF

2 Two-way Analysis

Actual FOH 45700

Fixed 31790
Variable 16,983 48,773
Controllable Variance

Budgeted allowed on Standard hours 48,773

Standard/ Applied FOH 45594
Volume Variance
Net FOH Variance

Three-way Analysis

Spending Variance
Actual FOH
Budget allowed on actual hours
Fixed 31790
 Variable 15,984
Budget variance

Efficiency Variance
Budget Allowed on actual hours
Budget allowed on standard hours
Fixed 31790
Variable 16,983
Efficiency Variance

Volume Variance
Budgeted allowed on Standard hours
Standard/ Applied FOH
Volume Variance
SQ = 1800*2.55 4590

SH = 1800*4.25 7650

UF

2,516.00 UF 2.569444
- 999.00 F
1,517.00 UF

- 4,590.00 F
3,179.00 UF
- 1,411.00 F

-3,073 F

3179 UF
106 UF

45700
47,774
-2,074 F

47,774

48,773
-999 F

48,773
45594
3179 UF
106 UF
 Journal Entries

A. RM Inventory

B. WIP Inventory
Materials Quantity Variance- Unfa

C. Payroll
Standard Costs: Actual
Qty/Hr Price Qty/ Hrs Price
DM 2.5 3.52 2.6 6500 3.5 D WIP Inventory
Labor Rate Variance- Unfav
DL 4 3.86 3.92 9800 4.2

FOH 4 7.54 3.92 9800 7.78

Variable 4 3.39 3.92 9800 3.57 E Variable Factory Overhead
Fixed 4 4.15 3.92 9800 4.21

F WIP Inventory
Variable FOH Spending Variance-

G Fixed Factory Overhead

H WIP Inventory
Fixed FOH Spending Variances- U

I Cost of Goods Sold

Materials Price Variance- Fav.
Labor Efficiency Variance- Fav
Variable FOH Efficiency Variance-
Fixed FOH Volume Variance

J Finished Goods Inventory

Journal Entries
SQ= (2.5*2500)
RM Inventory 22,880.00
Cash/ AP 22,750.00 MPV (3.5-3.52)6500
Materials Price Variance- Fav. 130.00 MQV (6500-6250)*3.52

WIP Inventory 22,000.00

Materials Quantity Variance- Unfav. 880.00 TMCV (22750-22000)
RM Inventory 22,880.00

Payroll 41,160.00 SH=(4*2500)

Wages Payable 41,160.00
LRV (4.2-3.86)*9800
WIP Inventory 38,600.00 LEV (9800-10000)*3.86
Labor Rate Variance- Unfav 3,332.00
Payroll 41,160.00
Labor Efficiency Variance- Fav 772.00 TLCV (41160-38600)

Variable Factory Overhead 35,000.00 VFOH Spending Var

Various Accounts 35,000.00 VFOH Efficiency Var

WIP Inventory 33,900.00

Variable FOH Spending Variance- Unfav. 1,778.00 TVFOH Var
Variable Factory Overhead 35,000.00
Variable FOH Efficiency Variance- Fav. 678.00

Fixed Factory Overhead 41,250.00 FFOH Spending Var

Various Accounts 41,250.00 FFOH Volume Var

WIP Inventory 41,500.00

Fixed FOH Spending Variances- Unfav 6,390.00 TFFOH Var
Fixed Factory Overhead 41,250.00
Fixed FOH Volume Variance 6,640.00

Cost of Goods Sold 4,160.00 Materials Cost Variance

Materials Price Variance- Fav. 130.00 Labor Cost Variance
Labor Efficiency Variance- Fav 772.00 Variable FOH Variance
Variable FOH Efficiency Variance- Fav. 678.00 Fixed FOH Variance
Fixed FOH Volume Variance 6,640.00 TMC Variance
Materials Quantity Variance- Unfav. 880.00
Labor Rate Variance- Unfav 3,332.00
Variable FOH Spending Variance- Unfav. 1,778.00
Fixed FOH Spending Variances- Unfav 6,390.00

Finished Goods Inventory 136,000.00 DM

Work in Process Inventory 136,000.00 DL
FOH
Var 33,900.00
Fixed 41,500.00
TMC
 6,250

3.5-3.52)6500 - 130 F
6500-6250)*3.52 880 UF
750 UF

22750-22000) 750 UF

10,000

4.2-3.86)*9800 3,332 UF
9800-10000)*3.86 - 772 F
2,560 UF DM
DL
41160-38600) 2,560 UF FOH
Variable
((35000/9800)-3.39)*9800 1,778 UF Fixed
((9800-10000)*3.39 - 678 F
1,100 UF

(35000-33900) 1,100 UF

(41250-34860) 6,390 UF
(34860-(10000*4.15)) - 6,640 F
- 250 F

(41250-41500) -250 F

Actual Std Variance

ost Variance 22,750 22,000 750 UF
41,160 38,600 2,560 UF
35,000 33,900 1,100 UF
41,250 41,500 - 250 F
140,160 136,000 4,160 UF

22,000.00
38,600.00
 75,400.00
136,000.00
 Actual Costs
Qty/Hrs Std Qty/HrsPrice Qty/Hrs Price
135 810,000 2.10 DM 98.333333333 590,000 2.15
18 108,000 11.00 DL 15.666666667 94,000 12.00
18 108,000 22.50 FOH
18 108,000 12.00 Variable 15.666666667 94,000 10.37
18 108,000 10.50 Fixed 15.666666667 94,000 11.41

Quantity Schedule
WIP, beg 2,000
USIP 6,000
UTAF 8,000

DM DL FOH
FT: WIP, beg 2,000 1,600 800 800
FT: USIP 4,000 4,000 4,000 4,000
WIP, end 2,000 800 1,500 1,500
UAAF 8,000 6,400 6,300 6,300

Cost Data Total

WIP, beg
DM (135*2000*2.1)*20% 113,400.00
DL (18*2000*11)*60% 237,600.00
FOH (18*2000*22.5)*60% 486,000.00 837,000.00
CPC (actual) 1,268,500.00 1,128,000.00 2,047,500.00 4,444,000.00
TCTAF 1,381,900.00 1,365,600.00 2,533,500.00 5,281,000.00

Cost Assignment
FT: WIP, beg 113,400.00 237,600.00 486,000.00 837,000.00
To complete
DM (1600*135*2.1) 453,600.00
DL (800*18*11) 158,400.00
FOH (800*18*22.50) 324,000.00 936,000.00
FT: USIP
 DM (4000*135*2.1) 1,134,000
DL (4000*18*11) 792,000.00
FOH (4000*18*22.50) 1,620,000.00 3,546,000.00
WIP, end
DM (800*135*2.10) 226,800.00
DL (1500*18*11) 297,000.00
FOH (1500*18*22.50) 607,500.00 1,131,300.00
Total 1,927,800.00 1,485,000.00 3,037,500.00 6,450,300.00
Variances - 545,900.00 - 119,400.00 - 504,000.00 - 1,169,300.00
TCAF 1,381,900.00 1,365,600.00 2,533,500.00 5,281,000.00
Journal Entries

a RM Inventory 1,720,000.00
Accounts Payable 1,720,000.00

b WIP Inventory (864000*2.1) 1,814,400.00

Materials Price Variance- Unfav. 29,500.00
RM Inventory 1,268,500.00
Materials Quantity Variance- Fav. 575,400.00

c Payroll 1,128,000.00
Salaries Payable 1,128,000.00

d WIP Inventory 1,247,400.00

Labor Rate Variance- Unfav. 94,000.00
Payroll 1,128,000.00
Labor Efficiency Variance 213,400.00

e Factory Overhead 2,047,500.00

Various Accounts 2,047,500.00

f. WIP Inventory 2,551,500.00

Factory Overhead 2,047,500.00
FOH Spending Variance 63,300.00
FOH Efficiency Variance 168,000.00
FOH Volume Variance 272,700.00

g Materials Quantity Variance- Fav. 575,400.00

Labor Efficiency Variance- Fav 213,400.00
FOH Spending Variance 63,300.00
FOH Efficiency Variance 168,000.00
FOH Volume Variance 272,700.00
Cost of Goods Sold 1,169,300.00
Materials Purchase Variance- Unfav. 29,500.00
Labor Rate Variance- Unfav 94,000.00

h Finished Goods Inventory 5,319,000.00

Work in Process Inventory 5,319,000.00
SQ= (135*6400) 864,000

MPV (2.15-2.10)*590000 29,500 UF

MQV (590000-864000)*2.1 - 575,400 F
- 545,900 F

TMCV (590000-1814400) - 545,900 F

SH=(18*6300) 113,400

LRV (12-11)*94000 94,000 UF

LEV (94000-115200)*11 - 213,400 F
- 119,400 F

TLCV (1128000-1247400) - 119,400 F

Three-way Analysis

Spending Variance
Actual FOH 2,047,500.00
Budget allowed on actual hours
Fixed 982,800.00
Variable 1,128,000.00 2,110,800.00
Budget variance - 63,300.00 F

Efficiency Variance
Budget Allowed on actual hours 2,110,800.00
Budget allowed on standard hours
Fixed 982,800.00
Variable 1,296,000.00 2,278,800.00
Efficiency Variance - 168,000.00 F

Volume Variance
Budgeted allowed on Standard hours 2,278,800.00
Standard/ Applied FOH 2,551,500.00
Volume Variance - 272,700.00 F
- 504,000.00 F

Actual Std Variance

Materials Cost Variance 1,268,500 1,814,400 - 545,900 F
Labor Cost Variance 1,128,000 1,247,400 - 119,400 F
FOH Variance 2,047,500 2,551,500 - 504,000 F
TMC Variance 4,444,000 5,613,300 - 1,169,300 F
 MP X MP Y BP A BP B
Finals Sales Value 150,000.00 192,000.00 12,000.00 6,600.00
Qty Produced 10,000 12,000 500 600
Total Addt'l Processing cost 26,000.00 14,400.00 2,200.00 1,800.00
Cost to sell/unit @ split-off 1.32 0.44 3.00 1.80
Cost to sell/unit after addt'l processing 1.47 0.55 3.20 2.00
Profit % 40% 50% 25% 20%

Final Sales Value 150,000.00 192,000.00 12,000.00 6,600.00

Total Add'tl Processing Cost 26,000.00 14,400.00 2,200.00 1,800.00
Sales Value @ Split-off 124,000.00 177,600.00 9,800.00 4,800.00
A.
a. WIP Inventory- Joint Products
Various Accounts
To record joint processing cost

b. WIP Inventory- By-product A

WIP Inventory- By-product B
Various Accounts
To record additional processing cost of by-products

c. Cash/AR
Various Accounts (Marketing Exp)
Various Accounts
WIP Inventory- By-product A
WIP Inventory- By-product B
Other Income
To record sale of by-products

d. WIP Inventory- Main Product X

WIP Inventory- Main Product Y
WIP Inventory- Joint Products
To allocated joint costs

e. WIP Inventory- Main Product X

WIP Inventory- Main Product Y
Various Accounts
To record separate processing costs

B.
a. WIP Inventory- Joint Products
Various Accounts
To record joint processing cost

b. WIP Inventory- By-product A

WIP Inventory- By-product B
WIP Inventory- Joint Products
To record production of by-products

c. WIP Inventory- By-product A

WIP Inventory- By-product B
Various Accounts
To record additional processing cost of by-products

d FG Inventory- By-Product A
FG Inventory- By-Product B
WIP Inventory- By-product A
 WIP Inventory- By-product B
To transfer complet by-product to finished goods

e Cash/AR
FG Inventory- By-Product A
FG Inventory- By-Product B
Various Accounts

f WIP Inventory- Main Product X

WIP Inventory- Main Product Y
WIP Inventory- Joint Products
To allocate joint costs

g WIP Inventory- Main Product X

WIP Inventory- Main Product Y
Various Accounts
To record separate processing costs

h FG Inventory- Main Product X

FG Inventory- Main Product Y
WIP Inventory- Main Product X
WIP Inventory- Main Product Y
To transfer main products to FG Inventory

C Reversal Cost and NRV

a. WIP Inventory- Joint Products
Various Accounts
To record joint processing cost

b. WIP Inventory- Main Product X

WIP Inventory- Main Product Y
WIP Inventory- By-product A
WIP Inventory- By-product B
WIP Inventory- Joint Products
To allocate Joint Costs

c. WIP Inventory- Main Product X

WIP Inventory- Main Product Y
WIP Inventory- By-product A
WIP Inventory- By-product B
WIP Inventory- Joint Products
To record separate costs

d. FG Inventory- Main Product X

FG Inventory- Main Product Y
WIP Inventory- Main Product X
 WIP Inventory- Main Product Y
To transfer main products to FG Inventory

e. FG Inventory- By-Product A
FG Inventory- By-Product B
WIP Inventory- By-product A
WIP Inventory- By-product B
To transfer by-products to FG Inventory
500,000.00 SP @ SO Proportion
500,000.00 Main Product X 124,000.00 41.11%
Main Product Y 177,600.00 58.89%
301,600.00
2,200.00
1,800.00
4,000.00
Sales 18,600.00
Less: Addt'l Cost 4000
15,800.00 Marketing Cost 2800 6,800.00
2,800.00 11,800.00
2,800.00
2,200.00
1,800.00
11,800.00

205,550.00
294,450.00
500,000.00

26,000.00
14,400.00
40,400.00

FSV APC
By-Product A 12,000.00 2,200.00
500,000.00 By-Product B 6,600.00 1,800.00
500,000.00

FSV APC
8,300.00 Main Product X 150,000.00 26,000.00
3,720.00 Main Product Y 192,000.00 14,400.00
12,020.00 342,000.00

2,200.00
1,800.00
4,000.00

10,500.00
5,520.00
10,500.00
 5,520.00

18,600.00
10,500.00
5,520.00
2,580.00

190,995.37
296,984.63
487,980.00

26,000.00
14,400.00
40,400.00

216,995.37
311,384.63
216,995.37
311,384.63

By-Product A
Sales
500,000.00 Addt'l Cost 2,200.00
500,000.00 Cost to Sell 1,500.00
Desired Profit 3,000.00
Share in Joint Cost
192,686.22
299,613.78
5,300.00 SP @ SO APC
2,400.00 Main Product X 150,000.00 26,000.00
500,000.00 Main Product Y 192,000.00 14,400.00
342,000.00

26,000.00
14,400.00
2,200.00
1,800.00
44,400.00

218,686.22
314,013.78
218,686.22
 314,013.78

7,500.00
4,200.00
7,500.00
4,200.00
Joint Cost Allocation
205,550.00
500,000.00
294,450.00
500,000.00

Mar. Cost NRV

1,500.00 8,300.00
1,080.00 3,720.00

MC @ SO NRV @ SO Proportion JC Allocation

13,200.00 110,800.00 39.14% 190,995.37
5,280.00 172,320.00 60.86% 487,980.00 296,984.63
283,120.00 487,980.00
By-Product A By-Product B
12,000.00 6,600.00
1,800.00
1,080.00
6,700.00 1,320.00 4,200.00
5,300.00 2,400.00

MC @ SO NRV @ SO Proportion JC Allocation

13,200.00 110,800.00 39.14% 192,686.22 218,686.22
492,300.00
5,280.00 172,320.00 60.86% 299,613.78 314,013.78
283,120.00 492,300.00
 SV @ SO Proportion Joint Cost
Product A 45,000.00 20% 24,000.00
Product B 67,500.00 30% 120000 36,000.00
Product C 112,500.00 50% 60,000.00
225,000.00

Product B Product C
Final Sales Value 96,000.00 189,000.00
APC 28,500.00 76,500.00
SV @ SO 67,500.00 112,500.00
Product B

Share from joint Cost 36,000.00

APC
DL 18000
FOH 10500 28,500.00
TMC 64,500.00
1 Activity-Based Costing (ABC) is a method of allocating manufacturing overhead that initially
traces the cost to activities and then to products. The main objective of this method is to better
assign overhead costs to products. Usually, ABC is employed by multi-product firms with
multiple processing steps.

2 Activity analysis is when firms study their operations by identifying and classifying activities.
Basically, this method tries to find ways on how companies can eliminate or at least reduce
costs from non-value-added activities. Meanwhile, in cost driver analysis, firms quantify,
investigate the causes as to why a cost is incurred, and identify the level to which the cost
occurs.

3 Unit-level cost is a cost incurred each time a unit is produced. Here, the cost is proportional to
the number of units produced.

Batch level cost, as the name suggests, is a cost incurred each time a batch is processed. Unlike
unit-level cost which depends on the number of units produced, the batch level cost depends
on the number of batches processed.

Product level cost relates to a specific product which is incurred regardless of how many
batches are run or units of product are produced or sold. Examples of costs under this level are
the salaries of designers and advertising fees.

Facility/organization level cost is incurred to support the overall production of products or

services. Hence, this cost is incurred regardless of which customers are served, which products
are produced, how many batches are run, or how many units are produced.

4 Backflush costing is a short-cut approach to accounting for the flow of manufacturing

operations which speeds up, simplifies, and minimizes accounting effort. Here, the product
costs are "flushed out" of the accounting system and are attatched to the products only after
they are completed. In short, the primary objective of this method is to reduce the number of
events that are measured and recorded in the accounting system.
A Std Hr/unit Budg. Prod Budg. Hrs
Computer Part 2 4,000 8,000
Cell Phone 0.5 2,000 1,000
Total Budgeted DLH 9,000

Total Budgeted FOH 288,000.00

Total Budgeted DLH 9,000.00
Application OH Rate 32

Computer Part Cell Phone

4,000 2,000
Unit Total Unit

Sales 137.50 550,000.00 46.25

COS
DM 30.00 120,000.00 17.00
DL 16.00 64,000.00 4.00
FOH 32.00 256,000.00 440,000.00 32.00
Gross Profit 110,000.00

B Activity Budget Volume Rate

Production Set-up 98,000.00 20 4,900.00
Material Handling 70,000.00 5,000 14.00
Packaging & Shipping 120,000.00 6,000 20.00

Computer Part Cell Phone

4,000 2,000
Unit Total Unit

Sales 137.50 550,000.00 46.25

COS
DM 30.00 120,000.00 17.00
DL 16.00 64,000.00 4.00
FOH:
Production Set-up 4,900 24,500 4,900
Material Handling 14 14,000 14
Packaging & Shipping 20 80,000 302,500.00 20
Gross Profit 247,500.00
Cell Phone
Total
2,000
Total

92,500.00 642,500.00

34,000.00 154,000.00
8,000.00 72,000.00
32,000.00 74,000.00 288,000.00
18,500.00 128,500.00

Cell Phone
Total
2,000
Total

92,500.00 642,500.00

34,000.00 154,000.00
8,000.00 72,000.00

73,500 98,000
56,000 70,000
40,000 211,500.00 120,000
- 119,000.00 128,500.00
6.A 1. Trigger Point: Sale

Cost of Sale

2. Trigger Point: Completion of Units

FG Inventory
Cost of Sale

Cost of Sale

3. Trigger Point: Purchase of materials

Raw and In-Process Inventory

Cost of Sale

Cost of Sale
1. Trigger Point: Sale 6.B. 1. Trigger Point: Sale

Cost of Sale 595,500.00 Cost of Sale

Accounts Payable 320,000.00
Salaries Payable 170,000.00
Various Accounts 105,500.00

Raw and In-Process Inventory

2. Trigger Point: Completion of Units FG Inventory

FG Inventory 320,000.00
Cost of Sale 275,500.00
Accounts Payable 320,000.00 2. Trigger Point: Completion of Units
Salaries Payable 170,000.00
Various Accounts 105,500.00 FG Inventory
Cost of Sale
Cost of Sale 320,000.00
FG Inventory 320,000.00

3. Trigger Point: Purchase of materials Raw and In-Process Inventory

Cost of Sale
Raw and In-Process Inventory 320,000.00
Accounts Payable 320,000.00
Raw and In-Process Inventory
Cost of Sale 275,500.00 FG Inventory
Salaries Payable 170,000.00
Various Accounts 105,500.00

Cost of Sale 320,000.00 3. Trigger Point: Purchase of materials

Raw and In-Process Inventory 320,000.00
Raw and In-Process Inventory

Cost of Sale

FG Inventory

Cost of Sale

Raw and In-Process Inventory

FG Inventory
1. Trigger Point: Sale 6.C. 1. Trigger Point: Sale

Cost of Sale 595,500.00 Cost of Sale

Accounts Payable 320,000.00
Salaries Payable 170,000.00
Various Accounts 105,500.00

Raw and In-Process Inventory 14,200.00 Cost of Sale

FG Inventory 17,500.00
Cost of Sale 31,700.00

2. Trigger Point: Completion of Units 2. Trigger Point: Completion of Units

FG Inventory 320,000.00 FG Inventory

Cost of Sale 275,500.00 Cost of Sale
Accounts Payable 320,000.00
Salaries Payable 170,000.00
Various Accounts 105,500.00

Raw and In-Process Inventory 4,200.00 Raw and In-Process Inventory

Cost of Sale 308,100.00 Cost of Sale
FG Inventory 312,300.00

Raw and In-Process Inventory 10,000.00 Cost of Sale

FG Inventory 9,800.00
Cost of Sale 19,800.00

3. Trigger Point: Purchase of materials 3. Trigger Point: Purchase of materials

Raw and In-Process Inventory 320,000.00 Raw and In-Process Inventory

Accounts Payable 320,000.00

Cost of Sale 275,500.00 Cost of Sale

Salaries Payable 170,000.00
Various Accounts 105,500.00

FG Inventory 315,800.00 FG Inventory

Raw and In-Process Inventory 315,800.00

Cost of Sale 308,100.00 Cost of Sale

FG Inventory 308,100.00

Raw and In-Process Inventory 10,000.00 Cost of Sale

FG Inventory 9,800.00
Cost of Sale 19,800.00
 Materials CC Total
RIP, beg - - -
Purchased/Incurred 320,000.00 275,500.00 595,500.00
320,000.00 275,500.00 595,500.00
RIP, end 4,200.00 10,000.00 14,200.00
Backflushed to FG 315,800.00 265,500.00 581,300.00
FG, beg - - -
315,800.00 265,500.00 581,300.00
FG, end 7,700.00 9,800.00 17,500.00
Backflushed to COS 308,100.00 255,700.00 563,800.00
1. Trigger Point: Sale

Cost of Sale 732,000.00

Accounts Payable 420,000.00
Salaries Payable 249,600.00
Various Accounts 62,400.00

Cost of Sale 7,700.00

Raw and In-Process Inventory 400.00
FG Inventory 7,300.00

2. Trigger Point: Completion of Units

FG Inventory 420,000.00
Cost of Sale 312,000.00
Accounts Payable 420,000.00
Salaries Payable 249,600.00
Various Accounts 62,400.00

Raw and In-Process Inventory 12,100.00

Cost of Sale 410,750.00
FG Inventory 422,850.00

Cost of Sale 16,950.00

Raw and In-Process Inventory 12,500.00
FG Inventory 4,450.00

3. Trigger Point: Purchase of materials

Raw and In-Process Inventory 420,000.00

Accounts Payable 420,000.00

Cost of Sale 312,000.00

Salaries Payable 249,600.00
Various Accounts 62,400.00

FG Inventory 412,100.00
Raw and In-Process Inventory 412,100.00

Cost of Sale 410,750.00

FG Inventory 410,750.00

Cost of Sale 16,950.00

Raw and In-Process Inventory 8,300.00
FG Inventory 8,650.00
 Materials CC Total
RIP, beg 4,200.00 10,000.00 14,200.00
Purchased/Incurred 420,000.00 312,000.00 732,000.00
424,200.00 322,000.00 746,200.00
RIP, end 12,100.00 1,700.00 13,800.00
Backflushed to FG 412,100.00 320,300.00 732,400.00
FG, beg 7,700.00 9,800.00 17,500.00
419,800.00 330,100.00 749,900.00
FG, end 9,050.00 1,150.00 10,200.00
Backflushed to COS 410,750.00 328,950.00 739,700.00
A Relevant Costs
Variable Cost/unit 4
Selling Prices

B Incremental Analysis

Sales @ Lower SP 228,250.00

Sales @ Original SP 240,000.00
Incremental Revenue - 11,750.00
VC @ Lower SP 33,200.00
VC @ Original SP 32,000.00
Incremental Cost 1,200.00
Incremental Benefit - 12,950.00

Original SP Lower SP
Sales 240,000.00 228,250.00
Variable Costs 32,000.00 33,200.00
Fixed Costs 160,000.00 160,000.00
Operating Income (Loss) 48,000.00 35,050.00 - 12,950.00
Relevant cost to buy 30,420.00

Relevant cost to make

DM 12,600.00
DL 7,200.00
Var. FOH 10,800.00
Relevant cost to make 30,600.00
Cost Savings if bought 180.00

Proof: Total Cost Approach

Cost to make
DM 12,600.00
DL 7,200.00
Var. FOH 10,800.00
Fixed Cost 9,000.00 39,600.00

Cost to buy
Purchase Price 30,420.00
Fixed Costs 9,000.00 39,420.00

Cost Savings if bought 180.00

Incremental CM due to Special Order
3,500 x (21-20) 3,500.00
Less: Lost CM in dropping 500 regular units
500 x (30-20) 5,000.00
Incremental loss on accepting the special order - 1,500.00

w/o SO w/ SO
Sales 418,500.00 360,000.00
DM 165,000.00 132,000.00
DL 60,000.00 48,000.00
Var. FOH 75,000.00 60,000.00
CM 118,500.00 120,000.00
Fixed FOH 105,000.00 105,000.00
OI 13,500.00 15,000.00 - 1,500.00
 X Y Total w/o Y
Sales 16,000.00 14,000.00 30,000.00 12,800.00
Var. CGS 6,000.00 10,000.00 16,000.00 4,800.00
Var. S&A 2,000.00 5,000.00 7,000.00 1,600.00
CM 8,000.00 - 1,000.00 7,000.00 6,400.00
Fxd PC 5,000.00 7,000.00 12,000.00 12,000.00
Fxd S&A 1,000.00 3,000.00 4,000.00 4,000.00
NI (L) 2,000.00 - 11,000.00 - 9,000.00 - 9,600.00

X Y
Sales 16,000.00 14,000.00
Var. CGS 6,000.00 10,000.00
Var. S&A 2,000.00 5,000.00
CM 8,000.00 - 1,000.00

Current Net Loss - 9,000.00

Less: CM of Product Y - 1,000.00
Less: Decrease in units sales of X 3,200.00
Add: Decrease in Var. CGS of X 1,200.00
Add: Decrease in Var. S & A 400.00
Net Loss after dropping Y - 9,600.00

Incremental Decrease in Sales of X - 3,200.00

Incremental Decrease in Total Revenue - 14,000.00
Incremental Cost Savings (Var. CGS of Y) 10,000.00
Incremental Cost Savings (Var. S&A of Y) 5,000.00
Incremental Decrease in Var. CGS of X 1,200.00
Incremental Decrease in Var. S&A of X 400.00
Incremental Decrease in Net Income - 600.00
 Item 1
SV after AP 20,000.00
Less: App. SV@ SOP 5,000.00
Incremental Revenue 15,000.00
APC 16,000.00
Incremental Profit (loss) after AP - 1,000.00

Proccess further? No
 Item 2
12,000.00
2,000.00
10,000.00
9,000.00
1,000.00

Yes
a. Cost Center - is an organizational unit wherein responsibility lies upon the incurrence or nonincurrence of costs
which is influenced or decided upon by the cost center manager. This responsibility center is evaluated on the basis
of how well costs are controlled.

b. Revenue center- is an organizational unit wherein responsibility lies upon the revenues generation or non-
generation which is influenced or decided upon by the revenue manager. This center has no control over the selling
prices or costs hence, evaluated on the basis of the total revenues only.

c. Profit center- is an organizational unit wherein responsibility lies upon the current activity revenues and costs
incurrence or non-incurrence are influenced or decided upon by the profit manager.

d. Investment center - is an organization unit wherein the manager has an authority to decide on where to invest
organizational resources or in what business should the company resources be placed into. Additionally, the manager
is also responsible for managing revenues and current expenses.
ncurrence of costs
aluated on the basis

ration or non-
ntrol over the selling

enues and costs

Segment Income
ROI =
Investment
n where to invest
tionally, the manager
A Div. A 200k/1M 20%

Div. B 750k/5M 15%

B RI = Income- (Target Rate x Asset Base)

12% 14% 18%

Div A 80,000.00 60,000.00 20,000.00
Div B 150,000.00 50,000.00 - 150,000.00
A.1
Overhead Costs
Service Dept OH
IT Dept (300/800)*110000
HR Dept (300/500)*120000

A.2 Dept A
Overhead Costs 112,000.00
Service Dept OH
20% IT Dept 33,000.00
17% HR Dept 85,200.00
230,200.00

B.1 Dept A
Overhead Costs 112,000.00
Service Dept OH
100,000.00 HR Dept 60,000.00
88,000.00 IT Dept 48,750.00
220,750.00

IT Dept
B.2 Dept A 30%
Dept B 50%
IT Dept -
HR Dept 20%
IT Dept 110,000+0.17(HR)
HR Dept 120,000+0.20(IT)

IT 110,000+0.17(120,000+0.20IT)
110,000+20,400+0.034IT
0.966IT 130,000.00
IT 134,482.76

HR 120,000+0.20(IT)
120,000+0.20(134,989.65)
HR 146,896.55

Dept A
Overhead Costs 112,000.00
Service Dept OH
IT Dept 33,600.00
HR Dept 73,448.28
219,048.28
Dept A Dept B
112,000.00 80,000.00

41,250.00 (500/800)*110000 68,750.00 110,000.00

72,000.00 (200/500)*120000 48,000.00 120,000.00
225,250.00 196,750.00

Dept B IT Dept HR Dept

80,000.00 110,000.00 120,000.00

55,000.00 - 110,000.00 22,000.00

56,800.00 - 142,000.00
191,800.00 - -

Dept B IT Dept HR Dept

80,000.00 110,000.00 120,000.00

40,000.00 20,000.00 - 120,000.00

81,250.00 - 130,000.00
201,250.00 - -

HR Dept
50%
33%
0.16667
+0.17(120,000+0.20IT)
+20,400+0.034IT

+0.20(134,989.65)

Dept B IT Dept HR Dept

80,000.00 110,000.00 120,000.00

67,241.38 - 134,482.76 26,896.55

48,965.52 24,482.76 - 146,896.55
196,206.90 - -
A. B1 B2 E B1 B2
Revenue 10 26 Revenue 12 26
Cost -10 -10 Cost -10 -8
APC -10 APC -10
Profit 0 6 Profit 2 8
not sell buy sell buy

B B1 B2
Revenue 14 26
Cost -10 -14
APC -10
Profit 4 2
sell buy

C B1 B2
Revenue 12 26
Cost -10 -12
APC -10
Profit 2 4
sell buy

D B1 B2
Revenue 11 26
Cost -10 -11
APC -10
Profit 1 5
sell buy