Cost Accounting and Control
EXAM REVIEWER
ANALYSIS & APPLICATION
SHORT PROBLEMS
CASE A Mary’s Pottery Trade produces and sells various types of earthenware vases. The business began operations on January
1, 2020, and its costs incurred during the year include the following:
Variable costs (based on vases produced):
Direct materials cost ₱253,200
Direct manufacturing labor costs 335,000
Indirect manufacturing costs 227,000
Administration and marketing 211,275
Fixed costs:
Administration and marketing ₱ 220,000
Indirect manufacturing costs 280,000
On December 31, 2020, direct materials inventory consisted of 1,200 pounds of material. Production in that year was 10,000
vases. All prices and unit variable costs remained constant during the year. Revenues for 2020 were ₱1,580,013. Finished
goods inventory was ₱173,042 on December 31, 2020. Each finished vase requires 1.5 pounds of material.
Required: Determine the following
1) Direct materials inventory cost, December 31, 2020.
Direct materials cost P 253,200
Divide by Used in production (10,000 x 1.5) 15,000 lbs.
Direct materials cost per pound P 16.88
Multiply by Direct materials ending inventory 1,200 lbs.
Direct materials cost, 12/31/2020 P 20,256
2) Finished goods ending inventory in units on December 31, 2020.
Direct material cost P 253,200
Direct labor 335,000
Factory Overhead (P227,000 + P280,000) 507, 000
Total manufacturing cost 1,905,200
Divide by Production 10,000 vases
Unit cost P 109.52
Cost of finished goods P 173,042
Divide by Units sold 109.52
Units in finished goods, end 1,580 vases
3) Selling price per unit.
Revenues P 1,580,013
Divide by Units sold (10,000 – 1,580) 8,420 vases
Selling price P 187.65 per vase
4) Operating profit for 2020.
Revenues P 1,580,013
Cost of goods sold (8,420 vases x P 109.52) (922,158.40)
Gross profit 657,854.60
Administration and Marketing expense (431,275)
Operating profit P 226,579.69
, Min-ho Corporation, which began operations on January 1, 2020, reported the following information:
CASE B
Estimated manufacturing overhead ₱ 600,000
Actual manufacturing overhead 611,000
Estimated direct labor cost 480,000
Actual direct labor cost 500,000
Total debits in the Work-in-Process account 1,880,000
Total credits in the Finished-Goods account 1,490,000
Min-ho Corporation applies manufacturing overhead to jobs on the basis of direct labor cost and adds a 60% markup to
the cost of completed production when finished goods are sold. On December 31, 2020 Job No. 88 was the only job that
remained in production. That job had direct-material and direct-labor charges of ₱16,500 and ₱36,000, respectively.
Required:
5) Determine the amount of under- or overapplied overhead.
Applied Factory Overhead (P600,000/P480,000 x P500,000) P 625,000
Actual FOH (611,000)
Overapplied FOH P 14,000
6) Compute the amount of direct materials used in production.
7) Calculate the balance the company would report as ending work-in-process inventory.
Work In Process Finished goods
6) DM (squeezed) P 755,000 1,782,500 COGM P1,782,500 P 1,490,000 COGS
DL 500,000
FOH 625,000
1,880,000 1,782,500 (squeezed)
DM 16,500
DL 36,000
FOH (125% of DLC) 45,000
7) WIP, end P 97,500
8) How much is the cost of the ending finished goods inventory?
COGM P 1,782,500
COGS (1, 490,000)
Finished good, end P 292,500
9) How much total sales revenue did Min-ho Corporation earn in 2020?
Sales revenue (P 1,490,000 X 160%) = P 2,384,000
EXAM REVIEWER
ANALYSIS & APPLICATION
SHORT PROBLEMS
CASE A Mary’s Pottery Trade produces and sells various types of earthenware vases. The business began operations on January
1, 2020, and its costs incurred during the year include the following:
Variable costs (based on vases produced):
Direct materials cost ₱253,200
Direct manufacturing labor costs 335,000
Indirect manufacturing costs 227,000
Administration and marketing 211,275
Fixed costs:
Administration and marketing ₱ 220,000
Indirect manufacturing costs 280,000
On December 31, 2020, direct materials inventory consisted of 1,200 pounds of material. Production in that year was 10,000
vases. All prices and unit variable costs remained constant during the year. Revenues for 2020 were ₱1,580,013. Finished
goods inventory was ₱173,042 on December 31, 2020. Each finished vase requires 1.5 pounds of material.
Required: Determine the following
1) Direct materials inventory cost, December 31, 2020.
Direct materials cost P 253,200
Divide by Used in production (10,000 x 1.5) 15,000 lbs.
Direct materials cost per pound P 16.88
Multiply by Direct materials ending inventory 1,200 lbs.
Direct materials cost, 12/31/2020 P 20,256
2) Finished goods ending inventory in units on December 31, 2020.
Direct material cost P 253,200
Direct labor 335,000
Factory Overhead (P227,000 + P280,000) 507, 000
Total manufacturing cost 1,905,200
Divide by Production 10,000 vases
Unit cost P 109.52
Cost of finished goods P 173,042
Divide by Units sold 109.52
Units in finished goods, end 1,580 vases
3) Selling price per unit.
Revenues P 1,580,013
Divide by Units sold (10,000 – 1,580) 8,420 vases
Selling price P 187.65 per vase
4) Operating profit for 2020.
Revenues P 1,580,013
Cost of goods sold (8,420 vases x P 109.52) (922,158.40)
Gross profit 657,854.60
Administration and Marketing expense (431,275)
Operating profit P 226,579.69
, Min-ho Corporation, which began operations on January 1, 2020, reported the following information:
CASE B
Estimated manufacturing overhead ₱ 600,000
Actual manufacturing overhead 611,000
Estimated direct labor cost 480,000
Actual direct labor cost 500,000
Total debits in the Work-in-Process account 1,880,000
Total credits in the Finished-Goods account 1,490,000
Min-ho Corporation applies manufacturing overhead to jobs on the basis of direct labor cost and adds a 60% markup to
the cost of completed production when finished goods are sold. On December 31, 2020 Job No. 88 was the only job that
remained in production. That job had direct-material and direct-labor charges of ₱16,500 and ₱36,000, respectively.
Required:
5) Determine the amount of under- or overapplied overhead.
Applied Factory Overhead (P600,000/P480,000 x P500,000) P 625,000
Actual FOH (611,000)
Overapplied FOH P 14,000
6) Compute the amount of direct materials used in production.
7) Calculate the balance the company would report as ending work-in-process inventory.
Work In Process Finished goods
6) DM (squeezed) P 755,000 1,782,500 COGM P1,782,500 P 1,490,000 COGS
DL 500,000
FOH 625,000
1,880,000 1,782,500 (squeezed)
DM 16,500
DL 36,000
FOH (125% of DLC) 45,000
7) WIP, end P 97,500
8) How much is the cost of the ending finished goods inventory?
COGM P 1,782,500
COGS (1, 490,000)
Finished good, end P 292,500
9) How much total sales revenue did Min-ho Corporation earn in 2020?
Sales revenue (P 1,490,000 X 160%) = P 2,384,000
