AC56 COST ACCOUNTING AND CONTROL ACTIVITY

CHAPTER 9: ACCOUNTING FOR LABOR

I. MULTIPLE CHOICE – THEORY premiums and Medicare
1. If the job is taken as a rush order with Contributions
the knowledge that overtime will be b. Gross pay less all deductions
necessary, the overtime premium c. The amount earned per hour times
should be charged to: number of hours worked
a. Specific job d. Gross pay less only income tax
b. General expense withheld
c. Factory overhead
d. Selling expense II. MULTIPLE CHOICE –
2. If the overtime premium is charged to COMPUTATIONAL
a specific job, it should be debited to: 1. Covid Rose worked 46 hours in one
a. Work in process account week at a rate of P45 an hour. She is
b. Selling expense account paid one and a half times the regular
c. General expense account rate for hours worked in excess of 40.
d. Manufacturing overhead account What is the gross earnings of Covid
3. What is the procedure for keeping Rose?
records of the hours worked by each a. P2,070
employee? b. P2,340
a. Timekeeping c. P2,205
b. Bookkeeping d. P1,800
c. Accounting 2. The data below pertains to the
d. Recordkeeping earnings of Covid Bryant for the week
4. The overtime premium spent on a ended June 16, 2020:
regular job order that cannot be
completed in the regular working Hours and rate 42 hours worked
hours should be charged to: at P40 an hour
a. Work in process account Earnings to date P14.00
b. Selling expense account Overtime rate One and a half
c. Manufacturing overhead control times the regular
account rate for hours
d. General expense account worked in excess
5. The document that is used to secure of 40 hours
information as to the type of work Withholding tax 3% of gross
performed is the: earnings
a. Labor voucher SSS Contributions 2% of gross
b. Time ticket earnings
c. Clock card PhilHealth 1% of gross
d. Requisition report Contributions earnings
6. An example of fringe benefit is: Pag-ibig 1% of gross
a. Direct labor wage rate Contributions earnings
b. Employee health insurance What is the net pay for Covid Bryant
c. Withheld taxes for the week?
d. Overtime pay a. P1,599.60
7. The employer’s portion of SSS b. P13,879.60
premiums is: c. P1,629.60
a. An expense for the employee d. P13,580.00
b. An expense of the employer 3. Coviduvidapdap, a production
c. A revenue for the employee employee is paid P180 per hour for a
d. A revenue for the employer regular work of 40 hours. During the
8. Fringe benefits of sales personnel is week ended March 23,
usually charged to Coviduvidapdap worked 50 hours and
a. Work in process account earned time and a half for overtime
b. Administrative expense hours.
c. Selling expense What is the amount that should be
d. Factory overhead control charged to Work in Process account if
9. Which of the following are not levied the overtime premium is charged to
on the employer? production worked on during the
a. Income taxes withheld overtime hours?
b. Medicare contributions a. P9,000
c. Pag-ibig Fund contributions b. P9,900
d. SSS premiums c. P8,900
10.“Take home pay” means d. P9,500
a. Gross pay plus the amount paid for 4. Using the data in No. 3, what is the
you by your employer for SSS amount that should be charged to
Work in Process account, if the
 AC56 COST ACCOUNTING AND CONTROL ACTIVITY
CHAPTER 9: ACCOUNTING FOR LABOR
overtime premium is charged to inventory – Job
manufacturing overhead? 1011
a. P9,000 Factory Overhead
37
b. P9,900 Control
c. P8,900 Loss 1,250
d. P9,500 12,23
Payroll Payable
5. Covidudumdum, a punch press 5
operator in a metal fabricating plant is d. Work in process
10,99
randomly assigned to various jobs. inventory – Job
8
The straight-time wage rate P40 per 1010
hour with time and one-half for time Work in process
over 40 hours per week. How much of inventory – Job 1,200
these earnings should be charged to 1011
Manufacturing Overhead Control Factory Overhead
37
account if 47 hours are worked in one Control
week? Payroll Payable 12,23
a. P1,974 5
b. P280 7. F & B Company pays time and a half
c. P140 for hours in excess of 40 hours per
d. P-0- week. An individual is paid P24.00 per
6. Twenty workers paid at a wage rate of hour and worked 44 hours a week.
P10.50 per hour, worked 40 hours a. P960
each, entirely Job 1010 during the past b. P1,032
week. Eight others, who are paid at a c. P1,104
wage rate of P7.50 per hour, spent d. P1,036
half of their 40-hour week on Job 1010 8. Escudero Manufacturing Co. has
and the remainder of their time on Job provided you with the following
1011. In addition, Kyle Motus, a part- information
timer, worked on Job 1010 for 16
hours but was unable to work 4 hours Raw materials purchased P135,0
because of the inefficiency of his 00
fellow workers in a prior stage. Kyle Beginning raw materials 100,00
earns P9.25 per hour. Salaries for inventory 0
supervisors and maintenance Ending raw materials 175,00
personnel related to Job 1010 and inventory 0
1011 amounted to P1,250. Factory Overhead (including
Assuming that payroll withholdings are P85,000 of indirect labor and 227,50
ignored and Jobs 1010 and 1011 are P20,000 of indirect 0
the only jobs being performed, what is materials)
the entry to record labor cost? Total manufacturing cost 960,00
0
a. Work in process Direct labor cost for the year
10,37
inventory – Job amounted to
3
1010 a. P 677,500
Work in process b. P382,500
inventory – Job 1,825 c. P642,500
1011 d. P692,500
Factory Overhead 9. Ronald Factory provides for an
37
Control incentive scheme for its factory
12,23 workers which features a combined
Payroll Payable
5 minimum guaranteed wage of P875
b. Work in process per week and piece rate of P11.25.
inventory – Job 9,748 Production report for the week show.
1010
Work in process Employee Units Produced
inventory – Job 1,200 R 67
1011 O 78
Factory Overhead L 80
1,287
Control A 82
12,23 N 72
Payroll Payable
5 D 75
c. Work in process The portion of the weekly payroll that
inventory – Job 9,748 should be charged to factory overhead
1010 is
Work in process 1,200 a. P5,325.00
 AC56 COST ACCOUNTING AND CONTROL ACTIVITY
CHAPTER 9: ACCOUNTING FOR LABOR
b. P5,275.00 i. Recording the payroll
c. P5,217.50 ii. Payment of the payroll
d. P217.50 iii. Distribution of the payroll
10.Litton Manufacturing Co. pays their iv. The employer’s payroll taxes
employees on a combined minimum 3. The Norman Company recently
rate and piecework rate plan. The adopted an incentive plan. Factory
minimum guaranteed daily wage is workers are paid P7.50 per unit with a
P420. Any employee who produces guaranteed minimum wage of P2,000
more than 10 shirts receives a bonus. per week. Following is a report on
If Mr. Litton produced 14 shirts, what employees’ productivity for the week
amount should be charged to factory ending May 16, 2014. All employees
overhead control account? worked the full 40-hour week.
a. 0
b. P88 WEEKLY SUMMARY
c. P268 EMPLOYEE’S UNITS PRODUCED
d. P168 NAME
R. Cruz 240
III. PROBLEMS J. Briones 286
1. A summary of taxable factory wages C. David 275
of the ETG Corporation for the month A. Mendoza 240
of March 2020 is shown below. F. Rivera 225
R. Tolentino 285
Wages subject to: Required:
SSS (6.2%); Incom a. Compute each employee’s gross
PhilHealth e pay
Departmen
(1.5%); Pag-ibig Taxes b. What amount should be charged to
t
(1.5%) and ECC 4.10% work in process?
(1%) c. What amount should be charged to
Factory P52,800 P20,1 factory overhead control?
Supply 30 4. Given the following data from Uptown
Factory Grocery:
12,11
Administrat 53,260
0
ion HOURS WORKED
Cutting 72,380 28,64 Hourl
Employ S T T S
M W F y
0 ee u u h a
rate
Assembly 79,910 33,75 J. Sy - 8 8 7 9 8 - P46.
0 80
Finishing 84,620 30,97 F. Lim 4 8 8 8 8 1 - 37.0
0 0
0
H.ong - 8 8 1 8 8 4 31.6
Required: 0 0
a. Prepare a schedule of the W.Tao - 8 8 8 8 9 4 26.4
employer’s contributions (e.g SSS, 0
PhilHealth, Pag-ibig and ECC) and All employees are paid at the regular
withholding taxes to be charged to hourly rate for the first 40 hours
each department. worked during the week. The rate for
b. Prepare the necessary journal entry hours worked in excess of 40 is one
to record employer’s payroll taxes and half times the regular rate. The
and deductions. rate for hours worked on Sunday is
2. A semi-monthly payroll summary twice the regular rate.
made from time tickets shows the Compute the following for EACH
following data: employee, for the week ended May 7,
2018:
Number of
a. Regular earnings (for regular and
Rate Hours
Employ Status Classifica / Regu Overti overtime hours)
ee tion hour lar me b. Overtime premium earnings
Austria S Direct 36 80 6 c. Gross earnings
Bautist ME Direct 36 80 8 5. Seck Sy, an employee of the Pool
a
Company is paid P200 per hour for a
De ME-2 Direct 45 80 8
Santos regular week for 40 hours. During the
Motus S-4 Indirect 30 80 week ended November 14, the
Reyes S Indirect 30 80 employee worked for 48 hours and
Required: earned time and a half for overtime
a. Determine the net pay for each hours.
employee. Prepare the following:
b. Prepare the journal entries for:
 AC56 COST ACCOUNTING AND CONTROL ACTIVITY
CHAPTER 9: ACCOUNTING FOR LABOR
a. Journal entry to record the labor
cost if the overtime premium is
charged to the jobs worked on
during the overtime hours.
b. Journal entry to record the labor
cost if the overtime premium is not
charged to specific jobs.