1-5 Old Navy Manufacturing Company

Journal Entries
A.
Raw Materials 240,000.00
Accounts Payable 240,000.00

B.
Work in Process 168,000.00
Manufacturing Overhead 12,000.00
Raw Materials 180,000.00

C.
Work in Process 120,000.00
Manufacturing Overhead 30,000.00
Factory Payroll 150,000.00

D.
Manufacturing Overhead 12,000.00
Accumulated Depreciation 12,000.00

E.
Manufacturing Overhead 1,500.00
Cash 1,500.00

F.
Manufacturing Overhead 4,320.00
Prepaid Insurance 4,320.00

G.
Manufacturing Overhead 5,000.00
Cash 5,000.00
H.
Work in Process 64,820.00
Manufacturing Overhead 64,820.00

I.
Finished Goods 339,615.00
Work in Process 339,615.00
452,820 x 75%

J.
Accounts Receivable 472,066.88
Sales 472,066.88

Cost of Goods Sold 314,711.25

Finished Inventory 314,711.25

Finished Goods Inventory, Beg. 60,000.00

Goods Completed During the Period (339,615 x 75%) 254,711.25
Cost of Goods Sold 314,711.25
Multiply by: Mark-up on Cost 150%
Selling Price of Goods Sold 472,066.88

1-6 Quicksilver Company

Case A Case B
a. Total Manufacturing Costs g. Direct Materials Used
Direct Materials Used 41,500.00 Total Manufacturing Costs
Direct Labor 15,000.00 Less: Manufacturing Overhead
Manufacturing Overhead 30,000.00 Direct Labor
Total Manufacturing Costs 86,500.00 Direct Materials Used
b. Work in Process, End h. Work in Process, Beg.
Cost of Goods Manufactured 79,000.00 Cost of Goods Manufactured
Less: Work in Process, Beg (5,000.00) Add: Work in Process, End.
Total Manufacturing Costs (86,500.00) Less: Total Manufacturing Costs
Work in Process, End (12,500.00) Work in Process, Beg.

c. Finished Goods, Beg. i. Sales

Goods Available for Sale 86,500.00 Gross Profit
Less: Cost of Goods Manufactured (79,000.00) Add: Cost of Goods Sold
Finished Goods, Beg. 7,500.00 Net Sales
Add: Sales Discount
d. Cost of Goods Sold Sales
Goods Available for Sale 86,500.00
Less: Finished Goods, End. (6,000.00) j. Goods Available for Sale
Cost of Goods Sold 80,500.00 Cost of Goods Manufactured
Add: Finished Goods, Beg.
e. Gross Profit Goods Available for Sale
Sales 112,500.00
Less: Sales Discount (7,500.00) k. Cost of Goods Sold
Net Sales 105,000.00 Goods Available for Sale
Less: Cost of Goods Sold (80,500.00) Less: Finished Goods, End.
Gross Profit 24,500.00 Cost of Goods Sold

f. Net Income l. Operating Expenses

Gross Profit 24,500.00 Net Income
Less: Operating Expenses (13,500.00) Less: Gross Profit
Net Income 11,000.00 Operating Expenses

1-7. Bayo Dress Shop

a. Total Factory Costs
Direct Materials Issued to Production (1,940,000 x 75%) 1,455,000.00
Directr Labor (1,350,000 x 80%) 1,080,000.00
Factory Overhead
Indirect Materials (1,940,000 x 25%) 485,000.00
Indirect Labor (1,350,000 x 20%) 270,000.00
Depreciation of Sewing and Equipment 80,000.00
Utilities Paid 320,000.00
Factory Insurance Expired 17,500.00
Factory Rent (960,000 - 50,000) 910,000.00 2,082,500.00
Total Factory Costs for the Period 4,617,500.00

b. Cost of Goods Manufactured for the Year

Total Factory Costs for the Period 4,617,500.00
Less: Work in Process Inventry, End. (100,000.00)
Cost of Goods Manufactured for the Year 4,517,500.00

c. Gross Profit
Sales (COGS / (100%-35%) 5,212,500.00
Less: Cost of Goods Sold
75% of Production
(4,517,500 x 75%) (3,388,125.00)
Gross Profit 1,824,375.00

d. Journal Entries
a. Raw Materials Inventory 2,350,000.00
Accounts Payable 587,500.00
Cash 1,762,500.00

b. Work in Process Inventory (1,940,000 x 75%) 1,455,000.00

Manufacturing Overhead 485,000.00
Raw Materials Inventory 1,940,000.00

c. Work in Process (1,350,000 x 80%) 1,080,000.00

 Manufacturing Overhead (1,350,000 x 20%) 270,000.00
Factory Payroll 1,350,000.00

d. Manufacturing Overhead 1,327,500.00

Accum. Dep. - Sewing & Comp. Equip. 80,000.00
Cash (320,000 + 910,000) 1,230,000.00
Factory Prepaid Insurance 17,500.00

1-8. M&M Company

a. The Total Factory Costs for the Period
Raw Materials, Beg. 540,000.00
Add: Purchases 1,640,000.00
Total Raw Materials Available for Use 2,180,000.00
Less: Raw Materials, End. (570,000.00)
Raw Materials Issued to Production 1,610,000.00
Less: Indirect Materials (1,610,000 * 20%) (322,000.00)
Direct Materials Issued to Production 1,288,000.00

Work in Process Inventory, Beg. 600,000.00

Add: Direct Materials 1,288,000.00
Direct Labor 840,000.00
Factory Overhead
Indirect Materials 322,000.00
Indirect Labor 180,000.00
Factory Utilities Expense 360,000.00
Repair & Maintenance of Factory Equip. 20,000.00
Depreciation of Factory Equip. 120,000.00 1,002,000.00
Total Factory Costs for the Period 3,730,000.00

b. The Cost of Goods Sold for the Period

Total Factory Costs for the Period 3,730,000.00
Less: Work in Process Inventory, End. (440,000.00)
Cost of Goods Manufactured 3,290,000.00
Add: Finished Goods Inventory, Beg. 580,000.00
Total Cost of Goods Available for Sale 3,870,000.00
Less: Finished Goods Inventory, End. (400,000.00)
Cost of Goods Sold 3,470,000.00

c. The Net Income or (Loss) for the Period

Sales (COGS * 135%) 4,684,500.00
Less: Cost of Goods Sold (3,470,000.00)
Gross Profit 1,214,500.00
Less: Operating Expenses
Office Salaries 140,000.00
Sales Salaries 80,000.00 (220,000.00)
Net Income 994,500.00

1-9. Product A
Direct Materials (1,200,500 x 90%) 1,080,450.00 Applied Overhead
Direct Labor (1,045,000 x 80%) 836,000.00 Direct Labor Cost * 110%
Factory Overhead 919,600.00 836,000 x 110%
Total Manufacturing Cost 2,836,050.00

Total Cost of of Goods Manufactured 2,837,500.00

Add: Work in Process Inventory, End.
20% of TMC
(2,836,050 x 20%) 567,210.00
Less: Total Manufacturing Cost (2,836,050.00)
Work in Process Inventory, Beg. 568,660.00

1-10. West Virginia Company

a. Change in Finished Goods Inventory Assuming the Goods at the End of the Period is P22,000
Cost of Goods Available for Sale 259,500.00
Less: Cost of Goods Manufactured During the Current Period (237,000.00)
Finished Goods Inventory, Beg. 22,500.00
Less: Finished Goods Inventory, End. (22,000.00)
Change in Finished Goods Inventory 500.00 DECREASE

b. Gross Profit Assuming Sales for the Period is P337,500 and Sales Discounts were reported to be P7,500
Cost of Goods Available for Sale 259,500.00
Less: Finished Goods Inventory, End. (22,000.00)
Cost of Goods Sold 237,500.00

Sales 337,500.00
Less: Sales Discount (7,500.00)
Net Sales 330,000.00
Less: Cost of Goods Sold (237,500.00)
Gross Profit 92,500.00

1-11. Jansport Manufacturing Company

a. Total Factory Costs Assuming Factory Overhead is Applied at 70% of Direct Labor Costs
Raw Meterials Issued to Production 3,600,000.00 Total Factory Payroll
Less: Indirect Materials (230,000.00) Less: Indirect Labor
Direct Materials Issued to Production 3,370,000.00 Direct Labor

Direct Materials 3,370,000.00

Direct Labor 2,100,000.00
Applied Factory Overhead 1,470,000.00
Work in Process, Beg. 720,000.00
Total Factory Costs 7,660,000.00

b. Cost of Sales Assuming Finished Goods Inventory is Increased by P186,000

Total Factory Costs 7,660,000.00
Less: Work in Process, End. (650,000.00)
Cost of Goods Manufactured 7,010,000.00
Less: Increase in FGI (186,000.00)
Cost of Sales / COGS 6,824,000.00

1-12. Fortified Company

Direct Materials, Beg. Bal. 174,000.00 Direct Labor
Add: Purchases 1,500,000.00 21,000 hours worked @ 45 945,000.00
Total Direct Materials 1,674,000.00 1,000 hours overtime @ 45 45,000.00
Direct Materials, End. (132,000.00) Total Direct Labor 990,000.00
DM Materials Used 1,542,000.00
Overtime Premium:
1,000 hours x 45/2 22,500.00

a. Prime Costs During the Period a. Conversion Costs During the Period
Direct Materials 1,542,000.00 Direct Labor 990,000.00
Add: Direct Labor 990,000.00 Add: Manufacturing Overhead 497,500.00
Total Prime Costs 2,532,000.00 Total Prime Costs 1,487,500.00

1-13. T Co.
a. The Cost of Raw Materials Purchased
Raw Materials Used in Production 326,000.00
Add: Raw Materials, End. Bal. 85,000.00
Total Raw Materials Available for Use 411,000.00
Less: Raw Materials, Beg. Bal. (75,000.00)
Raw Materials Purchased 336,000.00

b. The Total Factory Costs for the Period

Prime Cost 551,000.00 Conversion Cost 360,000.00
Less: Direct Materials (326,000.00) Less: Direct Labor (225,000.00)
Direct Labor 225,000.00 Manufacturing Overhead 135,000.00

Direct Materials 326,000.00

Direct Labor 225,000.00
Manufacturing Overhead 135,000.00
Work in Process, Beg. Bal. 80,000.00
Total Factory Costs 766,000.00

1-14. Dove Manufacturing Company

DM Beg 400,000.00
Add: Purchases 3,200,000.00
Less: DM Ending (400k + 180k) (580,000.00)
DM Materials Used 3,020,000.00

Cost of Goods Sold 6,900,000.00

Add: Finished Goods Inventory, End. (2,040,000 - 320,000) 1,720,000.00
Total Cost of Goods Available for Sale 8,620,000.00
Less: Finished Good Inventory, Beg. (2,040,000.00)
Cost of Goods Manufactured 6,580,000.00
Add: Work in Process, End. (800k x 90%) 720,000.00
Total Factory Costs 7,300,000.00
Less: Work in Process, Beg. (800,000.00)
Total Manufacturing Cost 6,500,000.00
Less: Direct Materials (3,020,000.00)
Total Converion Cost 3,480,000.00
Divide by: 1 + Predetermined Overhead Rate of 60% 160%
Direct Labor 2,175,000.00

Direct Labor 2,175,000.00

Multiply by: Predetermined Overhead Rate 60%
Factory Overhead 1,305,000.00

1-15. Sunflower Manufacturing Company

Conversion Cost 4,500,000.00 Prime Costs 6,750,000.00
Less: Direct Labor (4,500,000 / 150%) (3,000,000.00) Less: Direct Labor (3,000,000.00)
Factory Overhead (3,000,000 x 50%) 1,500,000.00 Raw Materials Used 3,750,000.00

Raw Materials Used 3,750,000.00

Add: Decrease in Raw Materials 250,000.00
Raw Materials Purchased During the Period 4,000,000.00

1-16. Johnson Company

a. Cost of Goods Manufactured for the Period
Raw Materials, Beg. 4,400,000.00
Add: Purchases 9,000,000.00
Less: Raw Materials, End. (2,800,000.00)
Raw Materials Used 10,600,000.00
Less: Factory Supplies (850,000.00)
Direct Materials Used 9,750,000.00
Add: Direct Labor 6,500,000.00
Factory Overhead
Indirect Labor 560,000.00
Supervision Fee 1,250,000.00
Depreciation (1,500,000 x 60%) 900,000.00
Rent (1,200,000 x 60%) 720,000.00
Utilities (600,000 x 60%) 360,000.00
Factory Supplies Used 850,000.00 4,640,000.00
Total Manufacturing Cost 20,890,000.00
Add: Work in Process, Beg. 3,000,000.00
Less: Work in Process, End (2,400,000.00)
Cost of Goods Manufactured 21,490,000.00
Add: Finished Goods, Beg. 2,400,000.00
Less: Finished Goods, End. (2,950,000.00)
Cost of Goods Sold 20,940,000.00

b. Sales and Net Income for the Period

Sales (20,940,000 / 125%) 27,920,000.00 Store Supplies, Beg.
Less: Cost of Goods Sold (20,940,000.00) Add: Purchase
Gross Profit 6,980,000.00 Less: Store Supplies, End.
Less: Administrative and Selling Expenses Store Supplies Used
Store Supplies 2,150,000.00
Office Supplies 720,000.00 Office Supplies, Beg.
Salaries and Benefits 2,360,000.00 Add: Purchase
Depreciation (1,500,000 x 40%) 600,000.00 Less: Office Supplies, End.
Rent Expense (1,200,000 x 40%) 480,000.00 Office Supplies Used
Utilities Expense (600,000 x 40%) 240,000.00
Advertising Expense 320,000.00 (6,870,000.00)
Net Income 110,000.00

1-17. Joyful Manufacturing Company

Overhead Applied per Direct Labor 30.80
Divide by: Average Direct Labor 38.50
Predetermined Overhead Rate 0.80

Conversion Cost = Direct Labor + Factory Overhead Direct Labor 4,400,000.00

7,920,000 = x + .80x Multiply by: Predetermined OH Rate 80%
7,920,000 = 1.80x Factory Overhead 3,520,000.00
x = 7,920,000 / 1.80
Direct Labor = 4,400,000

Direct Materials 9,280,000.00

Direct Labor 4,400,000.00
Factory Overhead 3,520,000.00
Total Manufacturing Costs 17,200,000.00
Add: Work in Process Inventory, Beg. 1,200,000.00
Total Factory Costs 18,400,000.00
Less: Work in Process Inventory, End. (1,000,000.00)
Cost of Goods Manufactured 17,400,000.00
Add: Finished Goods Inventory, Beg. 1,500,000.00
Total Cost of Goods Available for Sale 18,900,000.00
Less: Finished Goods Inventory, End. (2,100,000.00)
Cost of Goods Sold 16,800,000.00

Work in Process Inventory, End. 1,000,000.00 Finished Goods Inventory, End.

Less: Work in Process Inventory, Beg. (1,200,000.00) Less: Finished Goods Inventory, Beg.
Change in Work in Process Inventory (200,000.00) Change in Finished Goods Inventory

1-18. Serendra Company

Net Income 25,000.00 Cost of Goods Sold
Add: Operating Expenses 25,000.00 Add: FGI, End.
Gross Profit 50,000.00 Less: FGI, Beg.
Less: Sales (25,000 / 12.5%) 200,000.00 Cost of Goods Manufactured
Cost of Goods Sold 150,000.00 Add: WPI, End.
Less: WPI, Beg.
Total Manufacturing Costs
Less: Factory Overhead
Direct Labor (63,000 / 75%)
Direct Materials Used
Add: Raw Materials, End.
Less: Purchases
Raw Materials, Beg.
1-19.
a. Determine the amount debited to Finished Goods at Nov. 30
Total Overhead in WIP Inventory, Nov. 1 (120k + 90k) 210,000.00
Divide by: Total Direct Labor in WIP Inventory, Nov. 1 (80k + 60k) 140,000.00
Predetermined Overhead Rate 1.50

Charisse Denise Felice

WIP, Nov. 1
Materials 50,000.00 30,000.00
Labor 80,000.00 60,000.00
Overhead 120,000.00 90,000.00
Costs Added in November
Materials 80,000.00 50,000.00 75,000.00
Labor 100,000.00 80,000.00 110,000.00
Overhead (DL * 150%) 150,000.00 120,000.00 165,000.00
Amount Debited to FGI, Nov. 30 580,000.00 430,000.00

b. The Over or Underapplied Overhead at Nov. 30

Applied Overhead During November
Charisse 150,000.00
Denise 120,000.00
Felice 165,000.00 435,000.00
Less: Actual Overhead Incurred in Nov. (420,000.00)
Overapplied Overhead 15,000.00

1-20. Mariance Corporation

a. Balance of the Finished Goods Inventory account on December 31
Raw Materials, Jan. 1 85,000.00
Add: Purchases 970,000.00
Raw Materials Available for Use 1,055,000.00
Less: Raw Materials, Dec. 31 (110,000.00)
Direct Materials Used 945,000.00
Add: Direct Labor (48,000 hours x 20/hr) 960,000.00
Factory Overhead (960k x 60%) 576,000.00
Total Manufacturing Costs 2,481,000.00
Add: Work in Process, Beg. 90,000.00
Less: Work in Process, End. (271,000.00)
Cost of Goods Manufactured 2,300,000.00
Add: Finished Good Inventory, Jan. 1 180,000.00
Less: Cost of Goods Sold
Sales 2,625,000.00
Less: Gross Profit (1,050,000.00) (1,575,000.00)
Finished Goods Inventory, Dec. 31 905,000.00

b. Sales for the Period

Gross Profit 1,050,000.00
Divided by: Gross Profit Rate 40%
Sales for the Period 2,625,000.00
T-Accounts

Raw Materials Inventory Work in Process Inventory

80,000.00 180,000.00 b 100,000.00 339,615.00
a 240,000.00 b 168,000.00
c 120,000.00
h 64,820.00
320,000.00 180,000.00 452,820.00 339,615.00
140,000.00 113,205.00

Accounts Payable Manufacturing Overhead

240,000.00 a b 12,000.00 64,820.00
c 30,000.00
d 12,000.00
e 1,500.00
f 4,320.00
g 5,000.00
Cash 64,820.00 64,820.00
1,500.00 e -
5,000.00 g

Accumulated Dep - Factory Plant&Equip

12,000.00 d
100,000.00
(25,000.00)
(20,000.00)
55,000.00
 105,000.00
10,000.00
(100,000.00)
15,000.00

30,000.00
112,500.00
142,500.00
6,000.00
148,500.00

105,000.00
20,000.00
125,000.00

125,000.00
(12,500.00)
112,500.00

16,000.00
(30,000.00)
(14,000.00)
abor Cost * 110%
,000 x 110% 919,600.00 Applied Factory Overhead
2,700,000.00 Direct Labor 2,100,000.00
(600,000.00) Multiply by: Predetermined Overhead Rate 70%
2,100,000.00 Applied Factory Overhead 1,470,000.00
Manufacturing Overhead
Supervision Fee 175,000.00
Other Factory Overhead 300,000.00
Overtime Premium 22,500.00
Manufacturing Overhead 497,500.00
 850,000.00
2,000,000.00
(700,000.00)
2,150,000.00

150,000.00
850,000.00
(280,000.00)
720,000.00

Prime Cost 13,680,000.00

Less: Direct Labor (4,400,000.00)
Direct Materials 9,280,000.00
 2,100,000.00
(1,500,000.00)
600,000.00

150,000.00
78,000.00
(60,000.00)
168,000.00
95,000.00
(80,000.00)
183,000.00
(63,000.00)
(84,000.00)
36,000.00
50,000.00
(46,000.00)
40,000.00
ventory Finished Goods Inventory
i 60,000.00 314,711.25
i 339,615.00

399,615.00 314,711.25
84,903.75

erhead Cost of Goods Sold

h 314,711.25

314,711.25
2-1. Puregold Company
a. Journal Entries
Raw Materials Inventory ((5,000 x P100) + 10,000) 510,000.00
Accounts Payable 500,000.00
Cash 10,000.00
Purchase of Raw Materials on Account

Work in Process Inventory (382,500 x 90%) 344,250.00

Manufacturing Overhead (382,500 x 10%) 38,250.00
Raw Materials Inventory (510,000 x 75%) 382,500.00
Requisition for the Month

Raw Materials Inventory 5,900.00

Work in Process Inventory 5,100.00
Manufacturing Overhead 800.00
Return of Excess Materials

Accounts Payable (40 x P100) 4,000.00

Raw Materials Inventory 4,000.00
Return of Defective Materials

Work in Process 50,000.00

Accounts Payable 50,000.00
Purchased Raw Materials for a Specific Job

Raw Materials Inventory ((1,000 x P105) + 2,000) 107,000.00

Accounts Payable 105,000.00
Cash 2,000.00
Purchase of Raw Materials on Account

Work in Process Inventory (154,155 x 80%) 123,324.00 Initial Purchase

Manufacturing Overhead (154,155 x 20%) 30,831.00 Requisition
 Raw Materials Inventory 154,155.00 Return from SR
1,269 x 102 = 129,438 Return to Vendor
(1,500 - 1,269) x 107 = 24,717 Balance
Add: Purchase
b. Determine the Raw Materials Used and Raw Materials Inventory Balance
Raw Materials Inventory Less: Issuance
510,000.00 382,500.00 (1,500 - 1,269)
5,900.00 4,000.00 Balance
107,000.00 154,155.00
622,900.00 540,655.00 Raw Materials Used
82,245.00 Raw Materials Inventory

2-2. FAB Manufacturing Company

a. FIFO Perpetual
Receipts Issuances Balance
Date Units Unit Cost Total Units Unit Cost Total Units Unit Cost Total
Aug. 1 5,000.00 2.00 10,000.00
Aug. 7 6,000.00 2.50 15,000.00 5,000.00 2.00 10,000.00
- 6,000.00 2.50 15,000.00
- 5,000.00 2.00 10,000.00 2,000.00 2.50 5,000.00
- 4,000.00 2.50 10,000.00 -
- 9,000.00 - -
Aug. 12 8,000.00 2.30 18,400.00 - 2,000.00 2.50 5,000.00
- - 8,000.00 2.30 18,400.00
Aug. 14 - 2,000.00 2.50 5,000.00 1,000.00 2.30 2,300.00
- 7,000.00 2.30 16,100.00 -
- 9,000.00 - -
Aug. 15 9,000.00 2.25 20,250.00 - 1,000.00 2.30 2,300.00
- - 9,000.00 2.25 20,250.00
Aug. 21 - 1,000.00 2.30 2,300.00 1,000.00 2.25 2,250.00
- 8,000.00 2.25 18,000.00 -
9,000.00
Aug. 22 10,000.00 2.40 24,000.00 - 1,000.00 2.25 2,250.00
- - 10,000.00 2.40 24,000.00
Aug. 28 - 1,000.00 2.25 2,250.00 2,000.00 2.40 4,800.00
- 8,000.00 2.40 19,200.00 -
- 9,000.00 - -
Aug, 29 10,000.00 2.35 23,500.00 - 2,000.00 2.40 4,800.00
- - 10,000.00 2.35 23,500.00
Total Costs of Raw Materials Used 82,850.00 Total Costs of End.Inv 28,300.00

b. Simple Average - Perpetual

Receipts Issuances Balance
Date Units Unit Cost Total Units Unit Cost Total Units Unit Cost Total
Aug. 1 5,000.00 2.00 10,000.00
Aug. 7 6,000.00 2.50 15,000.00 11,000.00 25,000.00
9,000.00 2.25 20,250.00 6,000.00 2.25 13,500.00
SAUC = (2 + 2.50) / 2 = 2.25
Aug. 12 8,000.00 2.30 18,400.00 - 14,000.00 31,900.00
Aug. 14 - 9,000.00 2.27 20,430.00 5,000.00 2.27 11,470.00
SAUC = (2 + 2.50 + 2.30) / 3 = 2.27
Aug. 15 9,000.00 2.25 20,250.00 - 23,000.00 31,720.00
Aug. 21 - 9,000.00 2.26 20,340.00 14,000.00 2.26 11,380.00
SAUC = (2 + 2.50 + 2.30 + 2.25) / 4 = 2.26
Aug. 22 10,000.00 2.40 24,000.00 - 24,000.00 35,380.00
Aug. 28 9,000.00 2.29 20,610.00 15,000.00 2.29 14,770.00
SAUC = (2 + 2.50 + 2.30 + 2.25 + 2.40) / 5 = 2.29
Aug. 29 10,000.00 2.35 23,500.00 - 25,000.00 38,270.00
Total Costs of Raw Materials Used 81,630.00 Total Costs of End.Inv 38,270.00
- -
c. Weighted Average - Perpetual - -
 Receipts Issuances Balance
Date Units Unit Cost Total Units Unit Cost Total Units Unit Cost Total
Aug. 1 5,000.00 2.00 10,000.00
Aug. 7 6,000.00 2.50 15,000.00 - 11,000.00 2.27 25,000.00
WAUC = 25,000 / 11,000 = 2.27 -
Aug. 7. - 9,000.00 2.27 20,430.00 2,000.00 2.27 4,570.00
Aug. 12 8,000.00 2.30 18,400.00 - 10,000.00 2.30 22,970.00
WAUC = 22,970 / 10,000 = 2.30 -
Aug. 14 - 9,000.00 2.30 20,700.00 1,000.00 2.30 2,270.00
Aug. 15 9,000.00 2.25 20,250.00 - 10,000.00 2.25 22,520.00
WAUC = 22,520 / 10,000 = 2.25
Aug. 21 - 9,000.00 2.25 20,250.00 1,000.00 2.25 2,270.00
Aug. 22 10,000.00 2.40 24,000.00 - 11,000.00 2.39 26,270.00
WAUC = 26,270 / 11,000 = 2.39
Aug. 28 - 9,000.00 2.39 21,510.00 2,000.00 2.39 4,760.00
Aug. 29 10,000.00 2.35 23,500.00 - 12,000.00 2.36 28,260.00
WAUC = 28,260 / 12,000 = 2.36
Total Costs of Raw Materials Used 82,890.00 Total Costs of End.Inv 28,260.00

2-3. Starex Company

a. Economic Order Quantity (EOQ)
EOQ = √ 2 x Annual Demand x Cost per Order
Annual Carrying Cost per Unit

2 x 144,000 x 150 43,200,000

=
(200 x 5%) 10

b. Frequency of Order
No. of Orders = 144,000 annual requirement / 2,078.46
No. of Orders = 144,000 annual requirement / 2,078.46
No. of Orders = 69.28
c. Total Ordering Costs for the Year
Total Ordering Costs for the Year = No. of Orders per Year x Cost per Order
= 69.28 x 150
Total Ordering Costs for the Year 10,392.00

d. Reorder Point Assuming a Safety Stock Equal to Days Requirement

Reorder Point = (Daily Usage x Lead Time) + Safety Stocks = (400 x 5) + 400 2,400.00
Average Daily Usage = 144,000 / 360 = 400
Safety Stock = 400

2-4. Luzon Company

Raw Materials Purchased 1,290,000.00
Add: Freight In 50,000.00
Less: Purchase Returns (90,000.00)
Net Purchases 1,250,000.00
Less: Decrease in Raw Materials Inventory (45,000.00)
Cost of Raw Materials Used for the Period 1,205,000.00

2-5. Joey Company

Net Income 25,000.00
Add: Operating Expenses 25,000.00
Gross Profit 50,000.00
Less: Sales (25,000 / 12.5%) 200,000.00
Cost of Goods Sold 150,000.00
Add: Finished Goods Inventory, Dec. 31 78,000.00
Less: Finished Goods Inventory, Jam. 1 (60,000.00)
Cost of Goods Manufactured 168,000.00
Add: WIP Inventory, Dec. 31 95,000.00
Less: WIP Inventory, Jan. 1 (80,000.00)
Total Manufacturing Costs 183,000.00
Less: Factory Overhead (63,000.00)
Direct Labor (63,000 / 75%) (84,000.00)
Raw Materials Used 36,000.00
Add: Raw Materials Inventory, Dec. 31 50,000.00
Less: Raw Materials Purchased (46,000.00)
Raw Materials Inventory, Jan. 1 40,000.00

2-6. Glendale Company

Cost of Goods Manufactured 187,500.00 Direct Materials Used = Raw Materials Inventory, Beg. + Purchases - Raw Ma
Add: WIP Inventory, End. 12,500.00 100,000.00 = x 40,000.00
Total Manufacturing Costs 200,000.00 100,000 - 40,000 = 2/3x
Less: Factory Overhead (200,000 x 20%) (40,000.00) 60,000.00 = 2/3 x
Direct Labor (200,000 x 30%) (60,000.00) 60,000 / (2/3x) = (2/3 x) / (2/3)
Direct Materials Used 100,000.00 x = 90,000.00
Add: Raw Materials Inventory, End. 30,000.00 Raw Materials Inventory, Beg. 90,000.00
Raw Materials Available for Use 130,000.00 Raw Materials Inventory, End. 30,000.00
Less: Purchases (40,000.00)
Raw Materials Inventory, Beg. 90,000.00

2-7. Erwin Company

a. FIFO - Perpetual
Receipts Issuances Balance
Date Units Unit Cost Total Units Unit Cost Total Units Unit Cost Total
1-Jun 750.00 20.00 15,000.00
3-Jun 400.00 19.50 7,800.00 - 750.00 20.00 15,000.00
- - 400.00 19.50 7,800.00
4-Jun - 600.00 20.00 12,000.00 150.00 20.00 3,000.00
- - 400.00 19.50 7,800.00
10-Jun 350.00 21.50 7,525.00 - 150.00 20.00 3,000.00
- - 400.00 19.50 7,800.00
 - - 350.00 21.50 7,525.00
15-Jun - 150.00 20.00 3,000.00 50.00 19.50 975.00
- 350.00 19.50 6,825.00 350.00 21.50 7,525.00
- 500.00 - -
18-Jun 500.00 22.00 11,000.00 - 50.00 19.50 975.00
- - 350.00 21.50 7,525.00
- - 500.00 22.00 11,000.00
20-Jun - 50.00 19.50 975.00 500.00 22.00 11,000.00
- 350.00 21.50 7,525.00 -
- 400.00 - -
26-Jun 550.00 21.00 11,550.00 500.00 22.00 11,000.00
- - 550.00 21.00 11,550.00
27-Jun 500.00 22.00 11,000.00 400.00 21.00 8,400.00
- 150.00 21.00 3,150.00 -
- 650.00 -
30-Jun 200.00 20.00 4,000.00 400.00 21.00 8,400.00
200.00 20.00 4,000.00
Total Costs of Raw Materials Used/Issued 44,475.00 Total Costs of End.Inv 12,400.00

2-8. Nesabel Company

Total Manufacturing Costs 1,500,000.00
Less: Factory Overhead (3,920 x 100) (392,000.00)
Labor Cost (497,000.00)
Raw Materials Used for the Quarter 611,000.00

2-9. Sunflower Manufacturing Company

Conversion Cost 6,750,000.00 Prime Costs 6,750,000.00
Less: Direct Labor (6,750,000 / 150%) (4,500,000.00) Less: Direct Labor (4,500,000.00)
Factory Overhead (4,500,000 x 50%) 2,250,000.00 Raw Materials Used 2,250,000.00
Raw Materials Used 2,250,000.00
Add: Increase in Raw Materials 250,000.00
Raw Materials Purchased During the Period 2,500,000.00

2-10. Madison Ford Company

Raw Materials Inventory Work in Process In
Beg. Balance 13,000.00 41,000.00 Requisitioned Beg. Bal 32,000.00
Purchased 74,000.00 DL Incurred 65,000.00
87,000.00 41,000.00 DM Issued 41,000.00
End. Bal. 46,000.00 Applied FOH 81,250.00
219,250.00
End. Bal. 73,250.00

2-11. Tri-Star Furniture Manufacturing Company

Total Manufacturing Costs 900,000.00
Less: Manufacturing Overhead (900,000 x 25%) (225,000.00)
Direct Labor (225,000 / 72%) (312,500.00)
Direcet Materials Used 362,500.00

Total Manufacturing Cost 900,000.00

Less: Cost of Goods Manufactured (850,000.00)
Total 50,000.00
Divide by: 20%
Work in Process Inventory End. 250,000.00

To Check:
Work in Process Inventory, Beg. (250,000 x 80%) 200,000.00
Add: Total Manufacturing Cost 900,000.00
Less: Work in Process Inventory, End. (250,000.00)
Cost of Goods Manufactured 850,000.00

2-12. Majestic Company

Cost of Goods Sold During the Period (975,000 - 600,000) 375,000.00 Factory Overh
Add: Finished Goods Inventory, End. 55,000.00
Less: Finished Goods Inventory, Beg. (40,000.00)
Cost of Goods Manufactured 390,000.00
Add: Work in Process Inventory, End. 15,000.00
Less: Work in Process Inventory, Beg. (35,000.00)
Total Manufacturing Costs 370,000.00
Less: Factory Overhead Applied (520,000 - 400,000) (120,000.00)
Direct Labor (120,000 / 80%) (150,000.00)
Direct Materials Used 100,000.00
Add: Raw Materials Inventory, End 5,000.00
Less: Raw Materials Inventory, Beg. (10,000.00)
Raw Materials Purchased During the Month 95,000.00

2-13. MPD Company

a. Direct Materials Used
Raw Materials Inventory, Beg. 15,000.00
Add: Purchases 33,000.00
Raw Materials Inventory, End. (19,000.00)
Raw Materials Used in Production 29,000.00
Less: Indirect Materials (1,000.00)
Direct Materials Used 28,000.00

b. Manufacturing Cost
Direct Materials Used 28,000.00 Factory Labor = Direct Labor + Indirect Labor
Add: Direct Labor 42,000.00 49,000 = 6x + x
Factory Overhead 40,000.00 49,000 = 7x
Total Manufacturing Costs 110,000.00 49,000 / 7 = 7x/x
x = 7,000 Indirect Labor
6 x 7,000 = 42,000 Direct Labor
c. Finished Goods Inventory on June 30
Cost of Goods Available for Sale 190,000.00
Less: Cost of Goods Manufactured (120,000.00)
Finished Goods Inventory, Beg. 70,000.00

Cost of Goods Available for Sale 190,000.00

Less: Cost of Goods Sold (140,000.00)
Finished Goods Inventory, End. 50,000.00

2-14. Lady Manufacturing Company

Materials Conversion Cost Total
Raw in Process, Beg. 30,000.00 45,000.00 75,000.00
Purchases 200,000.00 200,000.00
Conversion Costs 280,000.00 280,000.00
Raw in Process, End. (20,000.00) (30,000.00) (50,000.00)
Cost of Goods Manufactured 210,000.00 295,000.00 505,000.00
Finished Goods Inventory, Beg. 45,000.00 35,000.00 80,000.00
Finished Goods Inventory, End (60,000.00) (30,000.00) (90,000.00)
Cost of Goods Sold 195,000.00 300,000.00 495,000.00

Journal Entries
Raw and in Process 200,000.00
Accounts Payable 200,000.00

Cost of Goods Sold 280,000.00

Various Accounts 280,000.00

Finished Goods 210,000.00

 Raw and in Process 210,000.00
To Backflush cost of Direct Materials from RIP to Finished Goods

Cost of Goods Sold 195,000.00

Finished Goods 195,000.00
To Backflush cost of Finished Goods to COGS

Cost of Goods Sold 20,000.00

Finished Goods 15,000.00
Raw and in Process 5,000.00

2-15. DEF Manufacturing Company

Materials Conversion Cost Total
Raw in Process, Beg. 21,000.00 14,000.00 35,000.00
Purchases 750,000.00 750,000.00
Conversion Costs 900,000.00 900,000.00
Raw in Process, End. (36,000.00) (12,000.00) (48,000.00)
Cost of Goods Manufactured 735,000.00 902,000.00 1,637,000.00
Finished Goods Inventory, Beg. 43,500.00 8,500.00 52,000.00
Finished Goods Inventory, End (50,000.00) (10,000.00) (60,000.00)
Cost of Goods Sold 728,500.00 900,500.00 1,629,000.00

Journal Entries
Finished Goods 735,000.00
Raw and in Process 735,000.00
To Backflush cost of Direct Materials from RIP to Finished Goods

Cost of Goods Sold 728,500.00

Finished Goods 728,500.00
To Backflush cost of Finished Goods to COGS
Cost of Goods Sold 500.00
Finished Goods 1,500.00
Raw and in Process 2,000.00
 Freight on 1st Purchase
10,000 Freight / 5,000 units = P2

Freight on 2nd Purchase

2,000 Freight / 1,000 units = P2

Units
tial Purchase 5,000.00
(3,750.00) 5,000 x 75% Initial Purchase
eturn from SR 58.00 5,900 / P102 102 = 100 + 2 (Freight) Requisition
eturn to Vendor (40.00) Return from SR
1,268.00 Cost - 102 129,336.00 Return to Vendor
dd: Purchase 1,000.00 Cost - 107 107,000.00 Cost: 107 = 105 Cost of Inv. + P2 Freight Balance
2,268.00 236,336.00 Add: Purchase
ss: Issuance (1,269.00) Cost - 102 (129,438.00) Balance
(1,500 - 1,269) (231.00) Cost - 107 (24,717.00) (154,155.00) Less: Issuance
768.00 82,181.00 (1,500 - 1,269)
Balance
= √4,320,000 = 2,078.46
y, Beg. + Purchases - Raw Materials Inventory, End. Net Income After Taxes 26,000.00
1/3x Divide by: Income Tax Rate 65%
Net Incme Before Taxes / Purchases 40,000.00
Work in Process Inventory Finished Goods Inventory
32,000.00 146,000.00 Cost of Goods Completed Beg. Bal 29,000.00 128,000.00
65,000.00 COGM 146,000.00
41,000.00 175,000.00 128,000.00
81,250.00 End. Bal. 47,000.00
219,250.00 146,000.00
73,250.00
 Factory Overhead
375,000.00 400,000.00
117,000.00 120,000.00

492,000.00 520,000.00

direct Labor Factory Overhead

13,000.00 40,000.00 FOH Applied
Indirect Labor 7,000.00
Indirect Materials 1,000.00
Dep. on Factory Asset 17,000.00
Expired Insurance 2,000.00
40,000.00 40,000.00
-
Units
5,000.00
(3,750.00) 5,000 x 75%
50.00 5,900 / P102 102 = 100 + 2 (Freight)
(40.00)
1,260.00 Cost - 102 128,520.00
1,000.00 Cost - 107 107,000.00
2,260.00 235,520.00
(1,260.00) Cost - 102 (128,520.00)
(240.00) Cost - 107 (25,680.00) (154,200.00)
760.00 81,320.00
COGS
3-1. Dainty Company
Journal Entry
Factory Payroll 106,000.00
Withholding Tax Payable 9,000.00
SSS Payable 5,000.00
Pag-Ibig Payable 2,000.00
Cash 90,000.00

Work in Process 95,400.00

Factory Overhead 10,600.00
Factory Payroll 106,000.00
(106,000 x 90%)
(106,000 x 10%)

Factory Overhead 8,000.00

SSS Payable 8,000.00

3-2. PBB Company

Hours Worked Shift Premium
Name of Worker Basic Pay Night Premium (10%) WHT Net Pay
for the Week (5%)
1st Shift
Tibo 36 2,448.00 2,448.00
Jason 40 2,720.00 2,720.00
2nd Shift
Rica 40 2,720.00 136.00 2,856.00
Princess 37 2,516.00 125.80 2,641.80
3rd Shift
Bianca 40 2,720.00 136.00 272.00 3,128.00
Toni 40 2,720.00 136.00 272.00 3,128.00
TOTAL 15,844.00 533.80 544.00 16,921.80
Journal Entry
Factory Payroll 16,921.80
Salaries Payable 16,921.80

3-3. Sonny Company

Hours Worked
Name of Worker Hourly Rate Basic Pay Overtime Premium (10%) Gross Pay
for the Week
Andrea 42.00 156.00 6,552.00 31.20 6,583.20
Mayet 45.00 68.75 3,093.75 34.38 3,128.13
Mel 48.00 68.75 3,300.00 55.00 3,355.00
Malou 48.00 68.75 3,300.00 55.00 3,355.00
Glenn 45.00 68.75 3,093.75 34.38 3,128.13
Ryan 42.00 68.75 2,887.50 13.75 2,901.25
Boy 40.00 68.75 2,750.00 2,750.00
TOTAL 24,977.00 223.70 25,200.70
Journal Entry
Factory Payroll 25,200.70 Computation:
Salaries Payable 25,200.70 Basic Pay 24,977.00
Add: Overtime Premium 223.70
Work in Process 18,617.50 Gross Pay 25,200.70
Factory Overhead 6,583.20
Factory Payroll 25,200.70

3-4. Intel Company

Hours Regular Hourly Overtime
Worker Basic Pay Night Premium (10%) Gross Pay
Worked Rate (9 hrs) Premium (10%)
1 15 68 1,020 40.80 6.80 1,067.60
2 15 68 1,020 40.80 6.80 1,067.60
3 15 68 1,020 40.80 6.80 1,067.60
4 15 68 1,020 40.80 6.80 1,067.60
5 15 68 1,020 40.80 6.80 1,067.60
TOTAL 5,100.00 204.00 34.00 5,338.00
Note: 6 hours Overtime ; 1 hour Night Shift

Computation:
Journal Entry Basic Pay
Factory Payroll 5,338.00 P68 x 15 hours x 5 workers
Withholding Tax Payable 256.65 Add: Overtime Premium
Salaries Payable / Cash 5,051.35 P68 x 10% x 6 hours x 5 workers
Night Premium
Work in Process 5,100.00 P68 x 10% x 1 hour x 5 workers
Factory Overhead 238.00 Gross Pay
Factory Payroll 5,338.00 Less: Withholding Tax
(P1,067.20 - P685) x 15% x 5 workers
Net Pay

3-5. Betty La Fea Company

Raw Materials Inventory, Beg. 450,000.00
Add: Raw Materials Purchased 2,650,000.00
Less: Raw Materials Inventory, End. (600,000.00)
Raw Materials Issued to Production (DM) 2,500,000.00

Good Manufactured 6,800,000.00 Conversion Cost = DL + FOH

Add: WIP, End 760,000.00 4,500,000 = x + 0.50x
Less: WIP, Beg. (560,000.00) 4,500,000 = 1.5x
Total Manufacturing Cost 7,000,000.00 4,500,000 / 1.5 = 1.5x/1.5
Less: Raw Materials Issued to Production (DM) (2,500,000.00) x = 3,000,000
Conversion Cost 4,500,000.00 Direct Labor = 3,000,000
FOH = 3,000,000 x 50% = 1,500,000
Raw Materials Issued to Production (DM) 2,500,000.00
Add: Direct Labor 3,000,000.00
Prime Costs for the Year 5,500,000.00
3-6. Sharp Enterprises
Computation:
Basic Pay
P65 x 16,300 hours 1,059,500.00
Add: Overtime Premium
P65 x 10% x 300 hours 1,950.00
Late Shift Premium
P65 x 15% x 6,000 hours 58,500.00 60,450.00
Gross Pay 1,119,950.00

Journal Entry
Factory Payroll 1,119,950.00
Salaries Payable / Cash 1,119,950.00

Work in Process 1,059,500.00

Factory Overhead 60,450.00
Factory Payroll 1,119,950.00

3-7. Bulls Company

a. Total Factory Costs for the Quarter
Raw Materials Inventory, Beg. 134,000.00
Add: Raw Materials Purchased 1,093,400.00
Less: Raw Materials Inevntory, End. (250,000.00)
Raw Materials Issued to Production (DM) 977,400.00

Basic Pay Factory Payroll

P42.50 x 39,800 hours 1,691,500.00 Salaries Payable / Cash
Add: Special Night Premium
P42.50 x 10% x 14,000 hours 59,500.00 Work in Process
 Overtime Premium Factory Overhead
P42.50 x 30% x 800 hours 10,200.00 69,700.00 Factory Payroll
Gross Pay 1,761,200.00

Direct Materials 977,400.00

Add: Direct Labor 1,691,500.00
Factory Overhead
1,691,500 x 80% 1,353,200.00
Total Manufacturing Costs 4,022,100.00
Add: WIP, Beg. 354,000.00
Total Factory Costs 4,376,100.00

b. The Costs of Goods Manufactured for the Quarter

Total Factory Costs 4,376,100.00
Less: WIP, End.
WIP, Beg. 354,000.00
Add: Increase in WIP 80,000.00 (434,000.00)
Cost of Goods Manufactured 3,942,100.00
Add: Finished Goods Inventory, Beg. 594,600.00 Finished Goods Inventory, Beg.
Cost of Goods Available for Sale 4,536,700.00 Less: Decreased in FGI
Less: Finished Goods Inventory, End. (444,600.00) Finished Goods Inventory, End.
Cost of Goods Sold 4,092,100.00

c. Balances of WIP, FGI; and COGS after closing the overhead variance
Manufacturing Overhead
1,420,000.00 1,353,200.00
66,800.00 Underapplied

End. Balance % (X / Total) Allocation (66,800 x % Balance

Work in Process Inventory 434,000.00 0.09 5,832.42 439,832.42
Finished Goods Inventory 444,600.00 0.09 5,974.87 450,574.87
Cost of Goods Sold 4,092,100.00 0.82 54,992.71 4,147,092.71
TOTAL 4,970,700.00 1.00 66,800.00 5,037,500.00

Adjustments:
Work in Process Inventory 5,832.42
Finished Goods Inventory 5,974.87
Cost of Goods Sold 54,992.71
Manufacturing Overhead 66,800.00

3-8. Factory Employee

Computation:
Basic Pay
P45 x 50 hours 2,250.00
Add: Overtime Premium
P45 x 50% x 10 hours 225.00
Gross Pay 2,475.00

Journal Entry
Factory Payroll 2,475.00
Cash / Salaries Payable 2,475.00

Work in Process 2,250.00

Factory Overhead 225.00
Factory Payroll 2,475.00

3-9. Sunshine Manufacturing Company

Direct Materials 300,000.00 40%
Add: Direct Labor 225,000.00 30%
Manufacturing Overhead 225,000.00 30%
Total Manufacturing Costs 750,000.00 100%
 Less: Work in Process Inventory, ending (75,000.00) 10% of TMC
Costs of Goods Manufactured 675,000.00 100%
Less: Finished Goods Inventory, ending (135,000.00) 20% of COGM
Cost of Goods Sold 540,000.00

Cost of Goods Sold 540,000.00

Divided by: 80%
Cost of Goods Manufactured 675,000.00

Cost of Goods Manufactured 675,000.00

Divided by: 90%
Total Manufacturing Costs 750,000.00

Total Manufacturing Costs 750,000.00

Multiply by: % of Direct Labor 30%
Direct Labor Incurred for the Period 225,000.00

3-10.
Cost of Goods Manufactured 450,000.00
Less: Decrease in WIP Inventory (30,000.00)
Total Manufacturing Costs 420,000.00
Less: Factory Overhead (150,000.00)
Prime Cost for the Period 270,000.00
 5,100.00

204.00

34.00 238.00
5,338.00

% x 5 workers (286.65)
5,051.35
1,761,200.00
1,761,200.00

1,691,500.00 Direct Labor

 69,700.00
1,761,200.00

594,600.00
(150,000.00)
444,600.00