Accounting for Direct Materials

The computations to arrive at the cost per direct material are shown below.

SUGARCANE
Cost per Ton 2,500
Tons ordered (year) 28.80
Total Cost of Sugarcane (year) 72,000
Layon ordered (year)
Layon per Ton 666.67
Tons ordered (year) x 28.80 19200
Cost per Layon 3.75
Ounces per Layon 72
Cost per Ounce 0.05

CALAMANSI
Cost per Pack 10
Ave. Contents per Pack 12
Cost per Calamansi 0.83

ICE
Cost per Bag (5 kilos) 16.00
Est. Tubes per Bag 50
Cost per Ice Tube 0.32

CUPS, STRAWS, FILM

Particulars Cost per pack No. Of Units per pack Cost per unit
12 oz. Cup 22 50 0.44
16 oz. Cup 25 50 0.50
22 oz. Cup 30 50 0.60
Straw 40 100 0.40
Film 7000 32479 0.22
Accounting for Direct Labor

The following figures show the computation for the components of direct labor.

Commission

For each Php 1000 of sales, each sales staff receives a Php 50 commission. To arrive at the
commission per cup, the group determined that the computation below seems to be the most appropriate.

COMMISSION
Commission per 1000 sales 50.00
1000
Average Selling Price 30 33.33333
Commission per cup 1.50

Washers Salaries

To compute for the Direct labor for the washers, the number of layon was used as a basis. The
cost is treated as a joint cost.

WASHERS
Total Pay (8 months) 109,560.00
Total layon purchased 19200
DL per layon 5.71
Ounce per layon 72
DL per ounce 0.08

Fixed Salaries Expense

The total salaries of all the sales staff was used to compute for the Direct Labor per cup. This is
then divided by the total number of cups sold.

FIXED SALARIES EXPENSE

Total Salaries of Sales Staff (8 months) 139,536.00
Total Cups sold (8 months) 32479

Direct Labor per cup 4.30

Accounting for Manufacturing Overhead

Manufacturing overhead costs include Rent and Utilities Expenses, Supplies Expense, and
Depreciation of the equipment used. The computation is as follows:

Manufacturing Overhead Costs

Rent and utilities Expenses 124,779.48
Supplies Expense 13680.00
Depreciation Expenses 116079.29
Total 265,388.65
Cups Sold (year) 32479
MOH Cost per Cup 7.84

The group decided that the most logical way to arrive at the standard manufacturing overhead
cost per cup was to sum up all the expenses and distribute them evenly to all the cups sold during the
year. For further understanding of how the expenses were derived, a detailed computation of each
component of Manufacturing overhead is shown below.

Rent and Utilities

To monitor the cost attributable to each branch, the group decided to allocate each expense to
their respective branches. This enables the business to see how well each branch sells and this also serves
as a guide to require each branch to reach a certain quota to recover the expenses incurred.

RENT & ELECTRICITY (year)

Cups Sold Cost per
Location Rent Electricity
(year) Cup
*Commisary and Office
10,000 32479 0.31
Building
Lopues East Branch 49,450 480 7900 6.32
Ruins Branch 40,000 850 23396 1.75
Weekend Market Branch 24,000 1183 20.29
Total 113,450 11,330 32479
*The cost per cup of the commissary and the office building is added to the cost per cup of the branches
since this is treated as a joint cost.

Supplies Expense

The following supplies are included in the manufacturing overhead since these are used in the site
of production (the branches).

SUPPLIES EXPENSE (year)

Supplies Cost Units Purchased (year) Total Cost
Plastic Bag 20.00 180 3,600.00
Gloves 250.00 18 4,500.00
Trash Bags 75.00 36 2,700.00
Tissue 80.00 36 2,880.00
Depreciation Schedule

DEPRECIATION
Type No. of Units Useful Life (in years) Cost Total Cost Depreciation (year)
Plant
Commisary and Office Building 1 25 1,500,000 1,500,000 30,000.00
(50% allocated to Ervs)
50% allocated to Manufacturing Overhead 15,000.00
Equipment
Tricycle 1 7 40,000 40,000 5,714.29
JMC Truck 1 10 500,000 500,000 50,000.00
Juicer 5 5 30,000 150,000 30,000.00
Sealer 5 5 10,000 50,000 10,000.00
Cart 3 10 6,000 18,000 1,800.00
Cooler 6 5 2,500 15,000 3,000.00
Supplies
Broom 4 1 25 100 100.00
Dust Pan 4 1 25 100 100.00
Trash Can 6 3 25 150 50.00
Pail 3 2 30 90 45.00
Dipper 2 2 20 40 20.00
Espading (for cutting tubo) 3 3 100 300 100.00
Ice Scooper 3 2 40 120 60.00
Mop 3 2 60 180 90.00