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    Actual Costing Illustrative Problem

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    Juan Dela Cruz
    1) The document provides accounting information for Love Company for the month of January 2018, including beginning inventory balances, transactions during the month involving raw materials, factory costs, finished goods, sales and expenses. 2) Journal entries are required to record the transactions for the month, as well as T-accounts to track inventory accounts and overhead. Cost of goods manufactured, cost of goods sold and net income must be calculated. 3) Additional problems provide transaction data for other companies and require calculation of inventory amounts, costs, expenses and net income.

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    © All Rights Reserved
    Download as PDF, TXT or read online from Scribd

    Actual Costing Illustrative Problem

    Uploaded by

    Juan Dela Cruz
    275 views5 pages
    1) The document provides accounting information for Love Company for the month of January 2018, including beginning inventory balances, transactions during the month involving raw materials, factory costs, finished goods, sales and expenses. 2) Journal entries are required to record the transactions for the month, as well as T-accounts to track inventory accounts and overhead. Cost of goods manufactured, cost of goods sold and net income must be calculated. 3) Additional problems provide transaction data for other companies and require calculation of inventory amounts, costs, expenses and net income.

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    Actual-costing-illustrative-problem

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    1) The document provides accounting information for Love Company for the month of January 2018, including beginning inventory balances, transactions during the month involving raw materials, factory costs, finished goods, sales and expenses. 2) Journal entries are required to record the transactions for the month, as well as T-accounts to track inventory accounts and overhead. Cost of goods manufactured, cost of goods sold and net income must be calculated. 3) Additional problems provide transaction data for other companies and require calculation of inventory amounts, costs, expenses and net income.

    Copyright:

    © All Rights Reserved
    Download as PDF, TXT or read online from Scribd
    Download as pdf or txt
    275 views5 pages

    Actual Costing Illustrative Problem

    Uploaded by

    Juan Dela Cruz
    1) The document provides accounting information for Love Company for the month of January 2018, including beginning inventory balances, transactions during the month involving raw materials, factory costs, finished goods, sales and expenses. 2) Journal entries are required to record the transactions for the month, as well as T-accounts to track inventory accounts and overhead. Cost of goods manufactured, cost of goods sold and net income must be calculated. 3) Additional problems provide transaction data for other companies and require calculation of inventory amounts, costs, expenses and net income.

    Copyright:

    © All Rights Reserved
    Download as PDF, TXT or read online from Scribd
    Download as pdf or txt
    of 5

    Manufacturing - Actual Costing - JBJ

    Problem 1

    Love Company had the following accounts balance as of January 1, 2018:

    Raw materials (DM and IM) inventory 20,300


    Work in process 7,000
    Finished goods inventory 18,000

    During January, the company incurred the following factory cost:

    1. Purchased P164,000 of raw materials on account.

    2. Issued P180,000 of raw materials to production. Of this amount, P134,000 was for direct mate-
    rials and the remainder was for production supplies.

    3. Accrued P88,000 in factory payroll cost, P62,000 was for direct labor and the rest was for su-
    pervisors salaries.

    4. Accrued P7,000 of factory utility cost

    5. Accrued P2,000 of property taxes on the factory.

    6. Recorded the expiration of P1,600 of prepaid insurance on factory equipment.

    7. Recorded P40,000 of straight-line depreciation on factory equipment.

    8. Transferred actual overhead to work in process.

    9. Transferred goods costing P320,000 to finished goods inventory.

    10. Recorded total sales of P700,000; of these, P550,000 on account.

    11. Recorded cost goods sold of P330,000

    12. Recorded selling and administrative cost of P280,000.

    Required:

    A. Journalize the transaction for January.

    B. Post transaction to T- account for raw materials inventory, Work in process inventory, Finished
    goods inventory, Manufacturing overhead.

    C. Compute cost of goods manufactured for January.

    D. Compute cost of goods sold.

    E. Compute Net income.


    Problem 2

    Honest Company manufactures mailboxes. The following data represent transaction and bal-
    ances for January 2018, the company’s first month of operation.

    Purchased direct materials on accounts P 248,000


    Issued direct materials to production 186,000
    Accrued direct labor payroll 134,000
    Paid factory rent 3,600
    Accrued factory utilities 16,200
    Recorded factory equipment depreciation 15,800
    Paid supervisor salary 6,400
    Ending work in process inventory (6,000 units) 35,000
    Ending finished goods inventory (3,000) ?
    Sales on account (P24 per unit) 648,000

    Required:

    A. Prepare the journal entries to record the flow of cost for January.

    B. How many units were sold in January? How many units were completed in January?

    C. What was the total cost of goods manufactured in January?

    D. What is the per unit cost of goods manufactured in January?


    Problem 3

    January 2018 inventory and cost data for Respect Company are as follows:

    January 1 January 31
    Raw materials P 12,300 P ?
    Work in process 25,900 33,300
    Finished goods 62,700 55,500

    Direct labor P 182,400


    Direct materials purchased 196,300
    Direct materials used 195,800
    Selling and administrative expenses 171,200
    Factory overhead 205,700

    Required:

    A. Compute the total inventory January 31, 2018.

    B. Compute the cost of goods manufactures for January 2018.

    C. Compute the cost of goods sold for January 2018.

    D. Compute the net income. Assume that C company income tax rate is 40%. Sales for January
    2018 were P985,000
    Problem 4

    The following transaction were incurred by Patience Company during January 2018

    1. Issued P800,000 of direct materials to production.

    2. Paid 40,000 hours of direct labor at P18 per hour.

    3. Accrued 15,500 hours of indirect labor cost at P15 per hour.

    4. Recorded P102,100 of depreciation on factory assets.

    5. Accrued P32,800 of supervisor’s salaries.

    6. Issued P25,400 of indirect materials to production.

    7. Completed goods costing P1,749,300 and transferred then to finished goods

    Required:

    A. If work in process inventory had a beginning balance of P18,900 and an ending balance of
    P59,600, What amount of manufacturing overhead was included in Work in process inventory
    during January 2018?

    Problem 5

    Faith Enterprises has the following data

    Inventories: March 1 March 31


    Raw material P18,000 P15,000
    Work in process 9,000 6,000
    Finished goods 27,000 36,000

    Additional information for March:


    Raw material purchased P42,000
    Direct labor payroll P30,000
    Direct labor rate per hour 7.50
    Actual Factory overhead P15,000
    Required: Compute the following

    1. Prime cost
    2. Conversion cost
    3. Cost of goods manufactured
    Problem 6

    Hope Company makes evening dresses. The following information was gathered from the com-
    pany records for 2018, the first year of company operations. Work in process inventory at the end
    of 2018 was P15,750.

    Direct materials P 555,000


    Direct materials issued to production 447,000
    Direct labor payroll accrued 322,500
    Indirect labor payroll accrued 93,000
    Prepaid factory insurance expired 3,000
    Factory utilities paid 21,450
    Depreciation on factory equipment 32,550
    Factory rent paid 126,000
    Sales (All account) 1,431,000

    The company’s gross profit rate for the year was 35%.

    Required:

    A. Compute the cost of goods sold for 2018.

    B. What was the total cost of goods manufactured for 2018?

    C. What is finished goods inventory at December 31, 2018?

    D. If net income was P125,000, What were total selling and administrative expenses for the year?

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