Problem

Problem 1.
Rey Company manufactures wood file cabinets. The following information is available for June 2020:
Beginning Ending
Raw Material Inventory $ 6,000 $ 7,500
Work in Process Inventory 17,300 11,700
Finished Goods Inventory 21,000 16,300
1. Refer to Rey Company. Direct labor is $9.60 per hour and overhead for the month was $9,600.
Compute total manufacturing costs for June, if there were 1,500 direct labor hours and $21,000 of
raw material was purchased.
2. Refer to Rey Company. Direct labor is paid $9.60 per hour and overhead for the month was
$9,600. What are prime costs and conversion costs, respectively if there were 1,500 direct labor
hours and $21,000 of raw material was purchased?
$9,600. If there were 1,500 direct labor hours and $21,000 of raw material purchased, Cost of
Goods Manufactured is:
$9,600. If there were 1,500 direct labor hours and $21,000 of raw material purchased, how much
is Cost of Goods Sold?
Problem 2.
The following information has been taken from the cost records of Con Company for the past year:
Raw material used in production $326

Total manufacturing costs charged to production during the year (includes direct 686
material, direct labor, and overhead equal to 60% of direct labor cost)
Cost of goods available for sale 826
Selling and Administrative expenses 25
Inventories Beginning Ending

Raw Material $75 $ 85
Work in Process 80 30
Finished Goods 90 110
1. Refer to Con Company. The cost of raw material purchased during the year was
2. Refer to Con Company. Direct labor cost charged to production during the year was
3. Refer to Con Company. Cost of Goods Manufactured was

4. Refer to Con Company. Cost of Goods Sold was
Problem. 3
Wilson Company prepared the following preliminary forecast concerning product G for 2004 assuming
no expenditure for advertising:
Selling price per unit P 10.00 Variable costs P600, 000
Unit sales 100,000 Fixed costs 300,000
Based on a marketed study in December 2003, Wilson estimated that it could increase the unit selling
price by 15% and increase the unit sales by 10% if P100,000 were spent on advertising. Assuming that
Wilson incorporates these changes in its 2004 forecast, what should be the operating income from
product G?
Problem 4.
Lindsay Corporation reported the following results from sales of 5,000 units of product A for the month
of September 2004:
Sales P200, 000 Fixed costs P60, 000
Variable costs 120,000 Operating income 20,000
Assume that Lindsay increases the selling price of product A by 10% on October 1, 2004. How many
units of product A would have to be sold in October 2004 in order to generate an operating income of
P20, 000?
Problem 5.
Thomas Company sells products X, Y, and Z. Thomas sells three units of X for each unit of Z, and two
units of Y for each unit of X. The contribution margins are P1.00 per unit of X, P1.50 per unit of Y, and
P3.00 per unit of Z. Fixed costs are P600, 000. How many units of X would Thomas sell at the break-
even point?
Problem 6.
The following information pertains to Rica Company:
Sales (50,000 units) P1, 000, 000 Materials and Labor P300, 000
Factory Overhead: Selling and General Expenses:
Variable 40,000 Variable 10,000
Fixed 70,000 Fixed 60,000
How much was Rica’s break-even point in number of units?
Problem 7.
Generous Company began its operations on January 1 of the current year. Budgeted sales for the first quarter
are P240,000, P300,000, and P420,000, respectively, for January, February and March. Generous Company
expects 20% of its sales cash and the remainder on account. Of the sales on account, 70% are expected to be
collected in the month of sale, 25% in the month following the sale, and the remainder in the following month.
How much should Generous receive from sales in March? ____________
Problem 8.
Obligacion Company has P299,000 in accounts receivable on January 1, 2006. Budgeted sales for January are
P860,000. Obligacion expects to sell 20% of its merchandise for cash. Of the remaining sales, 75% are
expected to be collected in the month of sale and the remainder the following month.
The January cash collections from sales are ___________
Problem 9.
Albania Company expects its June sales to be P300,000, which is 25% higher than its May sales. Purchases were
P200,000 in May and are expected to be P240,000 in June. All sales are on credit and are collected as follows: 80% in
the month of the sale and 20% in the following month. All payments in the month of sales are given 2% discount. Sixty
percent of purchases are paid in the month of purchase to take advantage of purchase term of 1/10, n/40. The remaining
amount is paid in the following month. The beginning cash balance on June 1 is P20,000. The ending cash balance on
June 30 would be?

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Problem 1.

Raw material used in production $326

Inventories Beginning Ending

3. Refer to Con Company. Cost of Goods Manufactured was

The following information pertains to Rica Company:

Factory Overhead: Selling and General Expenses:

Variable 40,000 Variable 10,000

Fixed 70,000 Fixed 60,000

How much was Rica’s break-even point in number of units?

The January cash collections from sales are ___________

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