Wesleyan University Philippines

College of Business and Accountancy

Cabanatuan City
COST ACCOUNTING I

SURNAME

FIRST NAME

MIDDLE NAME

COURSE

YEAR

BLOCK

SCORE

Part I. PROBLEM SOLVING

1. I Will Survive Company uses a normal costing. Its job costing system has
two direct-cost categories (direct materials and direct labor) and one in direct
cost category (manufacturing overhead). The following information is
obtained from the companys records for 2016:
Total Manufacturing Costs, P8,000,000
Cost of finished goods manufactured, P7,920,000
Manufacturing overhead applied, P3,600,000
Manufacturing overhead was applied to production at a rate of 200% of direct
labor costs.
The peso amount of work in process inventory on January 1, 2016 was
P320,000.
Requirements:
a. Compute for the total direct labor cost for 2016.
b. Compute for the total cost of direct materials in 2016.
c. Compute for the peso amount of work in process inventory on December 31,
2016.
2. Faith Company use normal costing in its job costing system. Partially
completed T-account and additional information for the year for 2016 follows:
Materials
1/1 30,000
900,000
400,000

Work-in-Process

380,000

1/1 20,000
DL 360,000

Manufacturing Overhead Control

540,000

Finished Goods
1/1 10,000
940,000

Additional Information:
a. Direct labor cost rate was P15 per hour.
b. Manufacturing overhead was applied at P20 per direct labor hour.
c. During the year, sales revenues were P1,090,000 and marketing expenses
were P140,000.
Answer the following questions:
1. What was the amount of direct materials issued to production during
2016?
2. What was the amount of manufacturing overhead applied to jobs during
2016?
3. What was the cost of jobs completed during 2016?
4. What was the balance of work in process inventory on December 31,
2016?
5. What was the cost of goods sold before adjustment for overapplied or
underapplied overhead.
6. What was the under or overapplied manufacturing overhead in 2016?
7. What is the operating income or loss for 2016 assuming the under or
overapplied overhead is closed to COGS?
8. What is the operating income (loss) for 2016 assuming the under or
overapplied overhead is pro rated to Work in Process, Finished Goods and
Cost of Goods Sold?
3. Discipline Corporation estimates the its production for the coming year will be
10,000 units, which is 80% of normal capacity, with the following unit costs:
Materials

P 40.00

Direct Labor

P 60.00

Direct labor is paid at the rate of P24 per hour. The machine should be run for
20 minutes to produce 1 unit. Total estimated overhead is expected to consist
of P400,000 for variable overhead and P400,000 for fixed overhead.
Determine the following:
a. Pre-determined overhead rate base on units of production, using the
expected actual capacity activity level
b. Pre-determined overhead rate based on material cost
c. Pre-determined overhead rate based on direct labor cost
d. Pre-determined overhead rate based on direct labor hours
e. Pre-determined overhead rate based on machine hours
f. Overhead rate based on units of production using the normal capacity
level