Question

PROBLEM 5

BBB Inc. is employing normal costing for its job orders. The overhead is applied using a predetermined overhead rate. The following information relates to BBB Inc. for the year ended December 31, 2019:

	Job No. 101	Job No. 102	Job No. 103
Job in Process, 01/01/2019
Direct Materials	P80,000	P60,000	P0
Labor	120,000	80,000	0
Factory Overhead	60,000	40,000	0
Costs added during 2019
Materials	P40,000	P20,000	P200,000
Labor	200,000	400,000	800,000
Factory Overhead	200,000	200,000	400,000

Additional information:

1. Actual overhead for the year 2019 amounted to P800,000.
2. Jobs No. 101 and 102 were completed and transferred to finished goods during year 2019.
3. Job No. 102 was sold during 2019.
4. The gross profit rate based on cost is 20%.

Compute: (6 pts)

1. Total manufacturing cost
2. Cost of goods manufactured for 2019
3. Cost of goods sold 2019
4. Gross profit for 2019
5. Work-in process for December 31, 2019
6. Cost of finished goods for December 31, 2019

PROBLEM 6

CCC Inc. has completed Job 101, containing 1,100 shoes, during 2016 at the following unit costs:

Direct Materials – 2,000 Direct Labor – 1,000

Factory Overhead (including an allowance of P300 for spoiled work - 1,300

Final inspection of Job 101 disclosed 100 spoiled shoes which were sold to a department store for P200,000.

1. What is the unit cost of the good shoes produced on Job 101 if spoilage loss is charged to all production? (2 pts)
2. What is the unit cost of the good shoes produced on Job 101 if spoilage loss is charged specifically to Job 101? (2 pts)

Answer 1

TOTAL MANUFACTURING COST
DIRECT MATERIAL		400000
DIRECT LABOR		1600000
MANUFACTURING OVERHEAD	900000
	TOTAL		2900000

W/N
DM	DL	MOH
80000	120000	60000
60000	80000	40000
40000	200000	200000
20000	400000	200000
200000	800000	400000
400000	1600000	900000

COST OF GOODS MANUFACTURED FOR 2019
OPENING WORK IN PROCESS		140000
MANUFACTURING COST		2900000
ENDING WORK IN PROCESS(-)		1400000
TOTAL				1640000

NOTE:

OPENING WORK IN PROCESS = SUM OF DM,DL &MOH ON 01/01/2019
ENDING WORK IN PROCESS = SUM OF DM,DL &MOH OF JOB NO.103
			(JOB 103 IS STILL IN PROGRESS AND NOT YET COMPLETED)

COST OF GOODS SOLD FOR 2019 (JOB102)
DM			80000
DL			480000
MOH			240000
TOTAL			800000

GROSS PROFIT (20% ON COST)
800000*20%
160000

WORK IN PROCESS FOR DECEMBER 2019 (JOB 103)
DM			200000
DL			800000
MOH			400000
TOTAL			1400000

COST OF FNISHED GOODS FOR DECEMBER 2019(JOB101)
DM			120000
DL			320000
MOH			260000
TOTAL			700000

UNIT COST OF GOOD SHOES PRODUCED
DM		2000
DL		1000
MOH		1000
TOTAL		4000

HERE SPOILAGE LOSS IS CHARGED TO ALL PRODUCTION NOT SPECIFICALLY TO JOB 101 .THEREFORE IT WILL NOT BE ADDED WITH THE UNIT COST

UNIT COST OF GOOD SHOES PRODUCED
DM		2000
DL		1000
MOH		1300
TOTAL		4300

HERE SPOILAGE LOSS IS SPECIFICALLY CHARGED TO JOB101.HENCE IT WILL BE ADDED TO THE UNIT COST OF JOB101.