PROBLEM 8-7

REQUIREMENT 1

JOB 456 JOB 789

Direct Materials ₱ 19,400.00 ₱ 119,800.00
Direct Labor cost ₱ 1,500.00 ₱ 22,500.00
Manufacturing Overhead ₱ 11,500.00 ₱ 172,500.00
Units Produced 20 400
Cost per Unit ₱ 1,620.00 ₱ 787.00

REQUIREMENT 2

JOB 456
OVERHEAD
Activity Center Expected use of cost driver Cost Allocation Rate (PHP)
Material Handling 1000 0.8
Lathe Work 40000 0.4
Milling 300 40
Grinding 1000 1.6
Testing 20 30
Total Overhead

JOB 789
OVERHEAD
Activity Center Expected use of cost driver Cost Allocation Rate (PHP)
Material Handling 4000 0.8
Lathe Work 120000 0.4
Milling 2100 40
Grinding 4000 1.6
Testing 400 30
Total Overhead

JOB 456 JOB 789

Direct Materials ₱ 19,400.00 ₱ 119,800.00
Direct Labor cost ₱ 1,500.00 ₱ 22,500.00
Manufacturing Overhead ₱ 31,000.00 ₱ 153,600.00
Units Produced 20 400
Cost per Unit ₱ 2,595.00 ₱ 739.75
REQUIREMENT 3
Because overhead assigned to each product using traditional is just based on a single allocation rate while u
allocated based on the product's expected usage of each cost driver per activity and this provides f
 Cost Allocated
₱ 800.00
₱ 16,000.00
₱ 12,000.00
₱ 1,600.00
₱ 600.00
₱ 31,000.00

Cost Allocated
₱ 3,200.00
₱ 48,000.00
₱ 84,000.00
₱ 6,400.00
₱ 12,000.00
₱ 153,600.00
single allocation rate while using ABC, the overhead is
er activity and this provides for a more accurate allocation.
 PROBLEM 8-7
REQUIREMENT 1

Product Overhead (P20 per DLH) DLH

Umbrella 16 0.8
Gazebo 120 6
Tent 40 2

REQUIREMENT 2

Product Overhead per unit Units Produced Total overhead

Umbrella 16 200000 ₱ 3,200,000.00
Gazebo 120 20000 ₱ 2,400,000.00
Tent 40 60000 ₱ 2,400,000.00
₱ 8,000,000.00

REQUIREMENT 3

Activity Estimated overhead Volume AB OH Rate

Quality Control 400000 280000 1.43
Setups 400000 20000 20
Material Handling 1200000 4000000 0.3
Equip. Operation 6000000 2000000 3

UMBRELLA
OVERHEAD
Activity Center Expected use of cost driver Cost Allocation Rate
Quality Control 200000 1.43
Setups 400 20
Material handling 800000 0.3
Equip. operation 400000 3
Total Overhead

GAZEBO
OVERHEAD
Activity Center Expected use of cost driver Cost Allocation Rate
Quality Control 20000 1.43
 Setups 800 20
Material handling 2000000 0.3
Equip. operation 800000 3
Total Overhead

TENT
OVERHEAD
Activity Center Expected use of cost driver Cost Allocation Rate
Quality Control 60000 1.43
Setups 800 20
Material handling 1200000 0.3
Equip. operation 800000 3
Total Overhead

Umbrella Gazebo Tent

Direct Materials ₱ 8.00 ₱ 80.00 ₱ 8.00
Direct Labor ₱ 12.00 ₱ 90.00 ₱ 30.00
Manufacturing Overhead ₱ 8.67 ₱ 152.23 ₱ 47.70
Total Cost per unit ₱ 28.67 ₱ 322.23 ₱ 85.70

REQUIREMENT 4
Lower price for high volume product which is the umbrella and higher price for low volume products which
 Total overhead
₱ 3,200,000.00
₱ 2,400,000.00
₱ 2,400,000.00
₱ 8,000,000.00

AB OH Rate
1.43 per unit
20 per setup
0.3 per kilo
3 per machine hour

Cost Allocated
285714.29
8000
240000
1200000
1733714.29

Cost Allocated
₱ 28,571.43
 ₱ 16,000.00
₱ 600,000.00
₱ 2,400,000.00
₱ 3,044,571.43

Cost Allocated
₱ 85,714.29
₱ 16,000.00
₱ 360,000.00
₱ 2,400,000.00
₱ 2,861,714.29

r low volume products which are the gabezo and tent.

 PROBLEM 8-9
REQUIREMENT 1

Budgeted Overhead ₱ 3,000,000.00

Direct Labor Cost ₱ 600,000.00
Budgeted Overhead Rate ₱ 5.00 per direct labor cost

Mauna Loa African

Direct Materials ₱ 8.40 ₱ 6.40
Direct Labor ₱ 0.60 ₱ 0.60
Manufacturing Overhead ₱ 3.00 ₱ 3.00
Budgeted Cost ₱ 12.00 ₱ 10.00
Mark-up 30% 30%
Selling Price ₱ 15.60 ₱ 13.00

REQUIREMENT 2

MAUNA LOA
OVERHEAD
Activity Center Expected use of cost driver Cost Allocation Rate (PHP) Cost Allocated
Purchasing 4 1000 ₱ 4,000.00
Material Handling 30 800 ₱ 24,000.00
Quality Control 10 480 ₱ 4,800.00
Roasting 1000 20 ₱ 20,000.00
Blending 500 20 ₱ 10,000.00
Packaging 100 20 ₱ 2,000.00
Total Overhead ₱ 64,800.00

AFRICAN
OVERHEAD
Activity Center Expected use of cost driver Cost Allocation Rate (PHP) Cost Allocated
Purchasing 4 1000 ₱ 4,000.00
Material Handling 12 800 ₱ 9,600.00
Quality Control 4 480 ₱ 1,920.00
Roasting 20 20 ₱ 400.00
Blending 10 20 ₱ 200.00
Packaging 2 20 ₱ 40.00
Total Overhead ₱ 16,160.00
 Mauna Loa African
Direct Materials ₱ 8.40 ₱ 6.40
Direct Labor ₱ 0.60 ₱ 0.60
Manufacturing Overhead ₱ 0.65 ₱ 8.08
Budgeted Cost ₱ 9.65 ₱ 15.08
Mark-up 30% 30%
Selling Price ₱ 12.54 ₱ 19.60
 Cost Allocated
₱ 4,000.00
₱ 24,000.00
₱ 4,800.00
₱ 20,000.00
₱ 10,000.00
₱ 2,000.00
₱ 64,800.00

Cost Allocated
₱ 4,000.00
₱ 9,600.00
₱ 1,920.00
₱ 400.00
₱ 200.00
₱ 40.00
₱ 16,160.00
 PROBLEM 8-10
REQUIREMENT 1

Activity Estimated Overhead Estimated use of Cost Driver Activity Based OH Ra

Purchasing ₱ 240,000.00 1500 ₱ 160
Processing ₱ 1,400,000.00 1000000 ₱ 1
Packaging ₱ 580,000.00 400000 ₱ 1
Testing ₱ 240,000.00 4000 ₱ 60
Storage ₱ 180,000.00 18000 ₱ 10
Washing ₱ 560,000.00 800 ₱ 700

REQUIREMENT 2

PAINT XX
OVERHEAD
Activity Center Expected use of cost driver Cost Allocation Rate (PHP) Cost Allocated
Purchasing 800 ₱ 160.00 ₱ 128,000.00
Processing 400000 ₱ 1.40 ₱ 560,000.00
Packaging 180000 ₱ 1.45 ₱ 261,000.00
Testing 2100 ₱ 60.00 ₱ 126,000.00
Storage 10400 ₱ 10.00 ₱ 104,000.00
Washing 350 ₱ 700.00 ₱ 245,000.00
Total Overhead ₱ 1,424,000.00

PAINT YY
OVERHEAD
Activity Center Expected use of cost driver Cost Allocation Rate (PHP) Cost Allocated
Purchasing 700 ₱ 160.00 ₱ 112,000.00
Processing 600000 ₱ 1.40 ₱ 840,000.00
Packaging 220000 ₱ 1.45 ₱ 319,000.00
Testing 1900 ₱ 60.00 ₱ 114,000.00
Storage 7600 ₱ 10.00 ₱ 76,000.00
Washing 450 ₱ 700.00 ₱ 315,000.00
Total Overhead ₱ 1,776,000.00

REQUIREMENT 3

PAINT XX PAINT YY
Total Overhead 1424000 1776000
Production 180000 220000
OH cost per unit ₱ 7.91 ₱ 8.07
 Activity Based OH Rate
₱ 160.00 per order
₱ 1.40 per liter
₱ 1.45 per container
₱ 60.00 per test
₱ 10.00 per average liter
₱ 700.00 per batch

Cost Allocated
₱ 128,000.00
₱ 560,000.00
₱ 261,000.00
₱ 126,000.00
₱ 104,000.00
₱ 245,000.00
₱ 1,424,000.00

Cost Allocated
₱ 112,000.00
₱ 840,000.00
₱ 319,000.00
₱ 114,000.00
₱ 76,000.00
₱ 315,000.00
₱ 1,776,000.00
 PROBLEM 9-5
REQUIREMENT 1

JOURNAL ENTRIES
Explanation Debit Credit
Spoiled Goods Inventory 1200
Factory Overhead Control 1600
Work in Process 2800

REQUIREMENT 2
JOURNAL ENTRIES
Explanation Debit Credit
Scrap Inventory 2500
Factory Overhead Control 2500

Accounts receivable 2500

Scrap inventory 2500
 PROBLEM 9-10
REQUIREMENT 1

JOURNAL ENTRIES
Explanation Debit Credit
Work in Process 400000
Materials 184000
Payroll 72000
Applied overhead 144000
For Manufacturing Cost

Factory Overhead Control 4400

Materials 800
Payroll 1200
Applied Overhead 2400
For Rework

Finished Goods 400000

Work in process 400000
Transfer of Goods

Total Cost 400000

Units 2000
Unit Cost ₱ 200.00

REQUIREMENT 2

JOURNAL ENTRIES
Explanation Debit Credit
Work in Process 400000
Materials 184000
Payroll 72000
Applied overhead 144000
For Manufacturing Cost

Work in Process 4400

Materials 800
Payroll 1200
Applied Overhead 2400
For Rework
Finished Goods 404400
Work in process 404400
Transfer of Goods

Total Cost 404400

Units 2000
Unit Cost ₱ 202.20
PROBLEM 15-10
REQUIREMENT 1

AQ AP AQ SP SQ SP AH AR
17700 3.4 17700 3 18000 3 2950 11.8
60180 53100 54000 34810
7080 590
MPV-UNFAVORABLE LRV-FAVORABLE
900
MQV-FAVORABLE

ACTUAL BAAH BASH APPLIED

V 59000 60000 60000
F 28000 28000 30000
87500 87000 88000 90000
2500
TOHV-FAVORABLE
500
CV-FAVORABLE
2000
VV-FAVORABLE
500
SV-UNFAVORABLE
1000
EV-FAVORABLE
2000
VV-FAVORABLE

REQUIREMENT 2

HOLY MANUFACTURING COMPANY

INCOME STATEMENT
MONTH ENDED JULY 31, 2014

SALES 240000
COST OF GOODS SOLD
Cost of goods sold at standard cost 180000
Materials price variance 7080
Materials quantity variance -900
Labor rate variance -590
 Labor efficiency variance -600
Overhead controllable variance -500
Overhead volume variance -2000 182490

GROSS PROFIT 57510

OPERATING EXPENSES 25000
NET INCOME 32510
 AH SR SH SR
2950 12 3000 12
35400 36000
590
RV-FAVORABLE
600
LEV-FAVORABLE

APPLIED
60000
30000
90000

0
RABLE

0
RABLE
PROBLEM 15-11
REQUIREMENT 1

JOURNAL ENTRIES
Explanation Debit Credit
Materials 6150
Material price variance 615
Accounts payable 6765

Work in process 6000

Material quantity variance 150
Materials 6150

Factory payroll 16800

Labor rate variance 420
Payroll payable 16380

Work in process 16000

Labor efficiency variance 800
Factory payroll 16800

Factory overhead control 24200

Accounts payable 24200

Work in process 24000

Overhead volume variance 400
Factory overhead control 24200
Overhead controllable variance 200

Finished goods 46000

Work in process 46000

Accounts receivable 70000

Sales 70000

Cost of goods sold 46000

Finished goods 46000

Selling and administrative expenses 2000

Accounts payable 2000
REQUIREMENT 2

VENUS CORPORATION
INCOME STATEMENT
MONTH ENDED JANUARY 31, 2014

SALES 70000
COST OF GOODS SOLD
Cost of goods sold at standard cost 46000
Materials price variance 615
Materials quantity variance 150
Labor rate variance -420
Labor efficiency variance 800
Overhead controllable variance -200
Overhead volume variance 400 47345

GROSS PROFIT 22655

OPERATING EXPENSES 2000
NET INCOME 20655