ATENEO DE MANILA UNIVERSITY

JOHN GOKONGWEI SCHOOL OF MANAGEMENT

ACC101: COST ACCOUNTING

EXERCISES ON CVP AND JOB COSTING

PROBLEM SET #1A M.D. WONG
AY 2016-20167 | 1ST SEMESTER

DIRECTIONS: Answer the following on a clean sheet of paper (or scratch paper with one clean side). Please show
relevant solutions and box your final answer.
1.

Withee produces a quick setting concrete powder. Production of 15,000 tons was started in September,
14,000 tons were completed. Material costs were $394,670 for the month while conversion costs were
$201,730. There was no beginning work-in-process; the ending work-in-process was 20% complete.
What is the total cost of the product that was completed and transferred to finished goods?
What is the value of the ending work-in-process?

2.

The predetermined overhead rate for manufacturing overhead for 2012 is $4.00 per direct labor hour.
Employees are expected to earn $5.00 per hour and the company is planning on paying its employees
$100,000 during the year. However, only 75% of the employees are classified as "direct labor." What was the
estimated manufacturing overhead for 2012?

3.

Before prorating the manufacturing overhead costs at the end of 2012, the Cost of Goods Sold and Finished
Goods Inventory had applied overhead costs of $57,500 and $20,000 in them, respectively. There was no
Work-in-Process at the beginning or end of 2012. During the year, manufacturing overhead costs of $74,000
were actually incurred. The balance in the Applied Manufacturing Overhead was $77,500 at the end of 2012. If
the under or overapplied overhead is prorated between Cost of Goods Sold and the inventory accounts, how
much will be allocated to the Finished Goods Inventory?

4.

Before prorating the manufacturing overhead costs at the end of 2012, the Cost of Goods Sold and Finished
Goods Inventory had applied overhead costs of $57,500 and $20,000 in them, respectively. There was no
Work-in-Process at the beginning or end of 2012. During the year, manufacturing overhead costs of $74,000
were actually incurred. The balance in the Applied Manufacturing Overhead was $77,500 at the end of 2012. If
the under- or overapplied overhead is prorated between Cost of Goods Sold and the inventory accounts, how
much will be the Cost of Goods Sold after the proration?

5.

The Work-in-Process Inventory account of a manufacturing firm has a balance of $2,400 at the end of an
accounting period. The job cost sheets of two uncompleted jobs show charges of $400 and $200 for materials
used, and charges of $300 and $500 for direct labor used. Overhead is applied as a percentage of direct labor
costs. What is the predetermine rate?

6.

Tillman Corporation uses job costing and has two production departments, M and A. Budgeted manufacturing
costs for the year are as follows:

The actual direct material and direct labor costs charged to Job. No. 432 during the year were as follows:

Tillman applies manufacturing overhead to production orders on the basis of direct labor cost using
departmental rates predetermined at the beginning of the year based on the annual budget. What is the total
cost associated with Job. No. 432 for the year?

ATENEO DE MANILA UNIVERSITY

JOHN GOKONGWEI SCHOOL OF MANAGEMENT
ACC101: COST ACCOUNTING
7.

EXERCISES ON CVP AND JOB COSTING

PROBLEM SET #1A M.D. WONG
AY 2016-20167 | 1ST SEMESTER

The following selected data were taken from the books of the Bixby Box Company. The company uses job
costing to account for manufacturing costs. The data relate to June operations.
A) Materials and supplies were requisitioned from the stores clerk as follows:
Job 405, material X, $7,000.
Job 406, material X, $3,000; material Y, $6,000.
Job 407, material X, $7,000; material Y, $3,200.
For general factory use: materials A, B, and C, $2,300.
B) Time tickets for the month were chargeable as follows:

C) Other information:
Factory paychecks for $36,700 were issued during the month.
Various factory overhead charges of $19,400 were incurred on account.
Depreciation of factory equipment for the month was $5,400.
Factory overhead was applied to jobs at the rate of $3.50 per direct labor hour.
Job orders completed during the month: Job 405 and Job 406.
Selling and administrative costs were $2,100.
Factory overhead is closed out only at the end of the year.
a. If Job 406 was sold on account for $41,500, how much is the gross profit for the job?
b. The end of the month Work-in-Process Inventory balance would be?
c. The balance in the factory overhead account would represent the fact that overhead was?
8.

The following events took place at a manufacturing company for the current year:
(1) Purchased $95,000 in direct materials.
(2) Incurred labor costs as follows: (a) direct, $56,000 and (b) indirect, $13,600.
(3) Other manufacturing overhead was $107,000, excluding indirect labor.
(4) Transferred 80% of the materials to the manufacturing assembly line.
(5) Completed 65% of the Work-in-Process during the year.
(6) Sold 85% of the completed goods.
(7) There were no beginning inventories.
a. What is the company's Cost of Goods Sold?
b. What is the value of the ending Work-in-Process Inventory?
c. What is the value of the ending Finished Goods Inventory?

9.

Compute the Work-in-Process transferred to the finished goods warehouse on April 30 using the following
information:

ATENEO DE MANILA UNIVERSITY

JOHN GOKONGWEI SCHOOL OF MANAGEMENT
ACC101: COST ACCOUNTING

EXERCISES ON CVP AND JOB COSTING

PROBLEM SET #1A M.D. WONG
AY 2016-20167 | 1ST SEMESTER

10.
Two jobs were worked on during the year: Job A-101 and Job A-102. The number of direct labor-hours spent
on Job A-101 and Job A-102 were 1,200 and 1,000, respectively. The actual manufacturing overhead was
$37,000.
a. What is the predetermined manufacturing overhead rate per direct labor hour for the year?
b. What was the amount of manufacturing overhead applied to Job A-101?
c. What is the amount of the under- or overapplied manufacturing overhead?
11. The Update Company does not maintain backup documents for its computer files. In June, some of the current
data were lost, and you have been asked to help reconstruct the data. The following beginning balances on
June 1 are known:

Reviewing old documents and interviewing selected employees have generated the following additional
information:

The production superintendent's job cost sheets indicated that materials of $2,600 were included in the
June 30 Work-in-Process Inventory. Also, 300 direct labor-hours had been paid at $6.00 per hour for the
jobs in process on June 30.
The Accounts Payable account is only for direct material purchases. The clerk remembers clearly that the
balance in the Accounts Payable on June 30 was $8,000. An analysis of canceled checks indicated
payments of $40,000 were made to suppliers during June.
Payroll records indicate that 5,200 direct labor-hours were recorded for June. It was verified that there
were no variations in pay rates among employees during June.
Records at the warehouse indicate that the Finished Goods Inventory totaled $16,000 on June 30.
Another record kept manually indicates that the Cost of Goods Sold in June totaled $84,000.
The predetermined overhead rate was based on an estimated 60,000 direct labor-hours for the year and
an estimated $180,000 in manufacturing overhead costs.

a.
b.
c.
d.
e.

What is the ending balance in the Work-in-Process Inventory on June 30?

What is the amount of direct materials purchased during June?
What is the Cost of Goods Manufactured for June?
How much manufacturing overhead was applied to the Work-in-Process Inventory during June?
What is the ending balance in the Direct Materials Inventory on June 30?

ATENEO DE MANILA UNIVERSITY

JOHN GOKONGWEI SCHOOL OF MANAGEMENT
ACC101: COST ACCOUNTING

EXERCISES ON CVP AND JOB COSTING

PROBLEM SET #1A M.D. WONG
AY 2016-20167 | 1ST SEMESTER

12. The financial records for the Lee Manufacturing Company have been destroyed in a fire. The following
information has been obtained from a separate set of books maintained by the cost accountant. The cost
accountant now asks for your assistance in computing the missing amounts.

a. What is the amount of the materials purchased?

b. What is the value of the ending Work-in-Process inventory balance?
c. What is the value of the beginning Finished Goods Inventory?
13. Scottso Corporation applies overhead using a normal costing approach based upon machine-hours. Budgeted
factory overhead was $266,400, budgeted machine-hours were 18,500. Actual factory overhead was
$287,920, actual machine-hours were 19,050.

a. How much overhead would be applied to production?

b. How much is the Over- or underapplied overhead?
c. How much overhead would be applied to production?
14. Daguio Corporation uses direct labor-hours in its predetermined overhead rate. At the beginning of the year,
the total estimated manufacturing overhead was $224,580. At the end of the year, actual direct labor-hours
for the year were 18,200 hours, manufacturing overhead for the year was underapplied by $12,100, and the
actual manufacturing overhead was $219,580. The predetermined overhead rate for the year must have been
closest to what?
15. Wert Corporation uses a predetermined overhead rate based on direct labor cost to apply manufacturing
overhead to jobs. Last year, the company's estimated manufacturing overhead was $1,200,000 and its
estimated level of activity was 50,000 direct labor-hours. The company's direct labor wage rate is $12 per
hour. Actual manufacturing overhead amounted to $1,240,000, with actual direct labor cost of $650,000. For
the year, manufacturing overhead was over- or underapplied by?
16. Craddock sells three products. Last month's results are as follows:

Total fixed costs are $100,000 marketing and $125,000 administrative.

Required:
a. What was the operating profit last month?
b. What is Craddock's break-even sales volume (at the given mix)?
c. What is Craddock's margin of safety?

ATENEO DE MANILA UNIVERSITY

JOHN GOKONGWEI SCHOOL OF MANAGEMENT
ACC101: COST ACCOUNTING

EXERCISES ON CVP AND JOB COSTING

PROBLEM SET #1A M.D. WONG
AY 2016-20167 | 1ST SEMESTER

17. You have been provided with the following information regarding the York Manufacturing Company:

This information is based on forecasted sales of 30,000 units.

Required:
a. What is the expected operating profit for the upcoming year?
b. What is the break-even point in units?
c. If $160,000 of operating profit is desired, how many units must be sold?
18. Rosy's Creations has budgeted annual fixed costs of $240,000 and an estimated variable cost ratio of 60%.
Required:
a. Compute Rosy's break-even point in sales dollars.
b. Compute Rosy's margin of safety if the company expects to earn revenues of $800,000.
c. Compute Rosy's expected operating profit at the $800,000 revenue.
19. The Ciao Line Buffet is a new buffet-style restaurant offering pizza and Italian dishes. The buffet has a fixed
price of $8.50 per person. The estimated food costs are $2.00 per person, regardless of volume. Fixed costs
are related to the number of buffet lines that are maintained, with the estimated costs as follows:

Determine the break-even point(s).

20. Colen Corporation produces and sells a single product. In January, the company sold 1,700 units. Its total sales
were $153,000, its total variable costs were $79,900, and its total fixed costs were $56,800.
Required:
a. Construct the company's contribution format income statement for January in good form.
b. Redo the company's contribution format income statement assuming that the company sells 1,600
units.