Costcon 1

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Dela Cruz Company makes industrial cleaning solvents.

Various chemical detergents are mixed


together and then bottled in 10-gallon drum. J. dela Cruz provided the following information for
last year:

Raw materials purchases P 250,000

Direct labor 140,000

Depreciation on factory equipment 45,000

Depreciation on factory building 30,000

Depreaciation on headquarters building 50,000

Factory insurance 15,000

Property taxes:

Factory 20,000

Headquarters 18,000

Utilities for factory 34,000

Utilities for sales office 1,800

Administrative salaries 150,000

Indirect labor salaries 156,000

Sales office salaries 90,000

Beginning bal., Raw Materials 124,000

Beginning bal., WIP 124,000

Beginning bal., Finished goods 84,000

Ending bal., Raw Materials 102,000

Ending bal., WIP 130,000


Ending bal., Finished goods 82,000

Last year, J. dela Cruz completed 100,000 units. Sales revenue equaled P1,200,000 and Dela
Cruz paid a sales commission of 5% of sales.

Required:

1. Calculate the direct materials used in production for last year. (2pts.)
Beginning Bal., Raw Materials 124,000
Add: Raw Materials Purchased 250,000
Cost of Material Delivered 374,000
Less: Ending bal., Raw Materials 102,000
Cost of Material Consumed 272,000

2. Calculate the prime cost. (2 pts.)


Cost of Material Consumed 272,000
Add: Direct Labor 140,000
Prime Cost 412,000

3. Calculate total conversion cost. (2 pts.)


Direct Labor 140,000
Indirect Labor
Indirect Labor Salaries 156,000
Indirect Material
Factory Insurance 15,000
Property Taxes
Factory 20,000
Utilities for Factory 34,000
Depreciation
Depreciation on Factory Equipment 45,000
Depreciation on Factory Building 30,000
Total Manufacturing Cost 440,000

4. Prepare a cost of goods manufactured statement for last year. (4 pts.)


Direct Material Used in Production 272,000
Direct Labor 140,000
Manufacturing Overhead 300,000
Total Manufacturing Cost 712,000
Add: beginning balance, WIP 124,000
Cost of Goods put into process 836,000
Less: Ending balance, WIP 130,000
Cost of Goods Manufactured 706,000

5. Calculate the unit product cost. (2 pts.


Direct Materials Used in Production 272,000
Direct Labor 140,000
Manufacturing Overhead 300,000
Total Cost 712,000
Divide: number of units 100,000
Unit Cost 7.12

6. Prepare a cost of goods sold statement for last year. (3 pts.)


Direct Materials Used in Production 272,000
Direct Labor 140,000
Manufacturing Overhead 300,000
Total Manufacturing Costs 712,000
Add: Beginning bal., WIP 124,000
Cost of goods put into process 836,000
Less: Ending bal., WIP 130,000
Add: Begining bal., Finished Goods 84,000
Cost of Goods Available for Sale 790,000 790,000
LESS: Ending bal., Finished goods 82,000
Cost of Goods Sold 708,000

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