INSTRUCTOR:

MRS. JEANLYN DOMINGO

SUBMITTED BY;
APRIL JOY L. OBEDOZA
W01 Exercise: Uses of Cost Accounting data

1. What is the difference between financial accounting and managerial accounting?

 The difference between financial and managerial accounting is that financial accounting is the
collection of accounting data to create financial statements, while managerial accounting is the
internal processing used to account for business transactions. Financial accounting is focused
on creating financial statements to be shared internal and external stakeholders and the public.
Managerial accounting focuses on operational reporting to be shared within a company.
Financial statements are due at the end of an accounting period, while managerial reports may
be issued more frequently, to provide managers with relevant information they can act on
immediately. Financial accounting is concerned with knowing the proper value of a company’s
assets and liabilities. Managerial accounting is only concerned with the value these items have
on a company’s productivity. There are a number of differences between financial and
managerial accounting, which fall into the following categories:

 Aggregation. Financial accounting reports on the results of an entire business.

Managerial accounting almost always reports at a more detailed level, such as profits by
product, product line, customer, and geographic region.

 Efficiency. Financial accounting reports on the profitability (and therefore the

efficiency) of a business, whereas managerial accounting reports on specifically what is causing
problems and how to fix them.

 Proven information. Financial accounting requires that records be kept with

considerable precision, which is needed to prove that the financial statements are correct.
Managerial accounting frequently deals with estimates, rather than proven and verifiable
facts.

 Reporting focus. Financial accounting is oriented toward the creation of financial

statements, which are distributed both within and outside of a company. Managerial
accounting is more concerned with operational reports, which are only distributed within a
company.

 Standards. Financial accounting must comply with various accounting standards,

whereas managerial accounting does not have to comply with any standards when information
is compiled for internal consumption.

 Systems. Financial accounting pays no attention to the overall system that a company
has for generating a profit, only its outcome. Conversely, managerial accounting is interested
in the location of bottleneck operations, and the various ways to enhance profits by resolving
bottleneck issues.

 Time period. Financial accounting is concerned with the financial results that a business
has already achieved, so it has a historical orientation. Managerial accounting may address
budgets and forecasts, and so can have a future orientation.

 Timing. Financial accounting requires that financial statements be issued following the
end of an accounting period. Managerial accounting may issue reports much more frequently,
since the information it provides is of most relevance if managers can see it right away.
 Valuation. Financial accounting addresses the proper valuation of assets and liabilities,
and so is involved with impairments, revaluations, and so forth. Managerial accounting is not
concerned with the value of these items, only their productivity.

2. What is the difference between job order costing from process costing?

Job order costing involves the detailed accumulation of production costs attributable to
specific units or groups of units. For example, the construction of a custom-designed piece of
furniture would be accounted for with a job costing system. The costs of all labor worked on that
specific item of furniture would be recorded on a time sheet and then compiled on a cost sheet for
that job. Similarly, any wood or other parts used in the construction of the furniture would be
charged to the production job linked to that piece of furniture. This information may then be used
to bill the customer for work performed and materials used, or to track the extent of the
company's profits on the production job associated with that specific item of furniture. While
Process costing involves the accumulation of costs for lengthy production runs involving products
that are indistinguishable from each other. For example, the production of 100,000 gallons of
gasoline would require that all oil used in the process, as well as all labor in the refinery facility be
accumulated into a cost account, and then divided by the number of units produced to arrive at
the cost per unit. Costs are likely to be accumulated at the department level, and no lower within
the organization.

Given these descriptions of job costing and process costing, we can arrive at the following
differences between the two costing methodologies:

 Uniqueness of product. Job costing is used for unique products, and process costing is used
for standardized products.
 Size of job. Job costing is used for very small production runs, and process costing is used
for large production runs.
 Record keeping. Much more record keeping is required for job costing, since time and
materials must be charged to specific jobs. Process costing aggregates costs, and so requires less
record keeping.
 Customer billing. Job costing is more likely to be used for billings to customers, since it
details the exact costs consumed by projects commissioned by customers.

3. What are the main characteristics of Job order costing?

 Each Job distinguishable

Each job can be clearly distinguishable from other jobs. Each job is given a unique Job number, which
clearly distinguish that job from other jobs performed by the organization.

 Customer Specific
Job costing is used, where job is performed at the request of the customer. Each job is performed as per
specific requirement of customer.

  Job Price

Job price is agreed with customer on the bases of cost estimation. An appropriate percentage is added
to the cost for quoting a price to the customer.

  Separate Record

Separate record is kept for each job. This record is handy for calculating the profit from the job.

  Job Cost Sheet

All cost related to job are collected on jobs cost sheet or job card. These costs are then charged to job
work in progress account.

  Job Account

All cost are transferred / recorded for job cost sheet to the job account, factor overheads are also
charged to the job in job account. On completion selling and other administrative expenditure also
charged to job account to calculate full cost of jobs.

4. What are the main characteristics of process costing?

 Controlled

One major characteristic of process costing is the fact that the process is controlled. This is why
process costing is used--it is an industry where the process is clear-cut, which makes it possible to
assign a price to it. This means that there are a wide range of industries where process costing will not
work. For example, a law firm cannot use process costing to determine prices because the process to
produce their product (legal expertise and advice) is not the same for every client. Indeed, its selling
point is that it is different for every client. Therefore, the process cannot be streamlined and the costs
cannot be kept the same for all lawyers.

 Cumulative

Process costing uses cumulative costs from every stage of production. So, if a factory makes ketchup
bottles, the people in charge of process costing would find the cost of the glass, plus the cost of the
labels, plus the cost of the workers in each department and maintenance of the necessary machines.
By adding up the total cost of producing a set number of ketchup bottles, the accounting team can
determine how much it costs to produce each ketchup bottle--and therefore determine what price
each bottle should sell for.

 Continuity

The final characteristic of process costing is that the process has to be continuous. If a factory makes
custom equipment for large clients, it is not possible to assign a fixed process cost because the
process is not continuous. The factory may be making one kind of equipment for six months and a
completely different kind for the next six months; the changing of inputs and outputs will change the
process and therefore change its cost. However it is possible to process cost within each of these six-
month periods. If a shop is making different things every day, though, then there are too many
variables and process costing is not possible.
CHAPTER 2 PROBLEM 5 ASSIGNMENT
CHAPTER 2 PROBLEM 6 ASSIGNMENT
CHAPTER 2 PROBLEM 7 ASSIGNMENT
CHAPTER 2 PROBLEM 10 ASSIGNMENT
 CHAPTER 3 PROBLEM 2 ASSIGNMENT

MARVIN MANUFACTURING COMPANY

COST OF GOODS SOLD STATEMENT
FOR THE YEAR ENDED DECEMBER 31, 2019

Direct material used

Raw materials inventory Jan 1, 2019 P 175,000
Add: Purchases 250,000
Total goods available for use 425,000
Less: raw material inventory Dec.31, 2019 125,000 P300, 000
Direct labor 270,000
Factory overhead 324,000
Total manufacturing cost 894,000
Add: work in process, Jan. 1 90,000
Cost of goods put into process 984,000
Less: work in process, Dec 31 120,000
Cost of good manufactured 864,000
Add: finish goods inventory, Jan 1 100,000
Total goods available for sale 964,000
Less: finished goods, Dec 31 80,000
Cost of goods sold 884,000
 CHAPTER 3 PROBLEM 3 ASSIGNMENT
DONNA COMPANY
COST OF GOOD SOLD STATEMENT
FOR THE MONTH ENDED MAY 31, 2019

Direct material used

Materials inventory May 1 P 124,000
Add: Purchases 0
Total goods available for use 124,000
Less: material inventory May 31 115,000 P 9,000
Direct labor 160,000
Factory overhead 240,000
Total manufacturing costs 409,000
Add: Work in process, May 1 129,200
Cost of goods put into process 538,200
Less: work in process, May 31 124,000
Cost of goods manufacturing 414,200
Add: finish goods, May 1 150,000
Total goods available for sale 564,200
Less: finished goods, May 31 122,000
Cost of goods sold 442,200

Chapter 3 Multiple Choice Question 1

Problem 1
1. In Crawford Company, the predetermined overhead rate is 80% of direct labor cost.
During the month, Crawford incurs 210,000 of factory labor costs, of which 200,000 is
direct labor and 10,000 is indirect labor. Actual overhead incurred was 200,000. The
amount of overhead debited to Work in Process Inventory should be:
a). P 200,000
b). P 144,000
c). P 168,000
d). P 160,000

Answer: D
D. Work in Process Inventory should be debited for (200,000 x 80%) = P 160,000 the amount
of manufacturing overhead applied.
 Chapter 4 Assignment CVP Analysis
PROBLEM 2

Monet Company plans to sell 10,000 motorcycle helmets at P1,000 each in the coming year. Variable
cost is P 700 which includes direct materials, direct labour, variable factory overhead, variable selling,
and variable administrative. Total fixed cost equals P148,500 which includes fixed factory overhead, and
fixed administrative expenses.

Required

1. Compute the break-even point in number of helmets

2. Compute for the break-even sales

3. Check your answer by preparing a contribution margin statement based on the break-even
sales.

Solution:
1. BEP (UNITS) = Total fixed cost
Selling price/ unit- variable cost/ unit
=148,000
1,000-700
= 495 units
2. Break-even sales
Sales 495,000
Variable cost 346,000
Contribution margin 148,000
Fixed cost 148,000
Net income 0

3. Contribution margin statement

Sales 10,000,000
Variable cost 7,000,000
Contribution margin 3,000,000
Fixed cost 148,500
Net income 2,851,500

PROBLEM 3
Reno sell a product for P1,050 with variable cost of P630. Total fixed cost amounted to P630,000.
1. Compute for contribution margin per unit
2. Compute for contribution margin ratio
3. Compute for the break-even point in units and in pesos
4. If Reno wants to earn P94,500, how many units must the company sell?

Solution:
1. Contribution margin/ unit = Selling Price - Variable cost
=1050- 630
=420 unit

2. Contribution margin ratio = Contribution margin/unit

Selling price/unit
=420/ 1050
= 40%
 3. A. BEP (UNITS) = Total fixed cost
Selling price/ unit- variable cost/ unit
=630,000
1,050 -630
=1500 units

B. BEP (PESOS)= Total fixed cost

CM ratio
= 630,000
40%
=P 1,575,000

4. If Reno wants to earn P94,500, how many units must the company sell?
Sales = Variable costs + Fixed cost + Profit
1050= 630 +630,000+ 94,500
420= 724,500
= 1725 UNITS

Problems 4
Green Meadows makes three types portable coolers. The company's total Fixed cost P1,080,000. Selling
prices, variable costs, and sales percentage of each type of cooler following:
MODEL SELLING PRICE VARIABLE COST SALES MIX
X100 P 8,800 P 7,600 30%
X950 14,800 12,000 50%
C800 24,000 20,000 20%

1. What is the company's break-even point in units and pesos?

a. Break-even in total units = Total fixed cost

Weighted average contribution margin
=1,080,000
2560
= 422 units

Computation of weighted average CM per unit:

∑(CM per unit x Unit sales mix ratio)

X100 (1200 x 30/100) = 360

X950 ( 2800 x 50/100) = 1400
C800 ( 4000 x 20/100) = 800
2560

b. Multi-product break-even point in peso

BEP in peso = Total fixed costs

  Weighted average CM ratio
= 1,080,000
17.21%
= P 6,275,421

Computation of weighted average CM ratio:

∑(CMR x Sales revenue ratio)
X100 (13.6% x2640/14840) = 2.42%
X950 (18.9% x7400/ 14840) =9.42%
C800 (16.6% x 4800/ 14840) =5.37%
17.21%

2. If the company has a target of 1M how many units of each type of cooler must be sold

Contribution margin per unit for all products.

Contribution Margin per Unit X100 = 8,800 – 7,600 = 1,200
Contribution Margin per Unit X950= 14,800 – 12,000 = 2,800
Contribution Margin per Unit C800 = 24,000 – 20,000 = 4,000

Weighted average contribution margin.

= 1,200 × 0.30 + 2,800 × 0.50 + 4,000 × 0.20 = 2,560

Target sales in units for all products.

Target Sales in Units X100 = (1,080,000 + 1,000,000) ÷ 2,560 × 0.30 = 244 Units
Target Sales in Units X950 = (1,080,000+ 1,000,000) ÷ 2,560× 0.50 = 406 Units
Target Sales in Units C800 = (1,080,000+ 1,000,000) ÷ 2,560× 0.20 = 163 Units
 Chapter 5 Job Order Costing Assignment

Journal entries:
Materials 56,000
Accounts payable 56,000

Work in process 44,000

Factory overhead control 6,000
Materials 50,000
Materials issued to production
Job 401(14,000)
Job 402( 19,000)
Job 403 ( 19,000)

Materials 1,600
Work in process 500
Factory overhead control 300

Accounts payable 2,000

Materials 2,000
Materials returned to vendors.

Payroll 78,000
Withholding taxes payable 6,050
SSS Premium Payable 3,200
Medicare contributions payable 750
Accrued factory payroll 65,600

Accrued payroll 65,600

Cash 65,600

work in process 66,800

Factory overhead control 11,200
Payroll 78,000

Factory overhead control 7,150

SSS Premium Payable 4,000
Medicare contributions payable 750
PAGIBIG Payable 2,400

Factory overhead control 30,000

accumulated depreciation 6,000
prepaid insurance 1,900
accounts payable 22,100

Work in process 53,440

Factory overhead applied 53,440

Finished goods 144,440

Work in process 144,440
job 401
job 402
Accounts receivable 88,816
Sales 88,816
Cost of goods sold 63,440
FG 63,440

Cash 70,000
Accounts receivable 70,000

JOB ORDER COST SHEET

JOB 401
NO.
Direct materials Direct labor Factory overhead
6,000 5,000 4,000
11,000 20,800 16,640
17,000 25,800 20,640

JOB 402
NO.
Direct materials Direct labor Factory overhead
11,200 6,000 4,800
14,000 25,000 20,000
25,200 31,000 24,800

JOB 403
NO.
Direct materials Direct labor Factory overhead
19,000 21,000 16,800

COST OF GOOD SOLD

XIndirect materials 5,400 55,000 43,000
Direct labor 66,800
Factory overhead 53,440
Total manufacturing costs 163,240
Work in process, Aug. 1 37,000
Cost of goods put into
process 200,240
Less: Work in process, Aug.
31 55,800
Cost of goods manufactured 144,440
Finished goods, Aug. 1 50,000
Total goods available for sale 194,440
Less: Finished goods, Aug. 31 131,000
Cost of goods sold - normal 63,440
Add. Under applied factory overhead 310
Cost of goods sold 63,750

Chapter 6 JIT & Backflush

Problem 2 – Magnolia Corporation

1) Raw and In Process 444,000

Accounts payable 444,000

2) Finished goods 443,000

Raw in process 443,000

Purchases 444,000

Mat. In RIP beg (23,400-2,400) 21,000

Mat. In RIP end (25,600-3,600) (22,000)

Mat. Content of FG 443,000

3) Cost of goods sold 399,000

Accrued payroll 210,000

FO Applied 189,000

3) Cost of goods sold 447,000

Finished goods 447,000

Mat. Content of FG 443,000

Mat. In FG beg. (24,000-8,000) 16,000

Mat. In FG end (19,000-7,000) (12,000)

Mat. Content of units sold 447,000

4) Raw and In Process 1,200

Cost of goods sold 1,200

Conversion cost in RIP end 3,600

Conversion cost in RIP beg (2,400)

Adjustment 1,200

5) Cost of goods sold 1,000

Finished goods 1,000

Conversion cost in FG end 7,000

Conversion cost in FG beg (8,000)
Adjustment (1,000)

Chapter 7 Assignment
 ACCOUNTING FOR MATERIALS
PROBLEM 1- Norman Company

EOQ = 2 x 64,000 x 40
2
= 1,600 units

Ordering cost= 64,000 x 40

1,600
= 1,600

Carrying cost = 1,600 x 2

2
= 1,600

PROBLEM 2- Abner Company

a. EOQ = 2 X 13,000 X 200

5.20
= 5,200,000
5.20
= 1,000 units

b. Number of orders in a year

=13,000/ 1,000
=13 orders

C. Average inventory based on EOQ

= 1,000 / 2
=500

D. Total carrying cost

= 13 x 200
=P 2,600

Total ordering cost

= 13 x 200
= P 2,600

PROBLEM 6

1. FIRST IN – FIRST OUT

RECEIVED ISSUED BALANCE
1,600 X 6.00 9,600

5 400 X 7.00 2,800 1,600 X 6.00 9,600

400 X 7.00 2,800
 9 400 X 8.00 3,200 1,600 X 6.00 9,600
400 X 7.00 2,800
400 X 8.00 3,200

16 800 X 6.00 4,800 800 X 6.00 4,800

400 X 7.00 2,800
400 X 8.00 3,200
24 600 X 9.00 5,400 800 X 6.00 4,800
400 X 7.00 2,800
400 X 8.00 3,200
600 X 9.00 5,400
27 800 X 6.00 4,800 200 X7.00 1,400
200 X7.00 1,400 400 X 8.00 3,200
600 X 9.00 5,400

Cost of material Issued = 4,800 + 4,800+ 1,400 = 11,000

Cost of ending inventory= 1,400+ 3,200+ 5,400 =10,000

2. AVERAGE
RECEIVED ISSUED BALANCE
1 1,600 X 6.00 9,600

5 400 X 7.00 2,800 2,000 X 6.20 12,400

9 400 X 8.00 3,200 2,000 X 6.50 15,600

16 800 X 6.50 5,200 1,600 X 6.50 10,400

24 600 X 9.00 5,400 2,200 X 7.18 15,800
27 1,000 X 7.18 7,180 1,200 X 7.18 8,620
Cost of material Issued = 5,200+ 7,180 = 12,380
Cost of ending inventory=8,620
 Chapter 7 Assignment 2

Problem 11. Little Mermaid Company

1. Charged to specific good
a. Work in process 2,440,000
Materials (5,000 x 200) 1,000,000
Payroll (5,000 x 120) 600,000
FO Applied (600,000 x 140%) 840,000

b. Work in process 122,000

Materials (1,000 x50) 50,000
Payroll (1,000 x 30) 30,000
FO Applied (30,000 x 140%) 42,000

c. Spoiled goods (20 x400) 8,000

Work in process 8,000

d. Finished goods 2,554,000

Work in process 2,554,000

2. Charged to all production

a. Work in process 2,500,000
Materials 1,000,000
Payroll 600,000
FO Applied 900,000
b. FO Control 125,000
Materials 50,000
Payroll 30,000
FO Applied 45,000
c. Spoiled goods 8,000
FO Control 2,000
Work in process 10,000
d. Finished goods 2,490,000
Work in process 2,490,000

3. A. Method used is charged to specific job

Unit Total per unit

Original cost 5,000 2,440,000 488.00
Additional cost 122,000 24.40
2,562,000 512.40
Spoiled (20) (8,000) .45
Net 4,980 2,554,000 512.85
Divide by 4,980
Cost per unit 512.85
Increase in unit cost due to spoiled units
Cost 512.40
Selling price 8,000
Loss 2,248
Divide by remaining units 4,980
.45

B. Method used is charged to all production

Original cost 5,000 2,500,000

Spoiled (20) (10,000)
Net 4,980 2,490,000
Divide by 4,980
Cost per unit 500

Problem 12. Marvin Corporation

Work in process 300,000
Materials 117,000
Payroll 100,000
FO Applied 83,000

Work in process 4,350

Materials 1,650
Payroll 1,500
FO Applied 1,200

Spoiled goods 825

Work in process 825

Finished goods 303,525

Work in process 303,525

B. Cost per unit of the finished goods.

Original cost 1,000 300,000
Spoiled (15) (825)
Net 985 299,175
Divide by 985
Cost per unit 303.73