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Pamantasan ng Cabuyao Brgy. Banay- Banay, City of Cabuyao, Laguna Managerial Accounting Costs, Concepts and Classification ACTIVITY 1

Name: Course and Section:

Score: Date:

Problem I Presented below is a list of costs and expenses usually incurred by J. Hendrix Corporation, a manufacturer of furniture, in its factory: 1. 2. 3. 4. 5. 6. 7. 8. 9.

Metal used in manufacturing tables Insurance on factory machines Leather used in manufacturing furniture Wages paid to machine operators Depreciation of factory machinery Salaries of factory supervisors Wood used in manufacturing furniture Sandpaper, bolts and nails Property taxes on factory building

– Direct Materials - Manufacturing Overhead - Direct Materials - Direct Labor - Manufacturing Overhead - Manufacturing Overhead - Direct Materials - Manufacturing Overhead - Manufacturing Overhead

Instructions: Classify the above items into the following categories (a) Direct Materials, (b) Direct Labor and (c) Manufacturing Overhead.

Problem II Classify the following as either manufacturing (M), selling (S), or administrative (A) 1. 2. 3. 4. 5. 6.

Metal for the furniture of golf clubs Wages of drivers delivering goods to customers Rent on factory building Freight- in of materials purchased President’s salary Cost of machine breakdown

-M -S -M -M -A -M

7. 8. 9. 10.

Power to operate factory equipment Advertising Commission paid to sales personnel Travel expenses of salesmen

-M -S -S -S

Problem III RATM Delivery Services reports the following costs and expenses in June of the current year: Direct materials Factory rent Direct labor Factory utilities Supervisor’s salary in the factory Depreciation—factory equipment Sales commission Advertising Depreciation—office equipment Salary of the president

P

220,000 50,000 180,000 8,500 60,000 20,000 57,000 47,000 10,000 250,000

Required: Compute the following: a. (1) Direct Materials = 220,000 (2) Direct Labor,

= 180,000

(3) Manufacturing Overhead = Factory Rent Factory Utilities Supervisor’s salary in the factory Depreciation—factory equipment Total

P 50,000 8,500 60,000 20,000 P 138,500

(4) Selling Expenses =

P 57,000 47,000 P 104,000

Sales Commissions Advertising Total

(5) Administrative Expenses = Depreciation—Office Equipment Salary of the President Total

P 10,000 250,000 P 260,000

b. Total Product Cost =

Direct Materials Direct Labor Manufacturing Overhead Total

P 220,000 180,000 138,500 P 538,500

c. Total Period Cost =

Selling Expenses Administrative Expenses Total

P 104,000 260,000 P 364,000

d. Cost per unit if the company was able to manufacture 40,000 units = (Total Product Cost + Total Period Cost) / No. of Units produced = (P538,500 + P364,000) / 40,000 Units = P22.5625 / Units

Problem IV Classify each of the following costs of Queen Company in two ways: (a) as Variable (V) or Fixed costs (F): (b) as Inventoriable Costs (I) or Period Costs (P) (a) V or F Example: Direct Labor 1. 2. 3. 4. 5.

Wood used in bookcases Machine depreciation based on machine hours Fire Insurance on factory equipment Wiring used in radios Sales Commissions

(b) I or P

V

I

F V V V V

P I I I P

Problem V L. Zepp, Inc. operates an automobile service facility, which specializes in replacing mufflers on cars. The following table shows the costs incurred during a month when 750 mufflers were replaced.

Number of Muffler Replacements 400 Total Costs Fixed Costs Variable Costs Total Costs Cost per muffler replacement Fixed Costs Variable Costs Total Costs per replacement

a c e

P

g j m

Required: Fill the missing amounts. a. P50,000 b. P50,000 c. Variable Cost per Unit x No. of Muffler Replacements = *P120/ Unit x 400 units = P48,000 * 60,000 / 500 units d. Variable Cost per Unit x No. of Muffler Replacements = P120/ Unit x 800 units = P96,000 e. f. g. h. i. j. k. l. m. n. o.

P50,000 + P48,000 = P98,000 P50,000 + P96,000 = P146,000 P50,000 / 400 units = P125/ unit P50,000 / 500 units = P100/ unit P50,000 / 800 units = P62.5/ unit P120 / unit P120 / unit P120 / unit P125 / unit + P120 / unit = P245 / unit P100 / unit + P120 / unit = P220 / unit P62.5 / unit +P120 / unit = P182.5 / unit

Problem VI The financial statements of Talica Company included these items: Marketing Costs Direct Labor Cost Administrative Costs

P

160,000 245,000 145,000

500

800

50,000 60,000 P110,000

b d f

h k n

i l o

Direct Materials Used Fixed Factory Overhead Costs Variable Factory Overhead Costs

285,000 175,000 155,000

Compute: 1. Prime Cost

= Direct Materials Used + Direct Labor Cost = P285,000 + P245,000 = P530,000

2. Conversion Cost Fixed)

= Direct Labor + Manufacturing Overhead (Variable and = P245,000 + (P155,000 + 175,000) = P245,000 + P330,000 = P575,000

3. Total Inventoriable Cost/ Product Cost = Direct Materials Used + Direct Labor + Manufacturing Overhead = P285,000 + P245,000 + P330,000 = P860,000 4. Total Period Cost

= Marketing Costs + Administrative Costs = P160,000 + P145,000 = P305,000

Problem VII M24 Corporation estimated its unit costs of producing and selling 12,000 units per month as follows: Direct Materials used Direct Labor Variable Manufacturing Overhead Fixed Manufacturing Overhead Variable Marketing Costs Fixed Marketing Costs Estimated Unit Cost

P

P

32.00 20.00 15.00 6.00 3.00 4.00 80.00

Compute: 1. Total Variable Costs per month = Variable Cost per unit x No. of units produced = **P70/ unit x 12,000 units = P840,000 **Variable Cost per Unit = Direct Materials used / unit + Direct Labor / unit + Variable Manufacturing Overhead / unit + Variable Marketing Costs / unit = P 32 + P20 + P15 + P3 = P70 / unit 2. Variable Cost per Unit produced. = P70/ unit 3. Total Manufacturing Cost. = Total Manufacturing Cost / Unit x No. of units produced = **P73 / unit x 12,000 units = P876,000 *** = Direct Materials used / unit + Direct Labor / unit + Variable Manufacturing Overhead / unit + Fixed Manufacturing Overhead / unit = P 32 + P20 + P15 + P6 = P73 / unit 4. Manufacturing Cost per Unit. = P73/ unit...