Answers to 8 17 Exercises of cost accounting subject PDF

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ACCTG 312n Cost Classification and Manufacturing Operations

EXERCISES August 17, 2021

60 points

Give what are asked in each case that follow. Write all your answers on your class notebook. Avoid erasures. NO. 1 Identify the Concept that is appropriately referred to by each of the Definition provided.

ANSWERS 1) Variable cost 2) Cost 3) Expense 4) Product cost 5) Period cost

6) Outlay cost 7) Opportunity cost 8) Full absorption cost 9) Indirect cost 10) Direct cost

11). Fixed cost 12) Sunk cost 13) Marginal cost 14) Average cost 15) Differential cost

NO. 2 The Lexus Corporation produces a set of wood home and office furniture consisting of a table and four chairs. The company has enough customer demand to justify its full capacity production of 1,800 sets per year. Annual cost data at full capacity are presented below. You are asked to classify the cost items, by behavior and function. Note that each cost item is classified in two ways: first, as variable or fixed with respect to the number of sets produced and sold; and second, as period cost or product cost. If it is a product cost, should be further classified as either direct or indirect. Two selected cost items were already classified as examples. Cost Items Direct materials used……………. Direct labor………………………… Advertising…………………….….. Factory supervision……………… Property taxes, factory building… Sales commissions……………… Factory insurance………………… Depreciation, office equipment… Rent, factory equipment………….. Indirect factory materials………… Depreciation, factory building…… Office supplies used……………… Administrative office salaries…… Factory utilities…………………… Transportation out………………… Cost of office communication, on a plan basis………………… TOTAL

Cost Behavior Variable Fixed 3,410,000 4,770,000 750,000 900,000 22,500 1,500,000 500,000 26,000 380,000 290,000 150,000 45,000 900,000 368,500 38,200 12,000 ₱10,421,700

₱ 3,640,500

Period Cost

Product Cost Direct Indirect 3,410,000 4,770,000

750,000 900,000 22,500 1,500,000 500,000 26,000 380,000 290,000 150,000 45,000 900,000 368,500 38,200 12,000 ₱ 3,271,200

₱ 8,180,000

₱ 2,611,000

Additional requirements: a) Compute the total amount in each of the columns above. b) How much is the average product cost of one set of the table and chairs? Average product cost = ₱8,180,000 + ₱2,611,000 = ₱5,995 per set 1,800 sets c)

Assume that production will drop to only 1,500 sets next year, would you expect the average product cost per set to increase, decrease, or remain unchanged? Explain. No need to present computations. Increase, because…

NO. 3The following information were related to the full year’s activities of Lexus Industries on its first year of operations, 2020: Raw materials, net purchases ₱ 8,125,000 Direct labor cost 2,875,000 Factory overhead 1,250,000 Selling, general and administrative 850,000 80% of available raw materials were transferred to production. 90% of the work in process were completed. 78% of the finished goods were sold. 20% of the factory overhead related to depreciation. 18% of the SG&A related to depreciation. Required: a) How much is the ending inventory for raw materials, work in process, and finished goods? Raw materials, end = ₱8,125,000 x 20% = ₱1,625,000 Work in Process, end = (₱6,500,000 + ₱2,875,000 + ₱1,250,000) x 10% = ₱1,062,500 Finished goods, end = COGM x 22% = ₱10,625,000 x 90% x 22% = ₱2,103,750 b)

How much is in cost of goods sold, and SG&A expenses during the period RM used (₱8,125,000 x 80%) ₱6,500,000 Selling and Admin Expenses DL cost 2,875,000 FOH 1,250,000 Total manufacturing costs ₱10,625,000 Cost of completed goods Cost of goods sold

c)

₱850,000

X 90% ₱9,562,500 X 78% ₱7,458,750

How much of the total depreciation during the period is charged against the income during the period? Depreciation in COGS (₱1,250,000 x 20% x 90% x 78%) ₱175,500 Depreciation in SG&A (₱850,000 x 20%) 170,000 Total depreciation charged against the income

₱345,500

d)

How much of the total depreciation during the period is included in the ending finished goods inventory? Depreciation in FG, end = ₱1,250,000 x 20% x 90% x 22%) = ₱49,500

e)

If Lexus Industries earned a profit of ₱3,879,750, how much were the total sales? Profit ₱3,879,750 SG&A 850,000 Gross margin ₱4,729,750 COGS Sales

7,458,750 ₱12,188,500

. . .END. . . “ The only difference between Dream and Aim is: DREAM requires effortless sleep to see, While AIM requires sleepless effort to achieve.”...