Chapter-4 - Cost PDF

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Summary

CHAPTER 4Multiple Choices – Computational1. b 6. b2. b 7. c3. b 8. b4. b 9. a5. b 10. AMultiple Choices – Computational1. (a)Cost ofDate of Issue Purchase Lot Units x Cost Materials Issued5/15 5/5 15 x P20 = P5/19 BI 10 x P15 = 1505/30 5/5 & 5/24 (5 x P20) + (10 x P18) = 280PEnding inventory...

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1

CHAPTER 4 Multiple Choices – Computational 1. 2. 3. 4. 5.

b b b b b

6. 7. 8. 9. 10.

b c b a A

Multiple Choices – Computational 1.

(a) Cost of Units x Cost Materials Issued 15 x P20 = P300 10 x P15 = 150 (5 x P20) + (10 x P18) = 280 P730 Ending inventory: 5 (from 5/24 purchase) x P18 = P90 Date of Issue 5/15 5/19 5/30

2.

Purchase Lot 5/5 BI 5/5 & 5/24

(a) (10 x P15) + (20 x P20) + (15 x P18) 45

=

P18.222

Cost of materials issued: 40 x P18.222 = P728.88 Ending inventory: 5 x P18.222 = P91.11 3.

(a) Date BI 5/5 5/24

4.

Units 10 20 10 40

Unit Cost P15 20 18

(c) Purchases

Date BI 5/5 5/15 5/19 5/24 5/30

(a) (b)

Cost of Materials Issued P150 400 180 P730

Units 10 20 15 -

Unit Cost P15 20 18 -

Units 15 10 15

Issued Unit Cost P18.333 18.333 18.084

(10 x P15) + (20 x P20) / 30 = P18.333 (5 x P18.333) + (15 x P18) / 20 = P18.084

Total Cost P275.00 183.33 271.26

Units 10 30 15 5 20 5

Balance Unit Cost P15.000 18.333(a) 18.333 18.333 18.085(b) 18.084

Total Cost P150.00 550.00 275.00 91.67 361.68 90.42

2 5.

(a) Purchases

Date BI 5/5 5/15 5/19 5/24 5/30

Units 10 20 15 -

(a) (b) (c) (d)

(10 x P15) (10 x P15) (5 x P20) (5 x P15)

6.

(d)

Date 1/1 1/6 1/7 1/26 1/31

Unit Cost P15 20 18 -

Units 1,500 3,400 -

+ + + +

Units 15 10 15

(20 x P20) (5 x P20) (5 x P15) (15 x P18)

Purchases Price 10.300 10.750 -

= = = =

Issued Unit Cost P20 (c) 18

Amount 15,450 36,550 -

Issued Price 10.000 10.500

Units 1,800 3,200

(P19,550 + P15,450) / (2,000 + 1,500) = (P17,000 + P36,550) / (1,700 + 3,400) =

7.

(c) P19,550 + P15,450 + P36,550 6,900

Amount 18,000 33,600

Units 2,000 3,500 1,700 5,100 1,900

Balance Price 9.775 10.000(a) 10.000 10.500(b) 10.500

Amount 19,550 35,000 17,000 53,550 19,950

P10.000 P10.500

x 1,900 = P19,702

Issued

600 x P4.90 = P2,940

R46

175 x P4.80 = P 840

R49

225 x P4.80 = P1,080

R50

80 x P4.80 = P 384 200 x P4.90 = P 980

PO96

Total P150 550 250 75 345 P75

(a) Received

Balance PO30

Units 10 30 15 5 20 5

Balance Unit Cost P15 (a) (b) 15 (d) 15

P550 P250 P175 P345

(a) (b)

8.

Total Cost P300 175 270

400 x P4.95 = P1,980

R52

310 x P4.90 = P1,519

RM24

(20) x P4.90 = (P98)

480 480 600 305 600 80 600

x x x x x x x

Balance P4.80 = P2,304 P4.80 = P2,304 P4.90 = P2,940 P4.80 = P1,464 P4.90 = P2,940 P4.80 = P 384 P4.90 = P2,940

400 400 400 90 400 110 400

x x x x x x x

P4.90 = P4.90 = P4.95 = P4.90 = P4.95 = P4.90 ) P4.95 )=

P1,960 P1,960 P1,980 P 441 P1,980 P2,519

3 9.

(a) Received

175 x P4.856 = P 849.80

Balance * 480 x P4.80 = P2,304.00 1,080 x P4.856 = P5,244.48 905 x P4.856 = P4,394.68

R49

225 x P4.856 = P1,092.60

680 x P4.856 = P3,302.08

R50

280 x P4.856 = P1,359.68

400 x P4.856 = P1,942.40

Balance PO30 R46

PO96

Issued

600 x P4.90 = P2,940

400 x P4.95 = P1,980

800 x P4.903 = P3,922.40

R52

310 x P4.903 = P1,519.93

490 x P4.903 = P2,402.47

RM24

(20) x P4.856 = P

510 x P4.901 = P2,499.59

97.12

* Answers may vary due to rounding. 10.

(a) Material AA BB CC DD

11.

Quantity 460 830 1,290 580

Cost P140 85 120 65

NRV P130 90 145 55

Valuation P 59,800 70,550 154,800 31,900 P317,050

(d) Materials AA BB CC DD

Cost P64,400 70,550 154,800 37,700 P327,450

NRV P59,800 74,700 187,050 31,900 P353,450

Since cost is lower, use P327,450 as the inventory valuation. 12.

(a)

Materials Quantity Group I AA 460 BB 830 Total Group II CC 1,290 DD 580 Total Valuation Summary Group I Group II Inventory Valuation

Basis NRV Cost

Cost

NRV

Total Cost

Total NRV

P140 85

P130 90

P64,400 70,550 P134,950

P59,800 74,700 P134,500

120 65

145 55

P154,800 37,700 P192,500

P180,500 31,900 P218,950

Valuation P134,500 192,500 P327,000

4 13.

(b) Finished goods, May 1, 2010 Cost of goods manufactured Total cost of goods available Finished goods, May 31 Loss on inventory write-down Cost of goods sold

14.

P129,640 395,440 525,080 (142,840) 9,740 P391,980

(a) Finished goods, June 1 Cost goods manufactured Total cost of goods available Finished goods, June 30 Recovery from Inventory write-down Cost of goods sold

15.

P 290,540 805,820 1,096,360 ( 276,760) ( 10,720) P 808,880

(a) Cost NRV (P134,315 - P26,855) Inventory write-down

16.

P 110,492 107,460 P 3,032

(a) Balance of Allow. for Inventory Write-down Required balance of Allow account: Cost of inventory NVV Recovery

P

8,930

P

5,119 3,811

P296,369 291,250

5 Solutions to Problems Problem 4-1

FIFO DATE Jan. 1 6

REF. Bal. PO74

12

R18

14

PO83

17

R23

31

R19

UNITS 200

250

RECEIVED PRICE AMOUNT 40.50

41.00

UNITS

ISSUED PRICE

AMOUNT

8,100 150 75

40.00) 40.50)

125 75 40

40.50) 41.00) 41.00

9,037.50

10,250

8,137.50 1,640

UNITS 150 150 200

BALANCE PRICE AMOUNT 40.00 P 6,000.00 40.00) 40.50) 14,100.00

125 125 250

40.50 40.50) 41.00)

5,062.50 15,312.50

175 135

41.00 41.00

7,175.00 5.535.00

LIFO DATE Jan. 1

REF. Bal.

6 12

R18

14

PO83

17 31

UNITS

RECEIVED PRICE AMOUNT

UNITS

ISSUED PRICE

AMOUNT

200 25

40.50) 40.00)

9,100.00

R23

200

41.00

8,200.00

R19

40

41.00

1,640

250

41.00

10,250

UNITS 150 150 200 125 125 250 125 50 125 10

BALANCE PRICE AMOUNT 40.00 P 6,000.00 40.00 40.50 14,100.00 40.00 40.00) 41.00) 40.00) 41.00) 40.00) 41.00)

5,000.00 15,525.00 7,050.00 5,410

MOVING AVERAGE DATE Jan. 1 6

REF. Bal. PO74

UNITS 200

RECEIVED PRICE AMOUNT 40.50

UNITS

ISSUED PRICE

UNITS 150 350

9,067.50

125

40.30

5,037.50

375

40.80

15,282.50

8,100 225

12

R18

14

PO83

17

R23

200

40.80

8,160

175

40.80

7,122.50

31

R19

40

40.80

1,632.00

135

40.80

5,490.50

250

41.00

40.30

BALANCE PRICE AMOUNT 40.00 P 6,000.00 40.30 14,105.00

AMOUNT

10,250

6 Problem 4-2 LOWER OF COST OR NRV BY ITEM MATERIAL X-1 X-2 X-3 A-4 A-5 A-6 Inventory

QUANTITY 100 200 120 120 110 25

COST PER UNIT P100.00 150.00 160.00 50.00 75.00 60.00

NRV PER UNIT P110.00 130.00 150.00 45.00 72.50 63.00

VALUATION BASIS Cost NRV NRV NRV NRV Cost

valuation

LOWER OF COST OR NRV P10,000.00 26,000.00 18,000.00 5,400.00 7,975.00 1,500 P68,875.00

LOWER OF TOTAL COST OR TOTAL NRV

MATERIAL X-1 X-2 X-3 A-4 A-5 A-6 Total Inventory

MATERIAL X-1 X-2 X-3 Total Group I A-4 A-5 A-6 Total Group II

QUANTITY 100 200 120 120 110 25

COST PER UNIT P100.00 150.00 160.00 50.00 75.00 60.00

NRV PER UNIT P110.00 130.00 150.00 45.00 72.50 63.00

TOTAL COST P10,000.00 30,000.00 19,200.00 6,000.00 8,250.00 1,500.00

TOTAL NRV P11,000.00 26,000.00 18,000.00 5,400.00 7,975.00 1,575.00

P74,950.00

P69,950.00 P69,950.00

Valuation

LOWER OF TOTAL COST OR TOTAL NRV BY GROUP COST NRV PER TOTAL QUANTIT PER UNIT UNIT COST Y 100 P100.00 P110.00 P10,000.00 200 150.00 130.00 30,000.00 120 160.00 150.00 19,200.00 P59,200.00 120 50.00 45.00 6,000.00 110 75.00 72.50 8,250.00 25 60.00 63.00 1,500.00 P15,750.00

Summary of Inventory Valuation: MATERIAL Group I Group II Inventory valuation

BASIS Market Market

VALUATION P55,000.00 14,950.00 P69,950.00

TOTAL NRV P11,000.00 26,000.00 18,000.00 P55,000.00 5,400.00 7,975.00 1,575.00 P14,950.00

7 Problem 4-3

FIFO METHOD Material A-42 DATE May 1 2 3

REF. Bal. R032 PO507

UNITS

650

RECEIVED PRICE AMOUNT

10.20

ISSUED PRICE

AMOUNT

110

9.50

1,045.00

UNITS

6,630

8

R036

150

9.50

1,425.00

31

R082

11 199

9.50) 10.20)

2,134.30

UNITS 271 161 161 650 11 650 451

BALANCE PRICE AMOUNT P9.50 P2,574.50 9.50 1,529.50 9.50) 10.20) 8,159.50 9.50) 10.20) 6,734.50 10.20

4,600.20

FIFO METHOD Materials B-18 DATE May 1 3 6

REF. Bal. PO507

UNITS 650

RECEIVED PRICE AMOUNT 6.50

R046 PO061

31

R082

650

5.90

AMOUNT

83 92 80

7.00) 6.50) 6.50

1,179.00 520.00

382

6.50

2,483.00

4,225.00

R034

12 26

ISSUED PRICE

UNITS

3,835.00

UNITS 83 83 650 558 478 478 650 96 650

BALANCE PRICE AMOUNT P7.00 P 581.00 7.00) 6.50) 4,806.00 6.50 6.50 6.50) 5.90) 6.50) 5.90)

3,627.00 3,107.00 6,942.00 4,459.00

8 Problem 4-3 (continued)

MOVING AVERAGE METHOD Material A-42 UNITS

RECEIVED PRICE AMOUNT

UNITS

ISSUED PRICE

AMOUNT

UNITS 271

110

9.50

1,045.00

161

9.50

1,529.50

811

10.06

8,159.50

661

10.06

6,650.50

451

10.06

4,537.90

DATE May 1

REF. Bal.

2

R032

3

PO507

8

R036

150

10.06

31

R082

210

10.06

650

10.20

6,630.00 1,509.00 2,112.60

BALANCE PRICE AMOUNT P9.50 P2,574.50

MOVING AVERAGE METHOD Materials B-18 DATE May 1

RECEIVED PRICE AMOUNT

UNITS

3

PO507

650

6

R034

175

6.56

12

R046

80

26 31

PO061 R082

382

650

6.50

5.90

UNITS

ISSUED PRICE

REF. Bal.

AMOUNT

4,225.00

UNITS 83

BALANCE PRICE AMOUNT P7.00 P 581.00

733

6.56

4,806.00

1,148.00

558

6.56

3,658.00

6.56

524.80

478

6.56

3,133.20

6.18

2,360.80

1,128 746

6.18 6.18

6,968.20 4,607.40

3,835.00

9

Problem 4-4 Req 1:

Req. 2:

Req. 3:

Loss on inventory write-down Allowance for inventory write-down To record loss resulting from decline in Net Re3alizable Value of inventory.

2,910

Allowance for inventory write-down Recovery from inventory write-down To record recovery resulting from adjustment of allowance account.

41,925

Allowance for inventory write-down Recovery from inventory write-down To record recovery resulting from adjustment of allowance account.

61,980

2,910

41,925

61,980

Problem 4-5 Req. 1:

No entry is needed, cost is lower than market.

Req. 2:

Loss on inventory write-down Allowance for inventory write-down To record loss resulting from decline in net realizable value of inventory.

6,350

Allowance for inventory write-down Recovery from inventory write-down To record recovery resulting from adjustment of allowance account.

6,350

Req. 3:

Req. 4:

6,350

6,350

2008: Inventory, at cost, Lower of cost or NRV 2009:

2010:

Inventory, at cost Less Allowance for inventory Write-down Inventory, at cost, lower of cost or NRV

P365,900

P348,105 6,350

P341,755 P337.740

Note: In 2010 the cost of inventory is higher than market. Therefore, the allowance of Inventory write-down is not needed. Inventory on the balance sheet will be shown at cost.

10 Problem 4-6 Goodson Printers Income Statement Year Ended January 31, 2010 Sales Sales returns and allowances Net sales Cost of goods sold: Finished goods inventory, Feb. 1 Cost of goods manufactured Cost goods available Finished goods inventory, Jan 31 Total Loss on inventory write-down Gross profit Operating expenses Selling expenses Administrative expenses Net income before provision for income tax Provision for income tax Net income after income tax

P729,370 48,211 681,159 P 47,910 422,280 470,190 49,620 420,570 9,682

430,252 250,907

96,357 60,061

156,418 94,489 28,347 P 66,141

Problem 4-7

FIFO METHOD DATE Mar. 1 5 9

REF. Bal R091 PO016

13

R094

22

PO023

29

R098

UNITS

600

600

RECEIVED PRICE AMOUNT

140

145

ISSUED PRICE

AMOUNT

400

125

50,000

600 250

125) 140)

110,000

250

140

35,000

UNITS

84,000

UNITS 1,000 600 600 600 350 350 600 100

87,000

BALANCE PRICE AMOUNT 125 125,000 125 75,000 125) 140) 159,000 140 140) 145) 140) 145)

49,000 136,000 101,000

MOVING AVERAGE METHOD DATE Mar 1 5

REF. Bal R091

UNITS

9

Po016

600

13

R094

22

PO023

31

R098

RECEIVED PRICE AMOUNT

UNITS 400

140

145

AMOUNT

125

50,000

84,000 850

600

ISSUED PRICE

132.50

UNITS 1,000 600 1,200

132.50

159,000

350

132.50

46,375

950

140.40

133,375

140.40

98,275

112,625

87,000 250

140.40

35,100

BALANCE PRICE AMOUNT 125.00 125,000 125.00 75,000

700

11 Problem 4-8

FIFO METHOD Material Number

Reorder Point 300 Reorder Quantity 650

Plywood B-84

DATE Nov. 1 1 3

REF. Bal R71 PO42

7

R36

12 21 26

R76 R76 PO47

31

R82

UNITS

650

650

RECEIVED PRICE AMOUNT

88

UNITS

ISSUED PRICE

AMOUNT

135

95

12,825

136 29 80 304

95) 88) 88 88

15,472 7,040 26,752

210

88

18,480

57,200

85

55,250

UNITS 271 136 136 650

BALANCE PRICE AMOUNT P95 P25,745 95 12,920 95) 88) 70,120

621 541 237 237 650 27 650

88 88 88 88) 85) 88) 85)

54,648 47,608 20,856 76,106 57,626

FIFO METHOD Materials Number DATE Nov. 1 3 4

Reorder Point 300 Reorder Quantity 650

Plastic R-36

REF. Bal PO42

UNITS 650

RECEIVED PRICE AMOUNT 76

R74 R76 PO47

31

R82

650

79

ISSUED PRICE

83 52 165 80

70) 76) 76) 76)

353 30

76) 79)

BALANCE PRICE AMOUNT 70 P5,810 70) 76) 55,210

AMOUNT

UNITS 83 83 650

9,762

598 433 353 353 650

76 76 76 76) 79)

45,448 32,908 26,828

620

79

48,980

49,400

R73

7 12 26

UNITS

6,080

51,350

29,198

78,178

12 Problem 4-8 (continued)

MOVING AVERAGE METHOD Material Number

Reorder Point 300 Reorder Quantity 650

Plywood B-84

UNITS

RECEIVED PRICE AMOUNT

UNITS

ISSUED PRICE

AMOUNT

UNITS 271

135

95

12,875

136

95

12,920

786

89.2

70,120

14,718

621

89.2

55,402

89.20

7,136

541

89.2

48,266

89.20

27,117

237

89.2

21,149

887

86.1

76,399

677

86.1

58,318

DATE Nov. 1

REF. Bal

1

R71

3

PO42

7

R74

165
...