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Cost Acc Answer Key

The document outlines various problems related to prime costs, including the identification of direct and indirect costs, calculation of total prime costs, and determination of prime cost per unit for multiple scenarios. It also discusses conversion costs and methods for calculating cost of goods sold using FIFO and weighted average costing methods. Additionally, the document includes detailed calculations and examples for each problem presented.

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Hong Dusik
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67 views5 pages

Cost Acc Answer Key

The document outlines various problems related to prime costs, including the identification of direct and indirect costs, calculation of total prime costs, and determination of prime cost per unit for multiple scenarios. It also discusses conversion costs and methods for calculating cost of goods sold using FIFO and weighted average costing methods. Additionally, the document includes detailed calculations and examples for each problem presented.

Uploaded by

Hong Dusik
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as PDF, TXT or read online on Scribd

PRIME COST PROBLEMS Prime Cost per unit = Total Prime Cost / 1.

Identify Direct Costs:


Number of units
PROBLEM 1 - Materials cost = ₱45,000
= ₱89,000 / 1,200
1. Raw materials purchased = ₱36,000 - Labor cost = ₱63,000
(Direct Material Cost) = ₱74.17 per unit
- Packaging costs = ₱6,000
2. Labor wages = ₱48,000 (Direct Labor
Cost) 2. Identify Indirect Costs:
PROBLEM 2
3. Packaging materials = ₱5,000 (Direct - Factory utilities = ₱10,000
Material Cost 1. Identify Direct Costs:
- Office salaries = ₱18,000
Indirect costs are expenses not directly - Raw materials purchased = ₱60,000
- Selling expenses = ₱12,000
related to producing the product. - Labor wages = ₱75,000
- Training programs = ₱3,000
1. Factory rent = ₱10,000 (Factory Overhead) - Packaging materials = ₱7,000
- Quality control costs = ₱2,500
2. Factory utilities = ₱8,000 (Factory 2. Identify Indirect Costs:
Overhead) - Equipment maintenance = ₱4,500
- Factory rent = ₱12,000
3. Office salaries = ₱15,000 (Administrative Total Prime Cost = Direct Material Cost +
Overhead) - Office supplies = ₱8,000 Direct Labor Cost
4. Advertising expenses = ₱12,000 (Selling - Advertising expenses = ₱15,000 = ₱45,000 + ₱63,000 + ₱6,000
Overhead)
- Insurance premiums = ₱9,000 = ₱114,000
5. Insurance premiums = ₱6,000
- Depreciation of equipment = ₱6,000 Prime Cost per unit = Total Prime Cost /
(Administrative Overhead)
Number of units
- Transportation costs = ₱4,000
6. Depreciation of factory equipment =
= ₱114,000 / 1,800
₱4,000 (Factory Overhead) Total Prime Cost = Direct Material Cost +
Direct Labor Cost = ₱63.33 per unit
7. Transportation costs = ₱3,000 (Selling
Overhead) = ₱60,000 + ₱75,000 + ₱7,000
8. Quality control inspections = ₱2,000 = ₱142,000 PROBLEM 4
(Factory Overhead)
Prime Cost per unit = Total Prime Cost / 1. Identify Direct Costs:
9. Training programs for employees = Number of units
₱1,500 (Administrative Overhead) - Raw materials = ₱80,000
= ₱142,000 / 2,500
Total Prime Cost = Direct Material Cost + - Labor wages = ₱96,000
Direct Labor Cost = ₱56.80 per unit
- Packaging materials = ₱9,000
= ₱36,000 + ₱48,000 + ₱5,000 2. Identify Indirect Costs:
= ₱89,000 PROBLEM 3
- Factory overhead = ₱15,000
- Administrative expenses = ₱20,000 - Insurance premiums = ₱12,000 - Direct Labor (DL): ₱75,000
(Administrative Overhead)
- Selling expenses = ₱18,000 - Factory Overhead (FOH): ₱15,000
- Depreciation of equipment = ₱10,000
- Insurance = ₱10,000 (Factory Overhead) - Administrative Overhead (AOH): ₱10,000 +
₱5,000 = ₱15,000
- Depreciation = ₱8,000 - Transportation costs = ₱6,000 (Selling
Overhead) - Selling Overhead (SOH): ₱8,000
- Transportation = ₱5,000
- Quality control inspections = ₱3,500 _Step 2: Calculate Total Conversion Cost_
- Research and development = ₱6,000
(Factory Overhead) Total Conversion Cost = Direct Labor +
Total Prime Cost = Direct Material Cost + Factory Overhead
Direct Labor Cost - Training programs = ₱2,000
(Administrative Overhead) = ₱75,000 + ₱15,000
= ₱80,000 + ₱96,000 + ₱9,000
Total Prime Cost = Direct Material Cost + = ₱90,000
= ₱185,000 Direct Labor Cost
PROBLEM 3
Prime Cost per unit = Total Prime Cost / = ₱90,000 + ₱120,000 + ₱11,000
Number of units - Direct Labor (DL) = ₱63,000
= ₱221,000
= ₱185,000 / 3,200 - Factory Utilities (FOH) = ₱10,000
Prime Cost per unit = Total Prime Cost /
= ₱57.81 Number of units - Office Salaries (AOH) = ₱18,000
= ₱221,000 / 4,500 - Selling Expenses (SOH) = ₱12,000
PROBLEM 5 = ₱49.11 per unit - Direct Material Cost (DM) = ₱45,000
Direct Costs - Quality Control Costs (FOH) = ₱2,500
- Materials cost = ₱90,000 (Direct Material CONVERSION COSTS PROBLEMS - Equipment Maintenance (FOH) = ₱4,500
Cost)
PROBLEM 1 Solution:
- Labor cost = ₱120,000 (Direct Labor Cost)
- Direct Material Cost (DM) = ₱60,000 - Direct Material (DM): ₱45,000
- Packaging costs = ₱11,000 (Direct
Material Cost) - Direct Labor (DL) = ₱75,000 - Direct Labor (DL): ₱63,000

Identify Indirect Costs - Factory Overhead (FOH) = ₱15,000 - Factory Overhead (FOH): ₱10,000 +
₱2,500 + ₱4,500 = ₱17,000
- Factory rent = ₱18,000 (Factory Overhead) - Administrative Overhead (AOH) = ₱10,000
- Administrative Overhead (AOH): ₱18,000
- Office salaries = ₱25,000 (Administrative - Selling Overhead (SOH) = ₱8,000
Overhead) - Selling Overhead (SOH): ₱12,000
- Depreciation (AOH) = ₱5,000
- Advertising expenses = ₱20,000 (Selling Total Conversion Cost = Direct Labor +
Solution Factory Overhead
Overhead)
- Direct Material (DM): ₱60,000 = ₱63,000 + ₱17,000
= ₱80,000 Difference in total costs = Total cost at (2,250,000 - (3000)² / 5)
highest production - Total cost at lowest
production = (540,000 - 540,000) / (2,250,000 -
1,800,000)
= ₱33,000 - ₱23,000
= ₱0 / ₱450,000 (corrected calculation)
= ₱10,000
= ₱30,000 / ₱450,000
PROBLEM 3
= ₱6.67 (corrected calculation)
- Direct Material Cost (DM) = ₱80,000 Difference in production levels = Highest
- Labor Wages (DL) = ₱96,000 production - Lowest production
= 900 units - 400 units Intercept (a)
- Factory Overhead (FOH) = ₱20,000
= 500 units ∑Y = na + b∑x
- Administrative Expenses (AOH) = ₱15,000
Variable Cost per unit = Difference in total ₱90,000 = 5a + ₱6.67(3000)
- Insurance (AOH) = ₱10,000
costs / Difference in production levels ₱90,000 = 5a + ₱20,010
- Depreciation (AOH) = ₱8,000
= ₱10,000 / 500 units 5a = ₱69,990
- Packaging Materials (DM) = ₱9,000
= ₱20 per unit a = ₱13,998
Solution:
Fixed Cost = Total cost at lowest production Estimated Total Cost for 900 units
- Direct Material (DM): ₱80,000 + ₱9,000 = - (Variable cost per unit x Lowest production)
₱89,000 Y = a + bx
= ₱23,000 - (₱20 x 400)
- Direct Labor (DL): ₱96,000 = ₱13,998 + ₱6.67(900)
= ₱23,000 - ₱8,000
- Factory Overhead (FOH): ₱20,000 = ₱13,998 + ₱6,003
= ₱15,000
- Administrative Overhead (AOH): ₱15,000 + = ₱20,001
₱10,000 + ₱8,000 = ₱33,000 Total Cost = Fixed Cost + Variable Cost

Total Conversion Cost = Direct Labor + = ₱15,000 + (₱20 x Number of units)


Factory Overhead = ₱15,000 + ₱20X
= ₱96,000 + ₱20,000 Where X is the of units produced.
= ₱116,000

LEAST-SQUARE METHOD
HIGH-LOW METHOD Slope (b)
Highest production level: 900 units (April) b = (∑XY - (∑x ∑Y) / n) / (∑x² - (∑x)² / n)
Lowest production level: 400 units (March) = (540,000 - (3000 x ₱90,000) / 5) /
purchase) Total units = 1200 + 300 = 1500
Total CGS = ₱25,500 Total cost = ₱103,000 + ₱25,500 =
₱128,500
2. January 20 sale:
Average cost = ₱128,500 / 1500 = ₱85.67
- 250 units x ₱110 = ₱27,500 (Jan 15
purchase)
- 100 units x ₱120 = ₱12,000 (Jan 25 Calculate Cost of Goods Sold (CGS)
purchase)
1. Jan 15 sale: 800 units x ₱85.83 =
Total CGS = ₱39,500 ₱68,664
3. January 30 sale: 2. Jan 29 sale: 400 units x ₱85.67 =
₱34,268
FIFO COSTING METHOD - 200 units x ₱120 = ₱24,000 (Jan 25
purchase)
Here's the detailed solution:
Calculate Ending Inventory Value
1. January 10 sale: 250 units (entirely from
January 5 purchase) Calculate the total cost of goods sold and Units sold = 800 + 400 = 1200
ending inventory*
- 200 units from Jan 5 purchase Units remaining = 1500 - 1200 = 300
(remaining 50 units from next batch) Total Cost of Goods Sold (CGS) = ₱25,500 +
₱39,500 + ₱24,000 = ₱89,000 Ending Inventory Value = 300 units x ₱85.67
- 50 units from Jan 15 purchase = ₱25,701
Ending Inventory = 300 units (remaining
2. January 20 sale: 350 units from Jan 25 purchase)
- Remaining 250 units from Jan 15 Ending Inventory Value = 300 units x ₱120 = WEIGHTED AVERAGE COSTING
purchase ₱36,000 Calculate total kg and total cost after each
- 100 units from Jan 25 purchase AVERAGE COSTING MEHOD purchase_
3. January 30 sale: 200 units 1. Jan 5 purchase: 500 units x ₱80 = 1. Jan 3 purchase: 2000 kg x ₱15/kg =
₱40,000 ₱30,000
- Remaining 300 units from Jan 25
purchase 2. Jan 20 purchase: 700 units x ₱90 = 2. Jan 15 purchase: 3000 kg x ₱18/kg =
₱63,000 ₱54,000
Calculate the cost of goods sold from each
batch* Total units = 500 + 700 = 1200 Total kg = 2000 + 3000 = 5000
1. January 10 sale: Total cost = ₱40,000 + ₱63,000 = ₱103,000 Total cost = ₱30,000 + ₱54,000 = ₱84,000
- 200 units x ₱100 = ₱20,000 (Jan 5 Average cost = ₱103,000 / 1200 = ₱85.83 Weighted Average Cost = ₱84,000 / 5000 =
purchase) ₱16.80
3. Jan 28 purchase: 300 units x ₱85 =
- 50 units x ₱110 = ₱5,500 (Jan 15 ₱25,500 3. Jan 28 purchase: 1000 kg x ₱16/kg =
₱16,000
Total kg = 5000 + 1000 = 6000
Total cost = ₱84,000 + ₱16,000 = ₱100,000
Weighted Average Cost = ₱100,000 / 6000
= ₱16.67
Calculate Cost of Goods Sold (CGS)_
1. Jan 20 sale: 4000 kg x ₱16.80 = ₱67,200
Remaining kg = 5000 - 4000 = 1000
Weighted Average Cost (after sale) =
₱16.80 (unchanged)
2. Jan 30 sale: 1000 kg x ₱16.67 = ₱16,670
Calculate Ending Inventory Value_
Units remaining = 6000 - 5000 = 1000 kg
(after Jan 20 sale) + 0 (after Jan 30 sale)
Ending Inventory Value = 0 kg (since all
remaining inventory was sold)

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