CHAPTER 8

1

CHAPTER 8

Answers to Multiple Choice – Theoretical 1. 2. !. ". $.

a d a c a

6. . 8. #. 1%.

b c c a a

&olutions to Multiple Choice – Co'putationa Co'putationall 1.

(b)

Prod Produc uctt AB: AB: Prod Produc uctt CD: CD: 2.

1,60 1,600/ 0/10 100, 0,00 000 0 x P860 P860,0 ,000 00 = 200/ 200/10 100, 0,00 000 0 x P860 P860,0 ,000 00 =

P1!*6% P 1*2%

(c ) Product A+

 Direct labor hours: AB: 1,600/100,000 x P520,000 = CD: 200/100,000 x P520,000 =  No. of Batches: AB: 4/500 x P280,000 = CD: 12/500 x P280,000 =  Engineering/design changes: AB: 2/120 x P60,000 = CD: 24/120 x P60,000 = Totals !.

Product C,

P 8,320 P 1,040 2,240 6,720 1,000 12,000 P11,560P19,760

(c ) Traditional costing: Total ours ours !"r #atc: 5,000D$% / 2,000 2,000 &olu'" x 100 #atc s()" = 250 D$% *"tu! cost !"r our: P1,000/250 D$% = P4 &etu &etup p cost cost per per unit unit-P"  2.$ 2.$ / P1% P1%  ABC: 1,000 *"t u! cost !"r !"r #atc / 100 #atc = P1%

".

(c ) Traditional Costing System: D(r"ct 'at"r(als D(r"ct la#or +820 x P18 A!!l("d -actor. o"r"ad +P14,760 x 300 Total -actor. cost

P 55,500 14,760 44,280 P114,540

0nit cost (P11"*$"%  1$% units)

P 6!.6%

2

 Number 4 (continued)  Activity-Based Costing System: System: D(r"ct 'at"r(als D(r"ct la#or A!!l("d -actor. o"r"ad: (""r( d"s( +P30 x 330 ac(" s"tu! +P200 x 22 ac(( +P25 x 732 Ass"'#l. +P8 x 1,450 Paca( ad s(!!( +P15 x 152 Bu(ld( occu!ac. +P6 x 732 Total -actor. cost 0nit cost (P121*1!2  1$% units) $.

P 55,500 14,760 P

(c ) Traditional Costing: D(r"ct 'at"r(als D(r"ct la#or A!!l("d o"r"ad: ac(" ours Pr"d"t"r'("d o"r"ad rat" +P1,800,000/30,000 A!!l("d o"r"ad D((d"d #. #atc s()" 0nit cost

9,900 4,400 18,300 11,600 2,280 4,392

50,872 P121,132 P 8%.$$

P440 075

x

80 P 60 P4,800 5,000

0 0 96 P6.11

 ABC  D(r"ct 'at"r(als P440 D(r"ct la#or 075 A!!l("d o"r"ad: at"r(als adl( (: +P720,000 / 6,000,000 x 5 = P0 P060 *"tu! cost: +P315,000 / 750 x 2 = P840 / 5,000 = 0168 ac(( cost: +P540,000/30,000x80 =P1,440/5,000 = 0288 ual(t. cotrol:+P2 l:+P225,000/500 = P450/5,00 ,000 = 009 1146 0nit cost P6.2#6 6.

(b) Product A1 P 20 200

at"r(als $a#or A!!l("d o"r"ad: ac(" s"tu! +P140,000/350 = P400 A1: P400/100 u(ts 4 B3: P400/2 u(ts T"st( +P190,000/4,750 = P40 A1: P40 x 020 ours = 8 B3: P40 x 55 ours = "lat"d to la#or: A1: A1: 10x1 10x10 0,000 ,000 = 100 100,0 ,000 00 rs rs B3: 20x 500 = 10,000 Total 110,000 rs A1: +100/110 xP330,000  10,000 30 B3: +10 /110 x P330,000  5,000 0nit cost P262

Product +! P 45 400

200

220

60 P#2$

3

.

(a)

Pr(c" costs ;"r"ad: +P500,000
1%.

1,600,000 400,000 P2,400,000 P500,000  400,000 100,000 P 6.%% 6.%% P $.$% $.

%$(b)

Pr('" cost ;"r"ad: Cost o- o!"rat( "u(!'"t: : 100/125 x P500,000 **: 25/125 x P500,000 at"r(al adl(: : 100/125 x P850,000 ** : 25/125 x P850,000 *"tu!s: : 100/125 x P650,000 ** : 15/125 x P650,000 >actor. cost uat(t. 0nit cost #.

Product RR Product && P 800,000 P150,000

Product RR P 800,000

Product && P 150,000

400,000 100,000 566,667 283,333 433,333 P2,200,000  400,000 P $.

%$216,667 P 750,000  100,000 P .

%$(c )

D(r"ct cost ;"r"ad: ?t(l(t("s: P600,000/P30,000 x 15,000 = *"tu!s: P546,000 / 390 x 65 = at" at"r( r(al al ad adl( l(: : P1,2 P1,280 80,0 ,000 00/8 /800 00,0 ,000 00 x 250, 250,00 000 0= >actor. cost

P 40,000 300,000 91,000 400, 400,00 000 0 P 831,000

0nit cost- P8!1*%%%  2%*%%% units /

P

"1.$$

(a)

D(r"ct Cost ;"r"ad: P2,426,000 / 50,000 x 9,000 = Total -actor. cost D((d"d #. u(ts !roduc"d ?(t cost

P 40,000 436,680 P476,680  10,000 P 4767

&ellin3 price per unit (P".6  12%4)

P

$.2%

4

11.

(d)

Trad(t(oal cost( +P27,500 x 145 Act((t.#as"d Cost(: at"r(al (s!"ct(o: P1150 x 12 = P 138 @ !roc"ss !roc"ss (s!"ct(o (s!"ct(o: : P014 x 17,500 17,500 = 2,450 Product c"rt: P77 x 25 1,925 Ecess o5 A+C oer traditional costin3 12.

P3,98750

4,51300 P $2 $2$.

%$(a)

""u"s D(r"ct la#or ;"r"ad +*c"dul" 1 nco'e (loss)

Product 77 P100,000 + 60,000 + 46,500 P (6*$%%)

Product MM P300,000 +100,000 +133,500 P 66*$%%

Product 77

Product MM

Schedule 1: a(t"ac": $$: P75,000 / 25,000 x 5,000 = P15,000 : P75,000 / 25,000 x 20,000 = Product d"l("r.: $$: P4 P45,000 / 5,000 x 1,000 = 9,000 : P45,000 / 5,000 x 4,000 = *u!"r(s(o: $$: $$: P60, P60,00 000 0 / P160 P160,0 ,000 00 x P60, P60,00 000 0= 22,5 22,500 00 : P60,000 / P160,000 x P100,000 = Total o"r"ad P46,500

1!.

P 60,000

36,000

37,500 P133,500

(d)

""u" au-actur( cost: D(r"ct 'at"r(als D(r"ct la#or ;"r"ad : P1,105,000/130,000 = P850 &C: 30,000 x P850 >P: 100,000 x P850 Total ross !ro-(t D((d"d #. u(ts sold ;ross pro5it per unit

9acuu' Cleaners P6,500,000

:loor Polishers P5,950,000

1,000,000 600,000

900,000 2,000,000

255,000 1,855,000 P4,645,000  10 1 0,000 P "6 "6$.

%$850,000 3,750,000 P2,200,000  1,000 P 2*2%%

5

1".

(b)

""u" au-actur( cost: D(r"ct 'at"r(als D(r"ct la#or ;"r"ad: &C: &C: P650 P650,0 ,000 00 /130 /130,0 ,000 00 x 30,0 30,000 00 = >P: P455,500 / 50,000 x 35,000 = Total ross !ro-(t D((d"d #. u(ts sold ;ross pro5it per unit

9acuu' Cleaners P6,500,000

:loor Polishers P5,950,000

1,000,000 600,000

900,000 2,000,000

150, 150,00 000 0 1,750,000 P4,750,000  10 1 0,000 P "$

318,850 3,218,850 P2,731,150  1,000 P 2*!1.1$

6

&olution to Proble Proble's 's

Proble' 81 1.

2

ac(" r"lat"d: P125,000 / 10,000 =

P1250

;t"rs: P295,000 / 25,000 =

P1180

ac(" s"tu!: P50,000 / 1,000 =

P50

at"r(al adl(: P45,000 / 1,000 =

P45

;t"r 'at"r(al r"lat"d: P6 P60,000 / 1,200 =

P50

ac(" o!"rat(o: P75,000 / 10,000 =

P750

;t"r o"r"ad: P190,000 / 25,000 =

P760

Proble' 82 1.

D(r"ct 'at"r(als D(r"ct la#or ;"r"ad: : P1,50 ,500,000/50 /50,000 x 3,000 = : P1,500,000/50,000 x 47,000 = :actor= cost D((d"d #. u(ts !roduc"d 0nit cost 2.

D(r"ct 'at"r(als D(r"ct la#or ;"r"ad: *"tu! r"lat"d : : P250,000/200 x 120 = : P250,000/200 x 80 = D"s( r"lat"d: : P350,000/10,000 x 6,000 = : P350,000/10,000 x 4,000 = ;t"r: : : P900 P900,0 ,000 00/5 /50, 0,00 000 0 x 3,00 3,000 0= : P900,000/50,000  47,000 = :actor= cost D((d"d #. u(ts !roduc"d 0nit cost

Product << P100,000 50,000

Product ;; P 310,000 350,000

90,000 P2"%*%%%  500 P "8% Product << P100,000 50,000

1,410,000 P2*%%*%%%  15,500 P 1!!.$$ Product ;; P 310,000 350,000

150,000 100,000 210,000 140,000 54,0 54,000 00 P$6"*%%%  500 P 1*128

846,000 P1*"6*%%%  15,500 P 112.6$

7

Proble' 8! 1.

Multi'edia
at"r(als adl(: : +5 x P12,000 CT: +5 x P15,400 ac(" s"tu!: : +P160 x 45 CT: +P160 x 25 Ass"'#l.: : +P12 x 400 CT: +P12 x 700 @s!"ct(o: : +P5 x 400 CT: +P +P5 x 700 Paca( ad s(!!(: : +10 x 9 CT: +10 x 16 Total oerhead costs

2

ult('"d(a ".#oard: P14,690 /400 = Co'-ort T.!" T.!" ".#oard: P16,830 / 700 =

P

Co'5ort T=pe
600 P

770

7,200 4,000 4,800 8,400 2,000 3,500 90 P1"*6#%

160 P16*8!%

P!6.! P2".%"

Proble' 8" (a)

at"r(al adl(: adl(: +P30,000 / 1,000 1,000 ac(" s"tu!s: +P27,000 / 450 ual(t. (s!"ct(o: +P24,000 / 600

(b)

P!% per no. o5 re>uisition P6% per setup P"% per no. o5 inspection Product &&

at"r(als adl(: **: +P30 x 400 %%: +P30 x 600 ac(" s"tu!s: **: +P60 x 150 %%: +P60 x 300 ual(t. (s!"ct(o: **: +P40 x 200 %%: +P40 x 400 Total o"r"ad costs

Product HH

P12,000 P18,000 9,000 18,000 8,000 P29,000

16,000 P52,000

8

Proble' 8$ 1

2.

;"r"ad rat": P28 P280,000 / P10 P100,000 = 28%4 ?ob 1%%1- (P2*%%%  28%4)

P$*6%%

?ob 2%%2D(r"ct 'at"r(als D(r"ct la#or ;"r"ad: +P2,000 x 280 Total cost 0nit cost (P1#*6%%  $%)

P12,000 2,000 5,600 P19,600 P!#2

?ob !%%!D(r"ct 'at"r(als D(r"ct la#or ;"r"ad: +P4,000 x 280 Total cost &ales price- (P2!*2%%  1$%4)

P 8,000 4,000 11,200 P23,200 P!"*8%%

?ob 1%%1ac(" s"tu!: +P20,000 / 200 = P100 x 8 @s!"ct( ct(o: +P130,000 / 6,500 = P20 x 22 at at"r(a "r(all adl adl( ( : +P80 P80,000 ,000 / 8,000 ,000 = P10 P10 x 30 (""r(: +P +P50,000 x 1,000 = P50 x 25 25 Total oerhead cost ?ob 2%%2D(r"ct 'at"r(als D(r"ct la#or ;"r"ad: ac(" s"tu!: +P100 x 10 @s!"ct(o: +P20 x 15 at"r(al adl(: +P10 x 40 (""r(: +P50 x 50 Total cost 0nit cost- (P18*2%%  $%) ?ob !%%!D(r"ct 'at"r(als D(r"ct la#or ;"r"ad: ac(" s"tu!: +P +P100 x 14 @s!"ct(o: +P20 x 30 at"r(al adl(: +P +P50 x 50 (""r(: +P50 x 15 Total cost &ales price- (P1*2$%  1$%4)

= = = =

P 10 100 400 300 1,250 P2*%

%$P12,000 2,000 P 1,000 300 400 2,500

4,200 P18,200 P%.%2

P 8,000 4,000 P1,400 600 2,500 750

5,250 P17,250 P2$*8$

9

Proble' 86 a.

*"d/r"c"(" oods: P25,000 / 500,000 = P005 !"r (lo *tor" oods: oods: P8,000 / 80,000 80,000 = P10 !"r cu#(c -oot -oot o" oods: P10,000 / 5,000 = P200 !"r suar" -oot @d"t(-. oods: P4,000 / 500 = P800 !"r !aca"  Anson: *"d/r"c"(" oods: *tor" oods: o" oods: @d"t(-. oods: Total cost

+40,000 x P005 +3,000 x P010 +300 x P2 +5 x P8

P2,000 300 600 40 P2*#"%

 Basco:  Basco: *"d/r"c"(" oods: *tor" oods: o" oods: @d"t(-. oods: Total

+40,000 x P005 + 2,000 x P010 + 200 x P2 + 20 x P8

P2,000 200 400 160 P2*6%

Casio: *"d/r"c"(" oods: *tor" oods: o" oods: @d"t(-. oods: Total

+40,000 x P005 + 1,000 x P010 + 1,000 x P2 + 80 x P8

P2,000 100 2,000 640 P"*"%

b.

Aso: 40,000 x P008 = Basco: 40,000 x P008 = Cas(o Cas(o:: 40,0 40,000 00 x P00 P008 8 =

P!*2%% P!*2%% P!*2%%

c.

Aso: P2,940 x 130 = Basc Basco: o: P2,7 P2,760 60 x 130 130  = Cas(o Cas(o:: P4,7 P4,740 40 x 130 130 =

P!*822 P!*$88 P6*162

d.

T" curr"t !r(c( !la ca!tur"s ol. o" d('"s(o o- cost causal(t. caus al(t.,, s"d/r"c"(" oods Accord(l., Accord(l., t" !r(c"s car"d -or ar"ous( s"r(c"s s"r(c"s ar" al'ost (d"!"d"t o- t" caus"s o- t" costs As (d(cat"d ( a co'!ar(so o- t" as"rs to !arts +# ad +c, t" "x(st( !r(c( !la ""rat"s t" sa'" !r(c" -or t" tr"" custo'"rs "r"as a ABC#as"d !r(c" r"sults ( "r. d(--"r"t !r(c"s to #" car"d to t" tr"" custo'"rs

10

Proble' 8 1.

?ob "$6 P19,400 1,500

D(r"ct 'at"r(als D(r"ct la#or au-actur( o"r"ad: Eo# 456: P230 x P50 Eo# 789: P230 x P750 Total 'au-actur( costs D((d"d u'#"r o- u(ts Manu5acturin3 cost per unit

11,500

2.

D(r"ct 'at"r(als D(r"ct la#or au-actur( o"r"ad: at"r(als adl(: P080 x 1,000F P080 x 4,000 $at" or: P040 x 40,000F P040 x 120,000 (ll(: P40 x 300F P40 x 2,100 r(d(: P160 x 1,000F P160 x 4,000 T"st(: P30 x 20F P30 x 400 Total 'au-actur( cost  Gu'#"r o- u(ts 0nit 'anu5acturin3 cost !.

?ob 8# P119,800 22,500

P32,400  20 P 1*62%

172,500 P314,800  40 4 00 P 8

Eo# 456 P19,400 1,500

Eo# 789 P119,800 22,500

800

3,200

16,000

48,000

12,000

84,000

1,600

6,400

600 P51,900  20 P 2*$#$

12,000 P295,900  400 P !#.$

T" !roduct cost -(ur"s co'!ut"d ( r"u(r"'"t 1 ad 2 d(--"r #"caus": a  #

t" t" Ho# Ho# ord" ord"rs rs d(-d(--"r "r ( t" t" a. a. t" t" us" us" "ac "ac o- -(" -(" act( act(( (t. t. ar"a ar"as, s, ad ad t" act((t. ar"as d(--"r ( t"(r (d(r"ct (d(r"ct cost allocat(o #as"s 9s!"c(-(call., 9s!"c(-(call., "ac ar"a do"s ot us " t" d(r"ct 'au-actur( la#orours (d(r"ct cost allocat(o #as"

Proble' 88 P16 / P20 = 80 o- a ourF 80 x 60 '(ut"s = "8 'inutes P120 / P20 = 6 ,7Hs P40 / P10 = 2 ,7Hs

a.

0'brellas;a@ebos: Tents:

b.

0'brellas;a@ebosTents: Total o"r"ad

c.

Allocation ratesual(t. cotrol: cotrol: P400,000 / 280,000 280,000 = P143 !"r u(t +roud"d +roud"d *"tu!s: *"tu!s: P400,000 P400,000 / 2,000 2,000 = P200 !"r s"tu! at"r(al adl(: adl(: P1,200,000 / 4,000,000 = P030 !"r (lo u(!' u(!'"t "t o!"rat o!"rat(o (o:: P6,000 P6,000,00 ,000 0 / 2,000, 2,000,000 000 = P300 P300 !"r %

+P16 x 200,000 +P120 x 20,000 +P40 x 60,000 cost

P!*2%%*%%% 2*"%%*%%% 2*"%%*%%% P8*%%%*%%%

11

 Problem 8-8 (continued) erhead Cost Allocation : 0'brellas

ual(t. cotrol: P143 x 200,000 P143 x 20,000 P143 x 60,000 *"tu!s: P200 x 400 P200 x 800 P200 x 800 at"r(al adl(: P030 x 800,000 P030 x 2,000,000 P030 x 1,200,000 u(!'"t o!"rat(o: P300 x 400,000 P300 x 800,000 P300 x 800,000 Total o"r"ad  Gu'#"r o- u(ts ;"r"ad cost !"r u(t

Tents

P 28 286,000 P

28,600 P

85,800

80,000 160,000 160,000 240,000 600,000 360,000 1,200,000 2,400,000 P1,806,000  200,000 P 903

P3,188,600  20,000 P 15 15943

2,400,000 P3,005,800  60,000 P 5010

P 800 1200 903 P2903

P 8000 9000 15943 P32943

P 800 3000 5010 P8810

Total cost !"r u(t: D(r"ct 'at"r(als D(r"ct la#or ;"r"ad Total d.

;a@ebos

@- !r(c"s ar" s"t #as"d o !roduct costs, act((t.#as"d cost( ould ""rat" lo"r  !r(c"s -or u'#r"llas ad ("r !r(c"s -or -or t" ot"r to !roducts

Proble' 8# 1a.

Bud"t"d 'au-actur( o"r"ad rat" =

Bud"t"d 'au-actur( o"r"ad Bud"t"d d(r"ct la#or cost

=

P3,000,000   P600,000 P$ per direct labor cost

= 1b.

D(r"ct 'at"r(als D(r"ct la#or au-actur( o"r"ad +060 x P500 Total costs Bud"t"d s"ll( !r(c"s !"r (lo: au aua $o $oa +P +P1200 x 130 = A-r(ca +P10 x 130 =

Mauna 7oa P 840 060 300 P12.%%

P1$.6% P1!.%%

A5 A5rican P 640 060 300 P1%.%%

12

 Problem 8- (continued) 2.

Total bu bud3eted un unit co costs pe per Bi Bilo are-

D(r"ct 'at"r(als D(r"ct la#or au-actur( o"r"ad: Purcas" ord"rs: $C: + 4 x P1,000  100,000 AC: + 4 x P1,000  2,000 at"r(al adl(: $C: +30 x P800  100,000 AC: +12 x P800  2,000 ual(t. cotrol: $C: +10 x P480  100,000 AC: +4 x P480  2,000 oast(: $C: +1,000 x P20  100,000 AC: +20 x P20  2000 Bl"d(: $C: +500 x P20  100,000 AC: +10 x P20  2,000 Paca(: $C: +100 x P20  100,000 AC: +2 x P20  2,000 Total cost per unit

Mauna 7oa P 840 060

A5rican Co55ee P 640 060

004 200 024 480 004 096 020 020 010 010 002 P #.6"

002 P1$.%8

Proble' 81% (a)

Purcas(: +P240,000 / 1,500 P160 !"r ord"r   Proc"ss(: +P1,400,000 / 1,000,000 P140 !"r l(t"r   Paca(: +P580,000 / 400,000 P145 !"r cota("r   T"st(: +P240,000 / 4,000 P60 !"r t"st *tora": +P180,000 /18,000 P10 !"r l(t"r   Ias(: +P560,000 / 800 P700 !"r #atc

(b)

Purcas(: +P160 x 800 F +P160 x 700 Proc"ss(: +P140 x 400,000F +P140 x 600,000 Paca(: +P145 x 180,000F +P1 P145 x 220,00 ,000 T"st(: +P60 x 2,100F +P60 x 1,900 *tora": +P10 x 10,400F +P10 x 7,600 Ias(: +P700 x 350F +P700 x 450 Total oerhead cost (c)

Paint 

Paint DD

P 128,000

P 112,000

560,000

840,000

261,000

319,000

126,000

114,000

104,000

76,000

245,000 P1*"2"*%%%

315,000 P1*6*%%%

?(t o"r"ad cost: Pa(t  +P1,424,000 / 180,000 cota("r =

P.#1

13 Pa(t JJ +P1,776,000 / 220,000 cota("r =

P8.%