Chapter 6 Cost Acctg. (De Leon)

Topics: Costs Pages: 26 (3001 words) Published: June 18, 2015
CHAPTER 6 – ACCOUNTING FOR MATERIALS

Problem 1 - Norman Companu\y
_____________
a)EOQ = \/ 2 x 8,000 x 40
25
= 160 units

Ordering cost =No of orders x ordering cost
=8,000 x 40
160
=2,000

Carrying cost=Average inventory x 25
=160 x 25
2
=2000

Problem 2 – Abner Company
_____________________________________________ a) EOQ = 2 (number of units required annually)(cost of order)
carrying cost per unit
___________________
2 x (1,200x 3) x 200
= 25
____________
1,440,000
= 25

= 240 units

b) Number of orders in a year = annual requirements
EOQ
= 3,600/240
= 15 orders

c) Average inventory based on EOQ = EOQ/2
= 240/2
= 120

d) Total carrying cost =Average inventory x Carrying cost/unit
= 120 x 25
= P 3,000

Page 2
Total ordering cost=No. of orders x ordering cost
=15 x 200
=P 3,000

Problem 3 - Olive Corporation
____________________
1.EOQ= (2 x 16,000 x P15) / P3 =400 units

2. Ordering costs Carrying costs
OrderNo. of Cost Ordering AverageCarrying
sizeorders per order costsInventory CCPU cost TRIC 6,400 2.5 P 15 P 37.50 3,200 P 3 P9,600 P9,637.50 1,600 10 15 150.00 800 3 2,400 2,550.00 400 40 15 600.00 200 3 600 1,200.00 200 80 15 1,200.00 100 3 300 1,500.00 100 160 15 2,400.00 50 3 150 2,550.00

No. of Orders =Annual demand / Order size
Average inventory=Order size / 2

Problem 4 – Heavyweight Co.
1. Allocation based on cost
Product Invoice Percentage Share of Freight Total cost Cost/pound X 11,250 4% 450 11,700 2.60 Y 13,500 4% 540 14,040 2.34

Z 15,750 4% 630 16,380 2.184

2. Allocation based on shipping weight
Product Weight Freight/pound Share of Freight Total Cost Cost/pound X 4,500 .09 405 11,655 2.59
Y 6,000 .09540 14,040 2.34
Z 7,500 .09675 16,425 2.19

Problem 5 - Maxie Company
1. Amount debited to Materials = 100,000 x 80% x 90% x 90% = 64,800 2. Amount debited to Materials = 100000 x 80% x 90% x 90% x 98% = 63,504

Page 3
Problem 6 –
1. FIRST-IN, FIRST-OUT
Received
Issued
Balance

1,600 x 6.00 9,600`
5 400 x 7.00 2,800

1,600 x 6.00 9,600
400 x 7.00 2.800
9 400 x 8.00 3,200

1,600 x 6.00 9,600
400 x 7.00 2,800
400 x 8.00 3,200
16
800 x 6.00 4,800
800 x 6.00 4,800
400 x 7.00 2,800
400 x 8.00 3,200
24 600 x 9.00 5,400

800 x 6.00 4,800
400 x 7.00 2,800
400 x 8.00 3,200
600 x 9.00 5,400
27
800 x 6.00 4,800
200 x 7.00 1,400
200 x 7.00 1.400
400 x 8.00 3,200
600 x 9.00...
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