# Chapter 7 Cost Acctg. (De Leon)

Problem 1 – Denmark Company

FO rate = 216,000 216,000 216,000 216,000 216,000 90,000 72,000 units 1,600 MHrs. 240,000 48,000 DLHrs/

249%of DMC P3.00/unit P135/MHr. 90% of DLC P4.50/DLHr.

Problem 2 - Colossal Corporation

FO rate = 207,000 207,000 207,000 207,000 207,000

500,000 52,100 units 69,000 MHrs. 85,000 DLHrs. 765,000

41,40%of DMC P3,97/unit P3.00/MHr P2.44/DLHr. 27.06%ofDLC

Problem 3 – Manila Company

1. FO rate = P67,500/15,000 DLHrs. = P 4.50/DLHr.

2. Applied FO = 16,000 Hrs. x P4.50 = P 72,000

3. Actual FO P 69,000

Less: Applied 72,000

Overapplied FO ( P 3,000)

Problem 4 - Ellery Corporation

1.Job 123Job 124Job 125Job 126

Direct labor cost 600 940 1,400 5,120

FO rate 180% 180% 180% 180%

Applied FO 1,080 1,692 2,520 9,216

2. Job 123Job 124Job 125Job 126TOTAL DM 300 1,080 720 4,200 6,300

DL 600 940 1,400 5,120 8,060

FO 1,080 1,692 2,520 9,216 14,508

TOTAL 1,980 3,712 4,640 18,53628,868

Problem 5 – Thermal Corporation

1. Direct method

P1___

P2___

S1___

S2___

Direct cost

P 90,000

P 60,000

P 20,000

P 32,000

Allocated cost

S1

10,000

10,000

( 20,000)

S2

20,000

12,000

( 32.000)

Total

P120,000

P 82,000

Base

50,000 MHrs.

20,000 DLHrs

FO rate

P 2.40/MHr.

P 4.10/DLHr.

2. Step method

P1___

P2___

S1____

S2___

Direct cost

P 90,000

P 60,000

P 20,000

P 32,000

Allocated cost

S1

2,000

2,000

( 20,000)

16,000

S2

30,000

18,000

( 48,000)

Total

P122,000

P 80,000

Base

50,000 MHrs.

20,000 DLHrs

FO rate P 2.44/MHr P 4.00/DLHr.

3. Algebraic method

P1___

P2___

S1___

S2____

Direct cost

P 90,000

P 60,000

P 20,000

P 32,000

Allocated

S1

3.143

3,143

( 31,429)

25,143

S2

28,572

17,143

11,429

( 57,143)

Total

P121,715

P80,286

Base

50,000 MHrs.

20,000 DLHrs

FO rate

P 2.43/MHr.

P 4.0/DLHr.

S1 -= 20,000 + 20% S2

S2 = 32,000 + 80% S1

S1 = 20000 + 20%( 32,000 + 80% S1)

= 20,000 + 6,400 + .16 S1

S1 - .16S1= 26.400

S1 = 26,400/.84

= 31,429

S2 = 32,000 + 80% 31,429

= 32,000 + 25,143

= 57,143

Problem 6 – ABC Company

1. Direct method

Machinery

Assembly

Repair___

Cafeteria

Direct cost

P 52,500

P 48,000

P 14,000

P 11,000

Allocated cost

S1

5,600

8,400

( 14,000)

S2

6,325

4,675

( 11.000)

Total

P 64,625

P 61,075

Base

1,500DLHrs.

1,250 DLHrs

FO rate

P 42.95DLHr.

P48.86/DLHr.

2. Step method

Machinery

Assembly

Repair

Cafeteria

Direct...

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