# Chapter 7 Cost Acctg. (De Leon)

Topics: Variable cost, Marginal cost, Costs Pages: 12 (1117 words) Published: June 18, 2015
﻿CHAPTER 7 - ACCOUNTING FOR FACTORY OVERHEAD
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...