CHAPTER 5-cost

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CHAPTER 5

Multiple Choices – Theoretical

1. c 6. a

2. b 7. a

3. a 8. a

4. a 9. d

5. a 10. a

Multiple Choices – Computational

1. (a)

Regular pay (46 hours x P45) P2,070

Overtime pay (6 hours x P22.50) 135

Gross earnings P2,205

2. (a)

Regular pay (42 hours x P40) P1,680.00

Overtime pay (2 hours x P20) 40.00

Gross earnings 1,720.00

Deductions:

Withholding tax (3%) P51.60

SSS contributions (2%) 34.40

Phil. Health contributions (1%) 17.20

Pag-ibig contributions (1%) 17.20 120.40

Net pay P1,599.60

3. (b)

Regular pay (50 hours x P180) P9,000.00

Overtime pay (10 hours x P90) 900.00

Charge to work in process P9,900.00

4. (a)

Regular pay, charge to work in process account P9,000.00

5. (b)

Bonus pay [(P100 + P320) x 40 hours x 4 weeks] / 50 = P 1,344 Vacation pay [(P100 + P320) x 40 hours x 2)] / 50 = 672

Total charge to Manufacturing Overhead Control P 2,016

6. (b), P1,344

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8. (d)

Gross earnings P4,560

Less regular pay (80 hours x P48) 3,840

Overtime pay 720

Divided by overtime rate (P48 x 150%) 72

Overtime hours 10

Regular pay (80 + 10) x P46 = P4,320

9. (d)

Benefits P1,092.80

Overtime premium (P4,560 - P4,320) 240.00

Charged to Manufacturing Overhead Control P1,332.80

10. (b)

Bonus (P14,904 / 11.5 mos.) P1,296

Vacation [(P14,904 x ½) / 11.5 mos.] 648

Pension (P2,070 / 12) 180

Total monthly liability P2,124

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PROBLEMS

Problem 5-1

(1) Factory Payroll 480,000

Withholding tax payable 4,800

SSS contribution payable 19,200

Phil. Health contribution payable 4,800

Pag-ibig contribution payable 7,200

Payroll payable 444,000

To record labor incurrence

(2) Work in process 288,000

Factory overhead control 66,000

Selling expenses 72,000

Administrative expenses 54,000

Factory Payroll 480,000

To record payroll distribution. Factory overhead control Selling expenses

Administrative expenses

SSS Contribution payable 28,800

ECC payable 9,600

Phil health contribution payable 4,800

To record employer’s contribution.

Direct Labor Indirect Labor Sales Salaries Office Salaries Total (P288,000) (P66,000) (P72,000) (P54,000) (P480,000) SSS P17,280 P3,960 4,320 3,240 P28,800 ECC 5,760 1,320 1,440 1,080 9,600 Phil. Health 2,880 660 720 540 4,800 Pag-ibig 4,320 990 1,080 810 7,200 P30,240 P6,930 P7,560 P5,670 P50,400

Problem 5-2

(1) Factory Payroll 18,000

SSS contribution payable 720

Phil. Health contribution payable 180

Pag-ibig contribution payable 270

(2-a) Administrative expenses 18,000

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Problem 5-2 (continued)

(2-b) Administrative expenses 1,890

SSS Contribution payable 1,080

ECC payable 360

To record employer’s share for payroll taxes.

Problem 5-3

To record labor cost for:

Regular pay (48 hours x P200) P 9,600

Overtime pay (8 hours x P100) 800

Total P10,400

(2) Work in process (regular pay) 9,600

Factory overhead control (overtime pay) 800

To record payroll distribution.

Problem 5-4

(a) Factory Payroll 27,600

To record labor cost.

(b) Work in process 27,600

To record labor distribution.

(c) Factory overhead control 3,600

Estimated liability for bonus 2,400

Estimated liability for vacation 1,200

To record liability for bonus and vacation pay: Bonus: P27,600 x 11.5 months = P2,400

Vacation: P27,600 / 2) P13,800 / 11.5 months = P1,200.

Problem 5-5

Factory overhead control

7,104

Estimated liability for bonus

4,736

Estimated liability for vacation

2,368

To record vacation and bonus pay for one

Week’s production.

Bonus [(P200 + P1,280) x 40 hours x 4 weeks] / 50 weeks = P4,736

Vacation [P200 + P1,280) x 40 hours x 2 weeks] / 50 weeks = 2,368

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Problem 5-6

(2) Payroll payable 93,952

Cash 93,952

To record payment of the payroll.

(3) Factory overhead control 6,216

Marketing expenses 2,072

Administrative expenses 2,072

ECC payable 1,120

To record employer’s payroll taxes.

(4) Withholding tax payable 43,488

ECC payable 1,120

Cash in bank 77,760

To record payment of payroll taxes.

Problem 5-7

Employee Regular Earnings Overtime Premium Gross Earnings

J. Sy P1,872.00 P -0- P 1,872.00

F. Lim 1,702.00 185.00 1,887.00

H. Ong 1,453.60 94.80 1,548.40

W. Tao 1,188.00 66.00 1,254.00

Problem 5-8

(1) Nov. 7: Factory Payroll 10,680.00

Withholding tax payable 403.20

Payroll payable 10,276.80

WTP (P2,760 + P10,680) x 3%

Nov. 14: Factory Payroll 11,040.00

Withholding tax payable (3%) 331.20

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Problem 5-8 (continued):

Nov. 21: Factory Payroll 10,800.00

Nov. 28: Factory Payroll 10,560.00

SSS contribution payable (45,840 x 3%) 1,375.20 Phil. Health cont. payable (P45,840 x 2%) 916.80

(2) Work in process 35,880.00

Factory overhead control 7,200.00

Factory Payroll 43,080.00

(3) Factory overhead control 4,523.40

SSS contribution payable (P43,080 x 4.5%) 1,938.60

Phil. Health cont. payable (P43,080 x 2%) 861.60

Estimated liability for vacation pay (P43,080 c 4%) 1,723.20

Problem 5-9

(1) E a r n i n g s D e d u c t i o n s Employe e Regular Earnings Overtime Premium Gross Earnings With. Tax SSS Phil. Health Pag-Ibig Others Net Amount Reyes 560.00 - 560.00 84.00 34.72 8.40 8.40 10.00 422.88 Santos 1,196.00 78.00 1,274.00 191.10 78.99 19.11 19.11 10.00 955.69 Manalo 752.50 26.25 778.75 116.81 48.28 11.68 11.68 10.00 580.30 Cruz 442.90 15.45 458.35 68.75 28.42 6.88 6.88 10.00 337.42 Sanchez 382.50 21.25 403.75 60.56 25.03 6.06 6.06 10.00 296.04 Webb 920.00 - 920.00 138.00 57.04 13.80 13.80 10.00 687.36 4,253.90 140.95 4,394.85 659.23 272.48 65.92 65.92 60.00 3,271.30 (2) Factory Payroll 4,394.85

Withholding tax payable 659.23

SSS contribution payable 272.48

Phil. Health contribution payable 65.92

Pag-ibig contribution payable 65.92

Union dues deduction payable 60.00

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Problem 5-10

Payroll payable or Wages payable 498,950

To record payroll for the week ending April 20, 2010.

(2) Payroll payable 498,950

Vouchers payable 498,950

To record payroll voucher.

(3) Voucher payable 498,950

Cash in bank 498,950

To record payment of the payroll.

Problem 5-11

Pension plan contribution payable 4,200

Payroll payable or salaries and wages payable 59,302

To record payroll.

Factory payroll 84,380

(3) Factory overhead control 9,958

ECC payable 4,050

To record employer’s payroll taxes on factory wages for the month.

(4) The balance of the Factory Payroll account if any represents the amount of factory wages earned and charged to production but unpaid at the end of the month. The balance is shown the balance sheet under the current liability section.

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Problem 5-12

(1) ETG Corporation

Summary of Factory Payroll Taxes For the month ended March 31, 2010

Department SSS Phil. Health Pag-ibig ECC With. Tax

Factory Supply P 3,273.60 P 792.00 P 792.50 P528.00 P 825.33 Factory Adm. 3,302.12 798.90 798.90 532.60 496.51 Cutting 4,487.56 1,085.70 1,085.70 723.80 1,174.24 Assembly 4,954.42 1,198.65 1,198.65 799.10 1,383.75 Finishing 5,246.44 1,269.30 1,269.30 846.20 1,269.77 Total P21,264.14 P5,144.55 P5,144.55 P3,429.70 P5,149.60 (2) Factory payroll 40,132.54 SSS contribution payable 21.264.14

Phil. Health contribution payable 5,144.55

Pag-ibig contribution payable 5,144.55

ECC payable 3,429.70

Withholding tax payable 5,149.60

To record employer’s payroll taxes.

Problem 5-13

2010

Sept. 15: Factory payroll 32.500

Salaries and wages payable 24,611

To record factory payroll, Sept. 1-15.

Vouchers payable 24,611

Voucher payable 24,611

Cash in bank 24,611

To record payment of payroll.

30: Factory payroll 83.200

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Sept. 30 Salaries and wages payable 75,026

Cash in bank 75,026

To record payment of payroll.

Work in process 46,240

Factory payroll 65,700

To record payroll distribution.

Factory overhead control 8,237.00

ECC contribution payable 1,600

To record employer’s payroll taxes on Factory wages for the month of September.

Problem 5-14

JOB COST SHEET

Customer Delta Dept. Store Job 479

Description On file Date Started 9/10/2010

Quantity 200 Date Completed _______

MATERIALS DIRECT LABOR APPLIED FACTY OVERHEAD

DATE REQ.

NO. AMOUNT DATE REF. HOURS AMOUNT DATE HOURS RATE AMOUNT 9/23 TTA 207 1,034.00

9/30 TTA 732 3,568.00 939 4,602.00

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Problem 5-14 (continued)

JOB COST SHEET

Customer Educational Toys Job 480

DATE REQ.

NO. AMOUNT DATE REF. HOURS AMOUNT DATE HOURS RATE AMOUNT 9/23 TTA 183 858.00

9/30 TTA 447 2,182.00 630 3,040.00

JOB COST SHEET

Customer Peter Pan Toys Store Job 481

DATE REQ.

9/30 TTA 1,006 2,772.00 1,253 4,009.00

JOB COST SHEET

Customer Jose’s Specialty Store Job 482

DATE REQ.

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Problem 5-14 (continued)

JOB COST SHEET

Customer Pablo Toys Shop Job 483

DATE REQ.

NO. AMOUNT DATE REF. HOURS AMOUNT DATE HOURS RATE AMOUNT 9/30 TTA 96 490.00

DEPARTMENTAL OVERHEAD ANALYSIS SHEET

Department __________________ Month of September, 2010 DATE REF. TOTAL

INDIRECT MATERIALS INDIRECT LABOR PAYROLL TAXES DEPN. REPAIRS &MAINT. UTILITIES OTHER ITEM AMOUNT Sept 2 TTA 1,917.00 1,917.00 9 TTA 2,801.00 2,801.00 15 TTA 7,320.00 7,320.00 16 TTA 3,430.00 3,430.00 23 TTA 3,722.00 3,722.00 30 TTA 3,163.00 3,163.00 30 SPT 7,979.27 7,979.27 30.332.27 22,353.00 7,979.27

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Work in Process No. 122 DATE EXPLANATION POSTREF. DEBIT CREDIT BALANCE DR.CR.

2010

SEPT. 30 J9-33 50,171.00 50,171.00 Dr.

SSS Contribution Payable No. 210 DATE EXPLANATION POSTREF. DEBIT CREDIT BALANCE DR.CR.

2010

SEPT. 30 J9-34 4,961.99 4,961.99 Cr.

Phil. Health Contribution Payable No. 211 DATE EXPLANATION POSTREF. DEBIT CREDIT BALANCE DR.CR.

2010

SEPT. 30 J9-34 1,200.48 1,200.48 Cr.

Pag-ibig Contribution Payable No. 212 DATE EXPLANATION POSTREF. DEBIT CREDIT BALANCE DR.CR.

2010

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Withholding Tax Payable No. 213 DATE EXPLANATION

POST

REF. DEBIT CREDIT BALANCE

DR. CR.

2010

SEPT. 30 J9-34 1,431.35 1,431.35 Cr.

Factory Payroll No. 500 DATE EXPLANATION POSTREF. DEBIT CREDIT BALANCE DR.CR.

2010 SEPT. 1 Balance √ 8,930.00 Cr. 2 WP 13,740.00 4,810.00 Dr. 9 WP 16,190.00 21,000.00 Dr. 15 WP 7,320.00 28,320.00 Dr. 16 WP 14,950.00 43,270.00 Dr. 23 WP 15,130.00 58,400.00 Dr. 30 WP 14.124.00 72,524.00 Dr. 30 SP 7,508.00 80,032.00 Dr. 30 J9-33 80,032.00

Manufacturing Overhead Control No. 501 DATE EXPLANATION POSTREF. DEBIT CREDIT BALANCE DR.CR.

2010

SEPT. 30 J9-33 29,861.00 29,861.00 Dr.

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Problem 5-14 (continued) DOLLS, INC.

Summary of Factory Wages September 2010

PAYROLL PERIOD DIRECT LABOR INDIRECT LABOR TOTAL

Sept. 1-2 2,893.00 1,917.00 4,810.00 3-9 13,389.00 2,801.00 16,190.00 1-15 - 7,320.00 7,320.00 10-16 11,520.00 3,430.00 14,950.00 17-23 11,408.00 3,722.00 15,130.00 24-30 10,961.00 3,163.00 14,124.00 16-30 - 7,508.00 7,508.00 50,171.00 29,861.00 80,032.00 Summary Direct Labor 50,171.00 Indirect Labor 29,861.00 Total 80,032.00 GENERAL JOURNAL

DATE ACCOUNT ACCTNO. REF DEBIT CREDIT

2010

Seot. 30 Work in process 122 √ 50,171.00

Manufacturing overhead control 501 √ 29,861.00

Factory payroll 500 √ 80,032.00

To record labor cost distribution.

30 Manufacturing overhead control 501 √ 7,979.27

SSS contribution payable 210 √ 4,961.99

Phil. Health cont. payable 211 √ 1,200.48

Pag-ibig cont. payable 212 √ 385.45

With. Tax payable 213 √ 1,431.35

To record employer’s payroll taxes on factory wages for the month.

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Problem 5-14 (continued) Requirement 12:

JOB HOURS TOTAL COST

479 939 P 4,602.00 480 632 3,109.00 481 806 4,009.00 482 387 1,949.00 483 96 490.00 TOTAL 2,860 P14,158.00 Requirement 13: Indirect labor P29,861.00 Payroll taxes 7,979.27 Total P37,840.27 Requirement 14:

NO. AND ACCOUNT NAME DEBIT BALANCE CREDIT BALANCE

122 Work in process 50,171.00

210 SSS contribution payable P 4,961.99

211 Phil. Health contribution payable 1,200.48

212 Pag-ibig contribution payable 385.45

213 Withholding tax payable 1,431.35

500 Factory payroll -0-