SORONO, MIZZERRY JANE M.
Exercise 1 (Operation costing)
Requirement 1
Cutting Assembly Finishing
Conversion Costs:
Direct manufacturing labor costs P2,600 P16,500 P4,800
Manufacturing overhead costs 3,000 22,900 3,300
Conversion Costs: P5,600 P39,400 P8,100
Total units produced:
1,200 + 600 + 200 2,000 2,000
1,200 + 600 1,800
Conversion cost per unit P2.80 P19.70 P4.50
Requirement 2
Requirement 2
Standard Home Industrial
Tool Box Costs:
Direct materials costs P18,000 P6,660 P5,400
Conversion costs
Cutting, (1,200; 600; 200 x P2.80)3,600 1,680 560
Assembly, (1,200; 600; 200 * 23,640 11,820 3,940
P19,70)
Finishing, (1,200; 600 x P4.50) 5,400 2,700 -----
Total costs P50,400 P22,860 P9,900
Divided by quantity produced 1,200 600 200
Cost per unit P42.00 P38.10 P49.50
Requirement 3. Journal Entries
1. Work in Process, Cutting
Materials Inventory Control (direct materials used in cutting operation)
2. Conversion Costs
Various accounts (such as wages payable and accumulated depreciation)
3. Work in Process, Cutting
Conversion cost allocated (conversion cost allocated to cutting operation)
4. Work in Process, Assembly
Work in Process, Cutting (transfers of boxes from cutting to assembly, direct materials P30,0
plus conversion costs in cutting operations, P5,600; all costs accumulated in Work in process,
Cutting are transferred since there is no beginning or ending work in process in cutting)
5. Work in Process, Assembly
Conversion costs allocated (conversion costs allocated to assembly operations)
6. Finished goods control
Work in Process, Finishing
Work in Process, Assembly (of total costs of P75,060 incurred up to assembly operations,
transferred-in costs of P35,660 plus conversion costs in assembly operations P39,400, P9,900
pertain to tinisned industrial boxes and Pos,160 are transterred to tinishing operations, all costs
accumulated in Work in Process, Assembly are transferred since there is no beginning or ending
work in process assembly)
7. Work in Process, Finishing
Conversion Costs, Allocated (conversion costs allocated to finishing operations)
8. Finished Goods Control
Work in Process, Finishing (transfers to finished boxed from finishing operations, transferred-in
Cost of 65,160 into finishing plus conversion costs in finishing operations, 8,100; all costs accumulated
Finishing are transferred since there is no beginning or ending WIP in finishing.
Exercise 2 (Backflush journal entries and JIT production)
Requirement 1
[Link] and In-Process Inventory ₱8,800,000
Accounts Payable 8,800,000
2. Conversion Costs Control ₱4,220,000
Various accounts (wages, OH) ₱4,220,000
[Link] Goods Inventory ₱12,500,000
Raw and In-Process Inventory ₱8,500,000
Conversion Costs Allocated ₱4,000,000
4. Cost of Goods Sold ₱11,900,000
Finished Goods Inventory ₱11,900,000
Requirement 2
Raw and In-Process Inventory
8,800,000 8,500,000
Direct materials Bal. 300,000
Conversion Costs Allocated
Conversion Costs 4,000,000
Conversion Costs Control
4,220,000
Requirement 3
JIT production system, there should theoretically be no inventory at the
end of each day if the manufacturing lead time per unit is extremely low.
Instead of P12,500,000, it would be for P11,900,000 in finished products produced.
The JIT production method would require direct material purchases and conversion
expenses of even less than P8,500,000 and P4,000,000, respectively,
in Entries (a) and (b), if the marketing department could only sell goods that cost P11,900,00
30,060
30,060
53,100
53,100
5,600
5,600
35,660
y, direct materials P30,0 35,660
lated in Work in process,
process in cutting)
39,400
operations) 39,400
9,900
65,160
ssembly operations, 75,060
s P39,400, P9,900
operations, all costs
beginning or ending
8,100
8,100
73,260
perations, transferred-in 73,260
8,100; all costs accumulated in WIP.
Finished Goods Inventory Cost of Goods Sold
12,500,000 11,900,000 11,900,000
Bal.600,000
ducts produced.
and conversion
goods that cost P11,900,000.