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CHAPTER 3 COSTS CONCEPTS and CLASSIFICATION
[Problem 1] 1. Direct labor Variable factory overea! "i#e! factory overea! %nit conversion cost
P10 15 $ P&1
'.
Direct materials Direct labor %nit (rime cost
P&' 10 P4'
&.
%nit (rime cost Variable factory overea! %nit variable cost
P4' 15 P57
4.
)otal tal (ro! (ro!uc ucti tion on cost cost *1', *1',00 000 0 unit units s # P$& P$& P75$ P75$,0 ,000 00
[Problem '] 1. n!irect materials an! factory su((lies -u(ervisin salaries e(airs an! maintenance eat, lit an! (o2er 3vertime (remium (lant 2orer "rine benefits for (lant 2orer De(reciation (lant nsurance (lant 6ctual factory factory overea! overea!
P $8 $8,000 /0,000 40,000 '8,000 '0,000 15,000 1/0,000 '',000 P47&,000 P47&,000
'.
6((l 6((lie ie! ! fact factor ory y over overe ea! a! *71,0 *71,000 00D D # P7.5 P7.50 0 P5&' P5&',5 ,500 00
&.
6ctual factory overea! ess9 6((lie! factory overea! 3vera((lie! factory overea!
P47&,000 5&',000 P* 5/,500
4..
"actory overe rea! s so2n on on t te statement of cost of oo!s manufacture!
P47&,000
[Problem &] 1. %nit cost
P4.&5
P750,000 + P800,000 + P80,000 + P110,000 400,000 units
'.
:ost of oo!s sol! &$0,000 units # P4.&5 P 1, 1,5$$,000
&.
nve nvent ntor ory y 6u. u. &1 40, 40,00 000 0 unit units s # P4.& P4.&5 5
P174 P174,0 ,000 00
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[Problem 4]
1. Direct materials Direct labor "actory su((lies Direct variable costs
De(artment 6 P 800,000 $00,000 '0,000 P 1,4'0,000
De(artment ; P 1,'00,000 $$0,000 $0,000 P 1,/'0,000
'. :ontrollable !irect fi#e! costs9 -u(ervisin salaries
P
48,000
P
7',000
%ncontrollable !irect fi#e! &. costs9 De(reciation of macinery an! e
P
140,000
P
''0,000
4. :ontrollable !irect fi#e! costs %ncontrollable !irect fi#e! costs )otal !irect fi#e! costs
P
48,000
P
7',000
P
140,000 188,000
P
''0,000 '/',000
5. Direct variable costs Direct fi#e! costs )otal !irect costs
P
$. 6llocate! costs from cor(orate ea! buil!in *P'00,000 # '0? 6llocate! (lant e#ecutives salaries *P&80,000 # 40? )otal in!irect costs 7. 6llocate! costs from cor(orate ea! buil!in 6llocate! (lant e#ecutives@ salaries De(reciation for macinery an! e
P
P
1,4'0,000 188,000 1,$08,000
P
1,/'0,000 '/',000 ','1',000
P
1&0,000
P
1/0,000
75,000
175,000
40,000
1$0,000
15',000
''8,000
P
&/7,000
P
75&,000
P
1&0,000 40,000
P
1/0,000 1$0,000
P
15',000
''8,000
140,000 4$',000
''0,000 7/8,000
P
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De(artment ; 6llocate! re(airs A maintenance *P'50,000 # '80 = 400 6llocate! factory rent buil!in *P'00,000 # 80? 6llocate! (lant e#ecutive@s salaries *P&80,000 # $0?
P 175,000 1$0,000 ''8,000
[Problem 5] 1. :emicals *P',000 B 100 lbs. Direct labor *P'00 B 100 lbs Clectricity an! 2ater *P100 B 100 lbs -u(ervisor@s salaries *P500 B 100 lbs %nit variable costs '.
De(reciation e#(ense 3ter factory costs )otal fi#e! costs
P1'0,000 (er mont '00,000 P&'0,000 (er mont
&.
4.
P'0 = lb. ' 1 5 P'8 = lb.
&00 tons
400 tons
500 tons
1,1'0,000 P &'0,000 1,440,000 P
1,400,000 &'0,000 1,7'0,000
Variable costs *o. of tons # 100 # P'8 "i#e! costs )otal costs
840,000 P &'0,000 P 1,1$0,000 P
%nit costs [*)otal cost = o. of tons=100 lbs]
P &8.$7 = lb P &$ = lb
P
[Problem $]
a b c ! e f
Direct *D or n!irect* D D D
:ost tem
Direct *D or
:ost tem
Variable *V or "i#e! *" V " " V " V " " "
[Problem 7] Variable *V
P &4.40 = lb
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n!irect*
or "i#e! *"
a
D
V
b
D
V
c ! e f E l m n
D D D D D D D D D
" " " V " " " V " " " "
*P'$,400,000 P'0,000,000 *P44,000,000 P'8,000 000
P$,400,000 P1$,000,000
[Problem 8] 1a. V: atio
40?
'. )otal costs an! e#(enses Variable costs *40? # sales "i#e! costs
'00' P '0,000,000 *11,'00,000 P 8,800,000
P8,800,000 $0?
&.
;CP *(esos
4.
:ontribution marin *P50 million # $0? ess9 "i#e! costs an! e#(enses 3(eratin income
[Problem /] a. :ost tem 1. '. &. 4. 5. $. 7. 8.
Fra( $ 11 1 4 5 10 & 7
'00& P '$,400,000 *17,$00,000 P 8,800,000 P14,$$$,$$7 P&0,000,000 8,800,000 P'1,'00,000
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/. 4.
/ %n!erstan!in te beavior of costs 2oul! ui!e manaers on o2 to !eal an! control costs in relation to volume of (ro!uction. )is coul! reatly el( in (lannin an! controllin activities resultin to better business results.
