2021.12.02 03:05Is different from that of a conventional factory,Cost Accountingen from the records of the019207Chapter 7 Accounting for MaterialsCost Accounting907Problem 9TRUE-FALSE QUESTIONSIndicate whether the following statements are true or false by inserting in the blankspace provided a capital "T" for true or "F" for false.Little Mermaid Company received an order of 5,000 automatic mixing machines. Thecost per unit is: materials P 200.00; labor-P 120.00; factory overhead applied at150% of direct labor cost (140% in cases in which any defective unit costs are to becharged to a specific order). . Final inspection revealed that 1,000 units wereincorrectly assembled. To correct each defective. unit requires P50.00 for materials,P30.00 for labor, and factory overhead of the appropriate rate. Then 20 units wereclassified as seconds and sold for P400.00 each, the proceeds being credited to theorder. The customer has agreed to accept the remaining good machines, although theacceptable units are fewer than the number ordered.1. When prices are rising, higher income will be reported using FIFO ascompared with using LIFO.2. Inventory methods can be changed at will to control reported netincome.3. An overstațed ending inventory leads to understated net income.4. An error in determining the cost of the ending inventory of a periodgenerally results in misstated income for two periods.5. The net realizable value of an inventory item can never be greater thanits expected selling price.6. An advantage of using LIFO yields the greatest cost of goods sold.7. Spoiled goods may be sold at an amount higher than the regular salesprice. .8. If spoilage in a job results is due to the exacting specifications of thejob, the loss resulting from the spoiled goods should be shared by allunits manufactured during the period.9. The closing entries necessary under the perpetual and periodic inventorysystems do not differ because all expenses and revenues must be closed.10. When a company changes from one inventory costing method to another,the change must be fully disclosed in a footnote to the financialstatements explaining the reasons for the change.11. Graphically, the economic order quantity (EOQ) is the point where thecarrying cost line intersect the ordering cost line.12. The primary goal of inventory management activity is to minimize therisks of a stockout while maximizing the return on inventory.13. .When computing the economic production run size, the cost's to set up aproduction run are analogous to the carrying costs in the basic economicorder quantity model14. The purchàse price per unit of inventory is irrelevant in lathe economicorder quantity (EOQ) model.15.The accounting for spoiled units and defective units is the same.Required:1. Entries if the method used is charged to speċific job.2. Entries if the method used is charged to all production.3. Cost per unit of the finished goods if:a. Method used is charged to specific jobb. Method used is charged to all productionProblem 10The Melon Manufacturing Company uses several raw materials in its productionschedule. Management wishes to use a system of selective control. The followingdata have been completed.Total CostUnit Cost0.50Materials1 x 11 x 21 x 31 x 41 x 5Yearly Usage xP7,1000.654,6152.5010,50010,5002,2001,50010,175P 49.4905,2501.750.802,7501,5005.50040.1001 x 71 x 81.85Lequired: Assume that management adopts the ABC plan, prepare the necessarychart24 202112.02 03:04UnderslalluT-ALand understand the fIve luP 32,20033,05020004Cost AccountingChapter 7 Accounting for Materials20Problem 4An invoice for X, Y, and Z is received from Heavyweight Co. Invoice totals are: X-P 125,000; Y -P 75,000%; Z - P100,000, The freight charges on this shipment of18,000 pounds total P7,500. Weights for the respective materials are 10,000, 6,000,and 7,500 pounds.Required:1. Cost per pound to be entered on the stock cards for each materials, based onProblem 7The Bedrock Company is a manufacturer of golf clothing. During the monthNhecompany cut and assembled 10,000 golf jackets. One hundred of the jackets dic notmeet specifications and were considered "seconds." Seconds are sold for P1,00T00per jacket, whereas first quality jackets sell for P2,500.00. During the month, Wo inProcess was charged for P3,600,000 of materials, P4,000,000 of labor, and faryoverhead is applied at 120% of direct labor (including allowance of 20% of dilect.labor for spoiled. units)cost.2. Cost per pound to be entered on the stock cards for each material, básed onshipping weight.Problem 5Maxie Company regularly buys merchandise from Dawson Suppliers and is allowed atrade discount of 20/10/10 from the list price. For the month of September, MaxieCompany purchased merchandise with a list price of P100,000. and terms of 2/10,n/30.Required: Entries required for each of the following conditions:a. Loss due to spoiled work is spread over all jobs.b. Loss due to spoiled work is charged to this specific job. (factory overhead isapplied at 100% of direct labor costc. Compute the unit cost of the good units under (a) and (b)Requirements:1. The amount debited to Materials if the purchase discount is treated as otherincome.(Purchases recorded at gross).2. The amount debited to Materials if the purchase discount is treated as aréduction of purchases. (Recorded as net)Problem 8Kyralei Co. manufacture golf carts and other recreational equipment. One order forRAGC Corporation for 2,000 carts showed the following costs per unit: directmaterials P400; direct labor P200; and factory overhead applied at 140% of directlabor cost if defective work is charged to a specific job and 150% if defective work ischarged to all jobs.Problem 6The following information is to be used in costing inventory on August 31.August 1Final inspection revealed that wheels were assembled with improper bearings. Thewheels were disassembled and the proper bearings inserted. The cost of correctingeach defective cart consists of P20 added cost for bearings, P40 for labor, and factoryoverhead at the predetermined rate.Beginning balancePurchased1,600 units at P6.00400 units at P7.0056.PurchasedIssuedRequired:A. Prepare journal entries to record correction of the defective units and transfer ofthe work in process to finished goods if:1. The RAGC is to be charged with the cost of defective units.400 units at P8.0016800 units600 units at P9.0024PurchasedIssued271,000 units2. The cost of correcting the defective units is not charged to RAGC.Required: The cost of materials used and the cost assigned to the August 31 inventoryby'each of these perpetual inventory costing methods:1. First-in, first-out2. Average.B. Compute the cost per unit of finished goods if:1. The RAGC is to be charged with the cost of defective units2. The cost of correcting the defectivc units is not charged to RAGC

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Answered: ome will be reported using FIFO as

ome will be reported using FIFO as

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q