PROBLEM 2: ABC Company manufactures special purpose machines to order. Because the products are tailored for the customers' preference, completed units are automatically sold to gain 20% profit on billed price. On 1/1/2017 there were two jobs in process, 405 and 406. The following costs were applied to them in 2016: lob 405 P 5,000 Iob 406 P 8,000 Direct material Direct labor 4,000 3,000 3.300 P14.300 Overhead 4,400 P13.400 Total During January of 2017, the following transactions took place: • Raw material costing P40,000 was purchased on account. • Jobs #407, 408, and 409 were started and the following costs were applied to them: Iob 407 Iob 408 Р3.000 5,000 Job 409 P 7.000 4.000 Direct materials P10,000 6,000 Direct labor • Job P405 and Job #406 were completed after incurring additional direct labor costs of P2,000 and P4,000, respectively. Job 408 is also completed on January. • Wages paid to production employees during January totaled P25,000. Depreciation of factory equipment for the month of January totaled P10,000. Utilities bills (where 30% of the utilities are related to office, while the remaining can be attributed to the factory) in the amount of P10,000 were paid for December 2016 operations. • Supplies costing P2,000 were used. Only 40% is used by the factory, while the 60% is used for promotional activities (flyers, etc.). Office rent totaling P5,000 were billed for January operations. • Miscellaneous overhead expenses totaled P13,300 for January. Any over- or underapplied overhead is considered material for the company. REQUIRED: How much is the Net income for January?
PROBLEM 2: ABC Company manufactures special purpose machines to order. Because the products are tailored for the customers' preference, completed units are automatically sold to gain 20% profit on billed price. On 1/1/2017 there were two jobs in process, 405 and 406. The following costs were applied to them in 2016: lob 405 P 5,000 Iob 406 P 8,000 Direct material Direct labor 4,000 3,000 3.300 P14.300 Overhead 4,400 P13.400 Total During January of 2017, the following transactions took place: • Raw material costing P40,000 was purchased on account. • Jobs #407, 408, and 409 were started and the following costs were applied to them: Iob 407 Iob 408 Р3.000 5,000 Job 409 P 7.000 4.000 Direct materials P10,000 6,000 Direct labor • Job P405 and Job #406 were completed after incurring additional direct labor costs of P2,000 and P4,000, respectively. Job 408 is also completed on January. • Wages paid to production employees during January totaled P25,000. Depreciation of factory equipment for the month of January totaled P10,000. Utilities bills (where 30% of the utilities are related to office, while the remaining can be attributed to the factory) in the amount of P10,000 were paid for December 2016 operations. • Supplies costing P2,000 were used. Only 40% is used by the factory, while the 60% is used for promotional activities (flyers, etc.). Office rent totaling P5,000 were billed for January operations. • Miscellaneous overhead expenses totaled P13,300 for January. Any over- or underapplied overhead is considered material for the company. REQUIRED: How much is the Net income for January?
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
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Transcribed Image Text:PROBLEM 2: ABC Company manufactures special purpose machines to order. Because the products are tailored
for the customers' preference, completed units are automatically sold to gain 20% profit on billed price. On
1/1/2017 there were two jobs in process, 405 and 406. The following costs were applied to them in 2016:
Job 405
P 5,000
Iob 406
P 8,000
Direct material
Direct labor
4,000
4,400
P13.400
3,000
3,300
P14.300
Overhead
Total
During January of 2017, the following transactions took place:
Raw material costing P40,000 was purchased on account.
Jobs #407, 408, and 409 were started and the following costs were applied to them:
Job 407
Lob 408
Job 409
P 7,000
Direct materials
Direct labor
P3,000
P10,000
6,000
5,000
4,000
Job P405 and Job #406 were completed after incurring additional direct labor costs of P2,000 and P4,000,
respectively. Job 408 is also completed on January.
Wages paid to production employees during January totaled P25,000.
Depreciation of factory equipment for the month of January totaled P10,000.
Utilities bills (where 30% of the utilities are related to office, while the remaining can be attributed to the
factory) in the amount of P10,000 were paid for December 2016 operations.
Supplies costing P2,000 were used. Only 40% is used by the factory, while the 60% is used for promotional
activities (flyers, etc.). Office rent totaling P5,000 were billed for January operations.
Miscellaneous overhead expenses totaled P13,300 for January.
Any over- or underapplied overhead is considered material for the company.
REQUIRED:
1. How much is the Net income for January?
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