The Packo Company, a small manufacturer, makes a varicty of tool boxes. The company's manufacturing operations and their costs for November were Cutting Assembly Finishing P16,500 22.900 P39,400 Three styles of boxes were produced in November. The quantities and direct Total Direct manufacturing labor Manufacturing overhead P2.600 3.000 P5,600 P4,800 P23.900 3.300 29.200 P8,100 P53,100 materials costs were Style Standard Home Quantity 1.200 600 Direct materials P18,000 6,600 5.400 P30.060 Industrial 200 The company uses actual costing. It takes direct materials to each style of box. It combines direct manufacturing labor and manufacturing overhead and allocates the conversion costs on the basis of all product units passing through an operation. All product units are assumed to receive an identical amount of time and effort in each operation. The industrial style, however. does not go through the finishing operation. Required: 1. Tabulate the conversion costs of each operation, the total units produced, and the conversion costs per unit for November. 2. Calculate the total costs and the cost per unit of each style of box produced in November. Be sure to account for all the total costs. 3. Prepare summary journal entries for each operation. For simplicity, assume that all direct materials are introduced at the beginning of the cutting operation. Also, assume that all units were transferred to finished goods when completed and that there was no beginning or ending work in process. Prepare one summary entry for all conversion costs incurred, but prepare a separate entry for allocating conversion costs in each operation.

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Chapter1: Financial Statements And Business Decisions
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the packo company, a small manufacturer makes a variety of toolboxes. The company manufacturing operation and its cost. calculate the total costs per unit of each style of box

 

 

279 Chapter 8
The Lim Company has a plant that manufacturers transistor radios. The
production time is only a few minutes per unit. The company uses a just-in-
time production system and a backflush costing system with two trigger
points for journal entries:
Exercise 2 (Backflush journal entries and JIT production)
• Purchase of direct (raw) materials
Completion of good finished units of product
There are no beginning inventories. The following data pertain to April
manufacturing:
Direct (raw) materials purchased
Direct (raw) materials used
Conversion costs incurred
Allocation of conversion costs
Costs transferred to finished goods
Cost of goods sold
P8,800,000
8,500,000
4,220,000
4,000,000
12,500,000
11,900,000
Required:
1. Prepare summary journa! entries for April (without disposing of under-
or overallocated conversion costs). Assume no direct materials variances.
2.
Post the entries in requirement 1 to T-accounts for applicable Inventory
Control, Conversion Costs Control, Conversion Costs Allocated and Cost
of Goods Sold.
3. Under an ideal JIT production system, how would the amounts in your
journal entries differ from those in requirement 1?
Exercise 3 (JIT purchasing, choosing suppliers)
The Donnie Corporation and the Thea Corporation manufacture fairly similar
remote-controlled toy cars. The Tristan Corporation, a retailer of children's
toys, expects to buy and sell 4,000 of these cars each year. Both Donnie and
Thea can supply all of Tristan's needs, and Tristan prefers to use only on
supplier for these cars. An electronic hookup will make ordering costs
negligible for either supplier. Tristan wants 80 cars delivered 50 times each
year. Tristan obtains the following additional information.
Transcribed Image Text:279 Chapter 8 The Lim Company has a plant that manufacturers transistor radios. The production time is only a few minutes per unit. The company uses a just-in- time production system and a backflush costing system with two trigger points for journal entries: Exercise 2 (Backflush journal entries and JIT production) • Purchase of direct (raw) materials Completion of good finished units of product There are no beginning inventories. The following data pertain to April manufacturing: Direct (raw) materials purchased Direct (raw) materials used Conversion costs incurred Allocation of conversion costs Costs transferred to finished goods Cost of goods sold P8,800,000 8,500,000 4,220,000 4,000,000 12,500,000 11,900,000 Required: 1. Prepare summary journa! entries for April (without disposing of under- or overallocated conversion costs). Assume no direct materials variances. 2. Post the entries in requirement 1 to T-accounts for applicable Inventory Control, Conversion Costs Control, Conversion Costs Allocated and Cost of Goods Sold. 3. Under an ideal JIT production system, how would the amounts in your journal entries differ from those in requirement 1? Exercise 3 (JIT purchasing, choosing suppliers) The Donnie Corporation and the Thea Corporation manufacture fairly similar remote-controlled toy cars. The Tristan Corporation, a retailer of children's toys, expects to buy and sell 4,000 of these cars each year. Both Donnie and Thea can supply all of Tristan's needs, and Tristan prefers to use only on supplier for these cars. An electronic hookup will make ordering costs negligible for either supplier. Tristan wants 80 cars delivered 50 times each year. Tristan obtains the following additional information.
Operation Costing, Just-in-Time System and Backflush Costing 269
II. Exercises
MdS
Chapfer 8
poge. 244-27
Exercise 1 (Operation Costing)
The Packo Company, a small manufacturer, makes a varicty of tool boxes.
The company's manufacturing operations and their costs for November were
Cutting Assembly Finishing
P16,500
22.900
P39,400
Total
Direct manufacturing labor
Manufacturing overhead
P2.600
P4,800 P23.900
29,200
3.000
P5,600
3.300
P8,100 PS3,100
Three styles of boxes were produced in November. The quantities and direct
materials costs were
Style
Standard
Quantity
1.200
Direct materials
P18,000
6,600
5,400
P30.060
Home
600
Industrial
200
The company uses actual costing. It takes direct materials to each style of
box. It combines direct manufacturing labor and manufacturing overhead and
allocates the conversion costs on the basis of all product units passing
through an operation. All product units are assumed to receive an identical
amount of time and effort in each operation. The industrial style, however.
does not go through the finishing operation.
Required:
1. Tabulate the conversion costs of each operation, the total units produced,
and the conversion costs per unit for November.
2. Calculate the total costs and the cost per unit of each style of box
produced in November. Be sure to account for all the total costs.
3. Prepare summary journal entries for each operation. For simplicity,
assume that all direct materials are introduced at the beginning of the
cutting operation. Also, assume that all units were transferred to finished
goods when completed and that there was no beginning or ending work
in process. Prepare one summary entry for all conversion costs incurred,
but prepare a separate entry for allocating conversion costs in each
operation.
Transcribed Image Text:Operation Costing, Just-in-Time System and Backflush Costing 269 II. Exercises MdS Chapfer 8 poge. 244-27 Exercise 1 (Operation Costing) The Packo Company, a small manufacturer, makes a varicty of tool boxes. The company's manufacturing operations and their costs for November were Cutting Assembly Finishing P16,500 22.900 P39,400 Total Direct manufacturing labor Manufacturing overhead P2.600 P4,800 P23.900 29,200 3.000 P5,600 3.300 P8,100 PS3,100 Three styles of boxes were produced in November. The quantities and direct materials costs were Style Standard Quantity 1.200 Direct materials P18,000 6,600 5,400 P30.060 Home 600 Industrial 200 The company uses actual costing. It takes direct materials to each style of box. It combines direct manufacturing labor and manufacturing overhead and allocates the conversion costs on the basis of all product units passing through an operation. All product units are assumed to receive an identical amount of time and effort in each operation. The industrial style, however. does not go through the finishing operation. Required: 1. Tabulate the conversion costs of each operation, the total units produced, and the conversion costs per unit for November. 2. Calculate the total costs and the cost per unit of each style of box produced in November. Be sure to account for all the total costs. 3. Prepare summary journal entries for each operation. For simplicity, assume that all direct materials are introduced at the beginning of the cutting operation. Also, assume that all units were transferred to finished goods when completed and that there was no beginning or ending work in process. Prepare one summary entry for all conversion costs incurred, but prepare a separate entry for allocating conversion costs in each operation.
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