XYZ company is a manufacturing firm that uses job-order costing. OnJanuary 1, the beginning of its fiscal year, the company's inventorybalances were as follows:Raw MaterialsPhp 20,00015,00030,000WIPFinished GoodsThe company applies overhead cost to jobs on the basis of machine-hours worked. For the current year, the company estimated that itwould work 75,000 machine-hours and incur php 450,000 inmanufacturing overhead cost. The following transactions wererecorded for the year:a) Raw materials were purchased on account, Php 410,000.b) Raw Materials were requisitioned for use in production, Php380,000 (Php 360,000 direct and Php 20,000 indirect).c) The following costs were incurred for employee services: laborPhp 75,000; indirect labor Php 110,000; sales commissions Php90,000; and administrative salaries Php 200,000.d) Sales travel cost were incurred Php 17,000.e) Utility cost were incurred in the factory Php 43,000.f) Advertising costs were incurred Php 180,000.g) Depreciation was recorded for the year, Php 350,000 ( 80%relates to factory operations and 20% relates to selling andadministrative activities).h) Insurance expired during the year Php 10,000 ( 70% relates tofactory operations and the remaining 30% relates to sellingand administrative activities).i) Manufacturing Overhead was applied to production. Due togreater than expected demand for its products, the companyworked 80,000 machine-hours during the year.j) Goods costing Php 900,000 to manufacture were completedduring the year.k) Goods were sold on account to customers during the year at atotal selling price of Php 1,500,000. The goods cost Php870,000 to manufacture.Required:1. Compute for the COGM (Cost of Good Manufactured)2. Prepare an Income Statement for XYZ Company.

The question is based on the concept of Cost Accounting.

Answered: XYZ company is a manufacturing firm…

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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The Polaris Company uses a job-order costing system. The following transactions occurred in October: Raw materials purchased on account, $210,000. Raw materials used in production, $190,000 ($178,000 direct materials and $12,000 indirect materials). Accrued direct labor cost of $90,000 and indirect labor cost of $110,000. Depreciation recorded on factory equipment, $40,000. Other manufacturing overhead costs accrued during October, $70,000. The company applies manufacturing overhead cost to production using a predetermined rate of $8 per machine-hour. A total of 30,000 machine-hours were used in October. Jobs costing $520,000 according to their job cost sheets were completed during October and transferred to Finished Goods. Jobs that had cost $480,000 to complete according to their job cost sheets were shipped to customers during the month. These jobs were sold on account at 25% above cost. Required: 1. Prepare journal entries to record the transactions given above. 2. Prepare…
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