1.

Peter Senen Corporation, which began operations on January 1 of the current

year, reported the following information:

Estimated manufacturing overhead P 600,000

Actual manufacturing overhead 639,000
Estimated direct labor cost 480,000
Actual direct labor cost 500,000
Total debits in the Work-in-Process 1,880,000
account
Total credits in the Finished-Goods 920,000
account

Peter Senen applies manufacturing overhead to jobs on the basis of direct labor
cost and adds a 60% markup to the cost of completed production when finished
goods are sold. On December 31, job no. 18 was the only job that remained in
production. That job had direct-material and direct-labor charges of P16,500 and
P36,000, respectively.

Required:
a. Determine the company’s predetermined overhead rate.
b. Determine the amount of under- or overapplied overhead. Be sure to label your
answer.
c. Compute the amount of direct materials used in production.
d. Calculate the balance the company would report as ending work-in-process
inventory.
e. Prepare the journal entry(ies) needed to record Peter Senen’s sales, which are all
made on account.

2. Peter Senen., which uses a job-costing system, is a labor-intensive firm, with

many skilled craftspeople on the payroll. Job no. 789 was the only job in process
on January 1, having costs of P22,500 as of that date. Direct materials used and
direct labor incurred during January were:

Job Direct Materials Direct

No. Labor
789 P 2,000 P 6,000
790 9,000 10,000
791 14,000 8,000

Job no. 791 was the only job in production as of January 31.

Required:
a. Should Peter Senen use direct labor or machine hours as a cost driver. Why?
b. Assume that the company decided to use direct labor as its cost driver. If the
budgeted amounts of direct labor and manufacturing overhead are anticipated to be
P200,000 and P300,000, respectively, what is the firm's predetermined overhead
rate?
c. Compute the cost of work-in-process inventory as of January 31.
d. Compute the cost of jobs completed during January.
e. Suppose that the company sold all of its completed jobs, adding a 40% markup
to cost. How much would the firm report as sales revenue?
3. Peter Senen., which uses a job-costing system, began business on January 1,
2020 and applies manufacturing overhead on the basis of direct-labor cost. The
following information relates to 2020:
Budgeted direct labor and manufacturing overhead were anticipated to be
P200,000 and P250,000, respectively.
Job nos. 1, 2, and 3 were begun during the year and had the following charges for
direct material and direct labor:

Job Direct Materials Direct

No. Labor
1 P35,000
P145,000
2 65,000
320,000
3 80,000
55,000

Job nos. 1 and 2 were completed and sold on account to customers at a profit of
60% of cost. Job no. 3 remained in production.
Actual manufacturing overhead by year-end totaled P233,000. Peter Senen adjusts
all under- and overapplied overhead to cost of goods sold.

Required:
a. Compute the company's predetermined overhead application rate.
b. Compute Peter Senen's ending work-in-process inventory.
c. Determine Peter Senen's sales revenue.
d. Was manufacturing overhead under- or overapplied during 2020? By how
much?
e. Present the necessary journal entry to handle under- or overapplied
manufacturing overhead at year-end.
f. Does the presence of under- or overapplied overhead at year-end indicate that
Peter Senen's accountants made a serious error? Briefly explain.

4. Peter Senen uses a job-cost system and applies manufacturing overhead to

products on the basis of machine hours. The company's accountant estimated that
overhead and machine hours would total P800,000 and 50,000, respectively, for
2020. Actual costs incurred follow.

Direct material used P250,000

Direct labor 300,000
Manufacturing overhead 816,000

The manufacturing overhead figure presented above excludes P27,000

of sales commissions incurred by the firm. An examination of job-cost records
revealed that 18 jobs were sold during the year at a total cost of P2,960,000. These
goods were sold to customers for P3,720,000. Actual machine hours worked
totaled 51,500, and Athens adjusts under- or overapplied overhead at year-end to
Cost of Goods Sold.

Required:
a. Determine the company's predetermined overhead application rate.
b. Determine the amount of under- or overapplied overhead at year-end. Be sure to
indicate whether overhead was under- or overapplied.
c. Compute the company's cost of goods sold.
d. What alternative accounting treatment could the company have used at year-end
to adjust for under- or overapplied overhead? Is the alternative that you suggested
appropriate in this case? Why?

5..Peter Senen uses a job-costing system for its units, which pass from the
Machining Department, to the Assembly Department, to finished-goods inventory.
The Machining Department is heavily automated; in contrast, the Assembly
Department performs a number of manual-assembly activities. The following
information relates to the Machining Department for the year just ended:

Budgeted manufacturing overhead P8,000,000

Actual manufacturing overhead 7,975,000
Budgeted machine hours 500,000
Actual machine hours 510,000

The Machining Department data that follow pertain to job no. 243, the only job in
production at year-end.

Direct materials P64,800

Direct labor cost 35,200
Machine hours 450

Required:
a. Assuming the use of normal costing, calculate the predetermined overhead rate
that is used in the Machining Department.
b. Compute the cost of the Machining Department's year-end work-in-process
inventory.
c. Determine whether overhead was under- or overapplied during the year in the
Machining Department.
d. If Peter Senen disposes of the Machining Department's under- or overapplied
overhead as an adjustment to Cost of Goods Sold, would the company's Cost-of-e.
e. Goods-Sold account increase or decrease? Explain.
f. How much overhead would have been charged to the Machining Department's
Work-in-Process account during the year?
g. Comment on the appropriateness of direct labor cost to apply manufacturing
overhead in the Assembly Department.
6. Peter Senen uses a predetermined overhead application rate of P18 per labor
hour. A review of the company's accounting records revealed budgeted
manufacturing overhead for the period of P621,000, applied manufacturing
overhead of P590,400, and overapplied overhead of P11,900.

Required:
1. Determine Peter Senen's actual labor hours, budgeted labor hours, and actual
manufacturing overhead.
2. Present the necessary year-end journal entry to handle the overapplied overhead,
assuming that the firm allocates over- or underapplied overhead to Cost of Goods
Sold.
 6. A review of the records of Peter Senen, Inc., a new company,
disclosed the following year-end information:
Manufacturing Overhead account: Contained debits of P872,000, which included
P20,000 of sales commissions.
Work-in-Process Inventory account: Contained charges for overhead of P875,000.
Cost-of-Goods-Sold account: Contained a year-end debit balance of P3,680,000.
This amount was computed prior to any year-end adjustment for under- or
overapplied overhead.

Peter Senen applies manufacturing overhead to production by using a

predetermined rate of P20 per machine hour. Budgeted overhead for the period
was anticipated to be P900,000.

Required:
Determine the actual manufacturing overhead for the year.
Determine the amount of manufacturing overhead applied to production.
Is overhead under- or overapplied? By how much?
Compute the adjusted cost-of-goods-sold figure that should be disclosed on the
company's income statement.
How many machine hours did Peter Senen actually work during the year?
Compute budgeted machine hours for the year.