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Topic_2_-_Problems_for_Discussion

The document outlines various accounting problems for discussion, including cost classification for the Accountancy Department, cost calculations for tax preparation services, utility cost analysis for Coballes Industrial, cost categorization for Micalea Company, and journalizing transactions for Romero Company. Each problem requires specific calculations and classifications related to direct and indirect costs, variable and fixed costs, and product costs. The problems are designed to enhance understanding of cost accounting principles and practices.

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roshanedeilpascual1
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2 views2 pages

Topic_2_-_Problems_for_Discussion

The document outlines various accounting problems for discussion, including cost classification for the Accountancy Department, cost calculations for tax preparation services, utility cost analysis for Coballes Industrial, cost categorization for Micalea Company, and journalizing transactions for Romero Company. Each problem requires specific calculations and classifications related to direct and indirect costs, variable and fixed costs, and product costs. The problems are designed to enhance understanding of cost accounting principles and practices.

Uploaded by

roshanedeilpascual1
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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Download as PDF, TXT or read online on Scribd
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PROBLEMS FOR DISCUSSION

PROBLEM 1
The School of Accountancy, Business and Hospitality of University of Saint Louis Tuguegarao has five
departments – Accountancy, Management Accounting, BA – Marketing, BA – Financial Management and
Tourism. Each program chair is responsible for the department’s budget preparation. Indicate whether each of
the following costs incurred in the Accountancy Department is direct or indirect to the department.

a. Accounting faculty salaries

b. Accounting chairperson’s salary

c. Cost of computer time of university server used by members of the


department

d. Cost of office assistant salaries (office assistants are shared by the entire
college)

e. Cost of travel by department faculty paid from externally generated funds


contributed to directly to the department

f. Cost of equipment purchased by the department from allocated funds

g. Depreciation allocation of the college building cost for number of offices


used by department faculty

h. Cost of periodicals/books purchased by the department

i. Cost of software on faculty computers

PROBLEM 2
Lloyd Acoba Accounting Services pays ₱2,000 per month for a tax preparation software license. In addition,
variable charges incurred average of ₱9 for every tax return the firm prepares.
a. Determine the total cost and cost per unit if the firm expects to prepare the following number of tax returns
in April 2021:
1) 200
2) 500
3) 800
b. Why does the cost per unit change in (1), (2) and (3) of (a)?
c. Lloyd, the owner of the firm, wants to earn a margin (excluding any other direct costs) on tax returns of
₱15,000 during April. If 200 returns are prepared, what tax preparation fee should be charged? If that fee
is charged, and 800 returns are prepared, what is the margin in April?

PROBLEM 3
In November 2021, Coballes Industrial gathered information for the prior 10 months’ machine hours and utility
costs. During 2021, the company’s normal operating range of activity was between 3,500 and 9,000 machine
hours per month.
The following machine hours and utility cost information is available:
Machine
Month Utility Cost
Hours
January 7,260 ₱2,960
February 8,850 3,410
March 4,800 1,920
April 9,000 3,500
May 11,000 3,900
June 4,900 1,860
July 4,600 2,180
August 8,900 3,470
September 5,900 2,480
October 5,500 2,310

Compute the variable cost per unit and total fixed cost using:
a. High-Low Method
b. Least Squares Regression Analysis
PROBLEM 4
Micalea Company incurred the following costs in June 2021:

• Paid a six-month (June through November) premium for insurance of company head-quarters, ₱18,600.
• Paid ₱1,000 fee for a salesperson to attend a seminar in August.
• Paid three months (June through August) of property taxes on its factory building, ₱15,000.
• Paid a ₱10,000 bonus to the company president for her performance during May June 2021.
• Accrued ₱20,000 of utility costs, of which 40 percent was for the headquarters and the remainder was
for the factory.

a. What expired costs are associated with the June information?


b. What unexpired costs are associated with the June information?
c. What product costs are associated with the June information?

PROBLEM 5
Romero Company had the following account balances as of July 1, 2021:
Raw Material (direct and indirect) Inventory 20,300
Work in Process Inventory 7,000
Finished Goods Inventory 18,000

During July, the company incurred the following factory costs:


1. Purchased ₱164,000 of raw material on account.
2. Issued ₱180,000 of raw material to production. Of this amount, ₱134,000 was for direct material and the
remainder was for production supplies.
3. Accrued ₱88,000 in factory payroll costs; ₱62,000 was for direct labor and the rest was supervisor’s
salaries.
4. Accrued ₱7,000 of utility costs; of this amount, ₱1,600 was a fixed cost and the remainder was variable.
5. Accrued ₱2,000 of property taxes on the factory.
6. Recorded the expiration of ₱1,600 of prepaid insurance on factory equipment.
7. Recorded ₱40,000 of straight-line depreciation on factory equipment.
8. Transferred goods costing ₱320,000 to Finished Goods Inventory.
9. Recorded total sales of ₱700,000; of these, ₱550,000 were on account.
10. Recoded cost of goods sold for ₱330,000.
11. Recorded selling and administrative costs of ₱280,000 (credit “Various Accounts”).
Required:
a. Journalize the transactions for July.
b. Post transactions to T-accounts for Raw Material Inventory, Work in Process Inventory, Finished Goods
Inventory and Cost of Goods Sold.
c. Prepare a schedule of cost of goods manufactured for July.
d. Prepare an income statement, including a detailed schedule of cost of goods sold.

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