EXERCISE $1$: Trial Day Financial Reporting for a Pho Restaurant

You are tasked with preparing the financial statements for a Pho restaurant's trial day. The

restaurant operates from $7$ AM to $5$ PM$,$ and you are required to report on the financial

performance for the morning session $(7$ AM to $12$ PM$).$

Information Provided:

$1.$ Capital Contribution to Start the Business:

o The owner contributed $500,000$ VND in cash to start the business.

$2.$ Raw Materials Purchase $($Noodles & Beef$)$:

o Raw materials were purchased for the production of $20$ bowls of Pho at a

cost of $200,000$ VND$.$ All the raw materials were processed during the

morning session, including cleaning, cutting, and packing the ingredients for

$20$ bowls. The cook completes the final preparation $($cooking with hot water$)$

when a customer orders a bowl.

$3.$ Cook's Wage for the Day:

o The cook$$s total wage for the day $(7$ AM $-5$ PM$)$ is $40,000$ VND$,$ paid at the

beginning of the day. Most of the cook's work is done in the morning,

including processing the raw materials for all $20$ bowls. $12,000$ VND of the

total wage is allocated to the morning session as Manufacturing Overhead

$($MOH$),$ which is applied to the production of $20$ bowls.

$4.$ Issue of Raw Materials to Production $(20$ Bowls$)$:

o Raw materials worth $200,000$ VND were transferred from Inventory to Work

in Process $($WIP$)$ for the $20$ bowls of Pho processed during the morning.

$5.$ Sales Commission:

o A sales commission of $3,000$ VND is earned per sale. Only $1$ bowl was sold in

the morning session.

$6.$ Advertisement Expense:

o The restaurant distributed flyers from $7$ AM to $8$ AM at a cost of $20,000$ VND$,$

which was paid at $8$ AM$.$

$7.$ Sale of $1$ Bowl of Pho:

o The restaurant sold $1$ bowl of Pho for $40,000$ VND during the morning.

$8.$ Cost of Goods Sold $($COGS$)$ for the Bowl Sold:

o The raw material cost for the $1$ bowl sold is $10,000$ VND$,$ and the

manufacturing overhead allocation per bowl is $12,000$ VND$.$ Therefore, the

total COGS for the $1$ bowl sold is $22,000$ VND $(10,000$ VND raw material $+$

$12,000$ VND overhead$).$

Requirements $($Modified$)$:

$1.$ Calculate the manufacturing overhead cost per bowl

$($Determine the overhead cost allocated to each bowl based on the total

manufacturing overhead incurred for the day.$)$

$2.$ Journalize the above transactions and post them to T$-$accounts

Use the following accounts:

o Cash

o Capital Contribution

o Raw Materials

o Work in Process $($WIP$)$

o Finished Goods $($FG$)$

o Cost of Goods Sold $($COGS$)$

o Manufacturing Overhead $($MOH$)$

o Sales Commission

o Advertisement Expense

o Revenue

o Income Summary

$3.$ What is the total manufacturing cost for the morning session?

$($Calculate the total cost, including raw materials and overhead for the $20$ bowls

processed during the morning session.$)$

$4.$ What is the unit product cost for the Pho?

$($Calculate the total cost per bowl by considering raw materials and overhead.$)$

$5.$ What is the cost of goods sold for the morning session?

$($Determine the COGS for the $1$ bowl sold, including raw materials and overhead.$)$

$6.$ What is the total value of the finished goods inventory at the end of the morning

session?

$($Calculate the value of any finished goods remaining at the end of the morning

session.$)$

$7.$ What is the total value of the work in process inventory at the end of the

morning session?

$($Calculate the value of the WIP inventory, reflecting the remaining $19$ bowls in

progress.$)$

$8.$ Determine whether overhead has been over$-$ or under$-$applied for the morning

session

$($Compare the overhead applied to actual overhead costs incurred to determine if

there is an over$-$ or under$-$application.$)$

$9.$ Prepare an Income Statement for the morning session, including sales

commission and advertisement costs

$($Reflect sales revenue, cost of goods sold, and operating expenses such as sales

commission and advertisement.$)$

$10.$ Prepare a Balance Sheet at the end of the morning session

$($Show the ending balances for assets, liabilities, and equity, including the owner's

capital contribution.$)$