Exercise 7.5

The following information relates to ABC Manufacturing Company for the year ended December 31,2018:

Beginning Ending

RM inventory..................................................................P20,000 P16,000

WIP inventory.................................................................18,000 15,000

FG inventory...................................................................24,000 21,000

RM purchases........................................................................................................200,000

Direct labor.............................................................................................................100,000

Indirect materials.....................................................................................................5,000

Indirect labor...........................................................................................................47,000

Factory utilities.......................................................................................................18,000

Factory rent............................................................................................................36,000

Depreciation - factory equipment............................................................................24,000

Sales......................................................................................................................960,000

Selling expenses....................................................................................................120,000

administrative expenses.........................................................................................240,000

Income tax rate..........................................................................................................30%

Required:

A. Calculate the RM(DM) used.

B. Develop a schedule of cost of goods manufactured.

C. Construct an income statement.

D. Prepare journal entries. Assume that all purchases and sales were made on credit and that all expenses were paid in cash.

Execise 7.6

DEF Manufacturing company used P150,000 of direct materials and incurred P60,000 of direct labor costs during 2018. Indirect

labor amounted to P5,000 while indirect materials used totaled P3,000. Other factory costs included Utilities of P6,000; maintenance of

P8,000; supplies of P4,00; Depreciation of P16,000 and propery taxes of P5,000. Work in process inventory began the year with a

P12,000 balance and ended the year with an P16,000 balance.

Required:

Prepare ..a schedule of cost of goods manufactured for DEF Manufacturing company for the year ended December 31,2018