Illustration of Non-cost Accounting System for Single Product and for Multiple Products:

Case 1. Cost of Goods Manufactured and Sold. Single Product (No Journal Entries)

Assuming X Manufacturing Corporation is producing a single product called Product X. During the month
of June 2017, the following production data are gathered:

1. Total raw material purchased, P500,000. Raw materials returned to supplier due to defect
P10,000.
2. Direct labor cost, P100,000.
3. Total actual factory overhead cost, P50,000.
4. Inventories:
June 1 June 30

Raw materials P50,000 P60,000

Work in process 10,000 20,000

Finished goods 31,000 46,500

There were 50 units of finished goods at the beginning with a unit cost of P620. There were 75
units of finished goods at the end with a unit cost of P620.

5. Net sales, during the month, 975 units x P1,000 = P975,000

Required:

1. Prepare the Statement of Cost of Goods Manufactured;

2. How much is the unit cost, assuming the quantity of production is 1,000 units?
3. Compute the Cost of Sales; and
4. Compute the Gross Profit and Gross Profit Rate

BENALDO MANUFACTURING COMPANY

Statement of Cost of Goods Sold
For the Month Ended June 31, 2017

Direct Materials Used:

Raw Materials Inventory, beginning P50,000

Add: Net Purchases:
Purchases- Raw Materials P500,000
Less: Purchases Returns and Allowances 10,000 P490,000
P540,000
Add: Transportation In 00 000
Raw Materials Available for Use P540,000
Less: Raw Materials Inventory, end 60,000 P480,000

Direct Labor 100,000

Manufacturing Overhead 50,000

Total Manufacturing Costs P630,000

Add: Work In Process, beginning 10,000
Total Cost of Goods Placed in Process P640,000
Less: Work In Process, end 20,000
Cost of Goods Manufactured P620,000
Add: Finished Goods Inventory, Beg. 31,000
Goods Available for Sale P651,000
Less: Finished Goods Inventory, End 46,500
Cost of Goods Sold P604,500

Net Sales (975 units @ P1,000) = P975,000

Cost of Sales (975 units @ P620) = (P604,500)
Gross Profit (975 units @ P380) = P370,500
Gross Profit Rate 38%

STATEMENT OF COST OF GOODS SOLD

Merchandising Company
Merchandise Inventory, Beg. Pxx
Add: Net Purchases xx
Goods Available for Sale Pxx
Less: Merchandise Inventory, end xx
Cost of Goods Sold Pxx

Manufacturing Company
Finished Goods Inventory, Beg. Pxx
Add: Cost of Goods Manufactured xx
Goods Available for Sale Pxx
Less: Finished Goods Inventory, End xx
Cost of Goods Sold Pxx
THIS WILL SERVE AS YOUR ACTIVITY, TO BE SUBMITTED ON SEPTEMBER 03, 2019

Case 2. Cost of Goods Manufactured and Sold. Multiple Products (With Journal Entries)

Mutobo Bakery is producing various bakery products such as pandesal, monay, banana bread, kababayan, and
pan de coco.
In its second month of operation, June 2017, the following summarized transactions were recorded:

TRANSACTIONS:
1. Total purchase of materials during the month on account, P100,000.
2. Return some materials due to defects, costing P5,000.
3. Cost of picking up of some materials, P2,400 pain in cash.
4. Total payroll for the month:

FACTORY FACTORY SALES OFFICE TOTAL

Direct Labor Indirect Department Management
Salaries and Wages P19,800 P7,000 P16,000 P14,000 ?
Deductions:
Withholding tax 1,700 300 1,200 1,200 ?
SSS premium 900 100 600 600 ?
Philhealth premium 350 50 300 300 ?
Pag-IBIG premium 200 50 175 175 ?
Total Deductions 3,150 500 2,275 2,275 ?
NET PAY ? ? ? ? ?

5. Employee’s fringe benefits

The employer’s share in the SSS, Philhealth, Pag-IBIG contributions are as follows:

SSS PhilHealth Pag-IBIG Total

Factory 1,600 500 300 ?
Sales 900 300 240 ?
Office 700 200 60 ?
Total ? ? ? ?

6. Payment of various expenses:

Factory Supplies P3,000
Factory repairs 2,000
Factory light, power and water 5,000
Other Factory expenses 5,000

7. Provision for depreciation expense in the factory:

Factory building P22,000
Machinery and equipment-factory 16,000

8. Total sales for the month, P300,000. (P200,000 is on credit)

9. Sales returned by customers on account, amounted P11,000.
10. The physical count of inventories showed the ff. information:
Beginning Ending
Raw materials P17,000 P12,000
Work in process 20,000 25,000
Finished goods 11,000 18,000

Required:
1. Prepare journal entries of each transaction above.
2. Prepare the Statement of Cost of Goods Manufactured
3. Closing entry method.
4. Income Statement. (32% tax rate)