The Cía. Manufacturera de Plásticos SA produces toys through the Production Order Cost System, based on absorbing historical costs. It has several productive departments to manufacture toys. The operations of a cost period are as follows:
At the beginning of January 2001, the opening balances are shown in the following Trial Balance:
| Bill |
Balances |
|
|
Debtor |
Creditor |
| Banks |
700,000.00 |
|
| Raw material warehouse |
250,000.00 |
|
| Production in process |
150,000.00 |
|
| Machinery and equipment |
1,200,000.00 |
|
| Deprec. Accum. Of maq. And team |
|
300,000.00 |
| Providers |
|
450,000.00 |
| Social capital |
|
1,500,000.00 |
| Utilities to be applied |
|
50,000.00 |
| Sums |
2,300,000.00 |
2,300,000.00 |
- The analysis of the warehouse of raw materials and production in process is as follows:
| Raw Materials Warehouse |
|
|
|
| Plastic raw materials |
10,000 kg |
A $ 20.00 each |
$ 200,000.00 |
| Metallic raw materials |
5,000 kg. |
A $ 10.00 each |
$ 50,000.00 |
|
|
Total |
$ 250,000.00 |
| Production in process |
(manufacturing stage order) |
|
|
| Order 210 Electric Trains |
|
|
|
| Direct raw material |
100,000.00 |
|
|
| Direct labor |
20,000.00 |
|
|
| Indirect manufacturing charges |
30,000.00 |
|
|
| Total |
150,000.00 |
|
|
- $ 550,000.00 of raw materials are purchased from local suppliers as follows:
| Raw Materials Warehouse |
|
|
|
| Plastic raw materials |
20,000 kg |
A $ 20.00 each |
$ 400,000.00 |
| Metallic raw materials |
15,000 kg. |
A $ 10.00 each |
$ 150,000.00 |
|
|
Total |
$ 550,000.00 |
- Defective metal raw materials returned for 2000 kg. At $ 10.00 = $ 20,000.00 In the period direct raw materials are consumed according to concentrations of exit vouchers as follows:
| Order 210 |
Electric trains |
|
|
|
| Metallic raw materials |
3000 kg |
A $ 10.00 |
$ 30,000.00 |
30,000.00 |
| Order 211 |
dolls |
|
|
|
| Mat. Plastic Premiums |
15000 kg |
A $ 20.00 |
$ 300,000.00 |
|
| Mat. Metal premiums |
4000 kg |
A $ 10.00 |
$ 40,000.00 |
340,000.00 |
| Order 212 |
Parlor games |
|
|
|
| Mat. Plastic premiums |
10,000 kg |
A $ 20.00 |
$ 200,000.00 |
|
| Mat. Metal premiums |
8000 kg |
A $ 10.00 |
$ 80,000.00 |
280,000.00 |
|
Total mat. Direct premiums consumed |
|
|
650,000.00 |
- The payroll for the month for paid labor amounts to $ 250,000.00. The application of direct labor according to reports of concentration of time worked is as follows:
| Order |
HRS DIR |
FEE X HR |
Total |
|
| 210 Electric trains |
5000 |
6 |
30,000 |
|
| 211 Dolls |
15000 |
6 |
90000 |
|
| 212 Living room set |
10000 |
6 |
60000 |
|
| Totals |
30000 hrs |
|
$ 180,000.00 |
|
- According to the same concentration of time worked, salaries for indirect labor matter the amount of $ 70,000.00 The application of predetermined indirect charges is made through a predetermined quota that is generally paid based on hours of direct labor with the formula:
Default charges quota = charges in. Defaults / total hrs. From MOD.
Default indirect charge fee = 225,000 / 30,000hrs = 7.50
| Order |
Hrs. MOD |
Quota of c.ind. pred |
Default CI |
| 210 |
5000 |
7.50 |
$ 37500.00 |
| 211 |
15000 |
7.50 |
112,500.00 |
| 212 |
10000 |
7.50 |
75,000.00 |
|
30000 hrs |
|
$ 225,000.00 |
- Indirect charges for manufacturing expenses incurred and paid during the cost period are $ 150,000.00 Depreciation of machinery and equipment at 10% per year imports $ 10,000.00 per month. During the month production orders 210 and 211 were completed. Finished toys are sold for orders 210 and 211 as follows:
| Order |
|
|
| 210 |
Electric trains |
375,000.00 |
| 211 |
dolls |
800,000.00 |
|
|
1,175,000.00 |
- The cost of sales of the previous orders is recorded The distribution costs of the period amount to $ 260,000.00
| Distribution costs |
150,000.00 |
| Administration costs |
100,000.00 |
| Financing costs |
10,000.00 |
- Records are made for the following provisions:
| Provis. For ISR |
38750 |
| Provis. For Part. Of workers in the utilities |
6250 |
|
45000 |
Required: Journal entries to reflect the activities of the cost period.
Financial statements: Production costs and income statement.
| Seat |
Concept |
Partial |
Should |
To have |
| TO |
Banks |
|
700,000.00 |
|
|
Raw material warehouse |
250,000.00 |
|
|
Plastic MP |
200,000.00 |
|
|
|
Metallic MP |
50,000.00 |
|
|
|
Production in process |
150,000.00 |
|
|
order 210 |
150,000.00 |
|
|
|
Machinery and equipment |
1,200,000.00 |
|
|
Machinery and equipment depreciation |
300,000.00 |
|
Providers |
|
|
450,000.00 |
|
Social capital |
|
|
1,500,000.00 |
|
Utilities to be applied |
|
50,000.00 |
| = |
Beginning balance record |
|
|
| one |
Raw material warehouse |
550,000.00 |
|
|
Plastic MP |
400,000.00 |
|
|
|
Metallic MP |
150,000.00 |
|
|
|
Providers |
|
|
550,000.00 |
| = |
Mat purchase record. Cousin |
|
| two |
Providers |
|
20,000.00 |
|
|
Raw material warehouse |
|
20,000.00 |
|
Metallic MP |
20,000.00 |
|
|
| = |
Mat return record. Defective premium |
| 3 |
Production in process |
650,000.00 |
|
|
order 210 |
30,000.00 |
|
|
|
order 211 |
340,000.00 |
|
|
|
order 212 |
40,000.00 |
|
|
|
Raw material warehouse |
|
650,000.00 |
|
Metallic MP |
150,000.00 |
|
|
|
Plastic MP |
500,000.00 |
|
|
| = |
MP Consumed Record |
|
|
| 4 |
MO |
|
250,000.00 |
|
|
Banks |
|
|
250,000.00 |
| = |
Registration of MO payroll |
|
| 5 |
Production in process |
180,000.00 |
|
|
Order 210 |
30,000.00 |
|
|
|
Order 211 |
90,000.00 |
|
|
|
Order 212 |
60,000.00 |
|
|
|
MO |
|
|
180,000.00 |
| = |
Payroll payment record |
|
|
| 6 |
CI |
|
70,000.00 |
|
|
MO |
|
|
70,000.00 |
| = |
MOI registration |
|
|
| 7 |
Production in process |
225,000.00 |
|
|
order 210 |
37,500.00 |
|
|
|
order 211 |
112,500.00 |
|
|
|
order 212 |
75,000.00 |
|
|
|
Applied ICs |
|
|
225,000.00 |
| = |
Default CI registration |
|
| 8 |
CI |
|
150,000.00 |
|
|
Banks |
|
|
150,000.00 |
| = |
CI registration |
|
|
| 9 |
CI |
|
10,000.00 |
|
|
Dep. Of machinery and equipment |
|
10,000.00 |
| = |
Depreciation record |
|
|
| 10 |
Warehouse of finished items |
790,000.00 |
|
| 10 |
Production in process |
|
790,000.00 |
|
order 210 |
247,500.00 |
|
|
|
order 211 |
542,500.00 |
|
|
| = |
|
|
|
|
|
registration of orders 210 and 211 completed |
|
| eleven |
sales |
|
|
1,175,000.00 |
|
VAT payable |
|
|
176,250.00 |
|
banks |
|
1,351,250.00 |
|
| = |
Sales |
|
|
|
| 12 |
Sales cost |
790,000.00 |
|
|
Warehouse of finished items |
790,000.00 |
| = |
Cost of sales record |
|
|
| 13 |
distribution cost |
150,000.00 |
|
|
administration cost |
100,000.00 |
|
|
financing cost |
10,000.00 |
|
|
banks |
|
|
260,000.00 |
| = |
Cost record |
|
|
| 14 |
distribution costs |
45,000.00 |
|
|
prov. For ISR |
|
38,750.00 |
|
prov. For part. Of the trab. In the utilities |
6,250.00 |
| = |
Record of provisions of the month |
|
| fifteen |
Low or over-absorbed IQ |
230,000.00 |
|
|
CI |
|
|
230,000.00 |
| = |
Low or over-absorbed IQ record |
|
| 16 |
Applied ICs |
|
225,000.00 |
|
|
Low or over-absorbed IQ |
|
225,000.00 |
| = |
Low or over-absorbed IQ record |
|
| 17 |
Sales cost |
5,000.00 |
|
|
Low or over-absorbed IQ |
|
5,000.00 |
| = |
Low or over-absorbed IQ record |
|
|
|
|
|
|
| EQUAL SUMS. |
3,225,000.00 |
8,101,250.00 |
8,101,250.00 |
|
|
|
|
|
Inc. Manufacturera de Plásticos SA de CV
Statement of production and sales costs
For the period from January 1 to January 31, 2001
|
Initial inventory of production in process |
|
|
150,000.00 |
| Plus |
Direct raw materials consumed: |
|
|
|
|
Inv. Initial raw materials |
250,000.00 |
|
|
| Plus |
Net purchases of raw materials |
530,000.00 |
|
|
| Partial |
|
780,000.00 |
|
|
| Less |
Final raw materials inv. |
130,000.00 |
650,000.00 |
|
| Plus |
Direct labor employed |
|
180,000.00 |
|
| Plus |
IC incurred: |
|
|
|
|
Applied ICs |
225,000.00 |
|
|
|
Low or over-absorbed IQ |
5,000.00 |
230,000.00 |
|
|
Production cost incurred in the period |
|
|
1,060,000.00 |
|
Total production cost |
|
|
1,210,000.00 |
| Less
|
Inv. End of production in process |
|
|
415,000.00 |
| = |
Cost of finished production |
|
|
795,000.00 |
| Plus |
Inv. Initial production finished |
|
|
0 |
| = |
Cost of finished production available |
|
|
795,000.00 |
| Less |
Inv. End of finished production |
|
|
0 |
| = |
PRODUCTION COST SOLD IN THE PERIOD |
|
|
795,000.00 |
Inc. Manufacturera de Plásticos SA
Income statement for the period from January 1 to 31, 2001.
|
Net sales |
1,175,000.00 |
|
| Less |
Sales cost |
795,000.00 |
|
| = |
Gross profit |
380,000.00 |
|
| Less |
Distribution Cost |
195,000.00 |
|
|
Administration cost |
100,000.00 |
|
|
Financing cost |
10,000.00 |
|
|
Net profit for the period |
75,000.00 |
|
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