Cost accounting.pdf

COST ACCOUNTING JOB ORDER COSTING THEORIES: 1. Which of the following manufacturers would most likely use for Job-order costing? a. Chemical Manufacturers b. Custom-furniture manufacturer c. Micr...

COST ACCOUNTING JOB ORDER COSTING THEORIES: 1. Which of the following manufacturers would most likely use for Job-order costing? a. Chemical Manufacturers b. Custom-furniture manufacturer c. Microchip processors d. Gasoline refiners 2. Walker Corporation, which manufactures watches according to designs and specifications of customers, uses a job order cost system. In May, it completed 500 pieces of Job “Star" at cost per unit of P500 for direct materials and P400 for direct labor. Factory overhead is applied at 100% of direct labor cost. Job "Star" suffered 50 defectives units (normal occurrence) which were reworked at a labor cost of P100 par unit in addition to the predetermined factory overhead. Walker treats normal defective work as part of the predetermined factory overhead rate. What was the total cost of work on the defective units, and what account was charged for this? a. P5,000 factory overhead control c. P10,000 to factory overhead b. P5,000 work in process control d. control d. P10,000 to work in process 3. In a job order cost system, the use of direct materials previously purchased usually is recorded as increase in a. Work in process control c. Factory overhead control b. Materials and supplies control d. Remote control 4. The following transactions of Earth Company which started production this month, using perpetual inventory system: a. Purchased raw materials on account, P56,700 b. Requisitioned raw material for production as follows: direct materials 85% of total raw used; indirect materials 15% of total c. Direct labor wages of P33,100 are accrued as are indirect labor wages of P12,500. d. Overhead incurred and paid for P66,900. e. Overhead is applied to production based on 110% of direct labor cost. f. Goods costing P114,870 were completed during the period. g. Goods costing P51,320 were sold on account for P77,600. What is the entry to record the requisitioned of raw materials? a. Work in process 43,560 Manufacturing overhead control 8,005  Raw materials inventory 53,365 b. Work in process 43,560 Manufacturing overhead control 8,005 Raw materials inventory 45,360 Manufacturing overhead applied 8,005 c. Direct materials 43,560 Manufacturing overhead control 8,005 Raw materials inventory 53,365 d. Work in process Raw materials inventory 5. Irene uses the job order costing system. Factory overhead is applied to production at a redetermined rate of 150% of direct labor cost. Any over and under applied factory overhead is closed to cost of goods sold account at the end of the month. Additional information is available as follows: In process, beginning: Direct materials 20,000 Direct labor 10,000 Applied factory overhead 15,000 Job 102, 103, and 104 were started during December. Direct materials requisitions fot the month of December totaled P130,000; direct labor costs amounted to P100,000 was incurred for December and the actual factory overhead amounted to P160,000. The only job still in process of December was Job 104, with costs of P14,000 for direct materials and P9,000 for direct labor. Which of the following is incorrect? a. The underapplied overhead was P10,000 and will be credited to cost of goods sold b. The total cost of goods manufactured was P388,500 c. The applied factory overhead for the month of December was P150,000 d. The work in process ending inventory was P23,000 6. Overapplied overhead would result when a. Overhead costs budgeted for the period exceeds actual overhead incurred b. Overhead applied to production exceeds actual overhead cost incurred c. The plant operated at a fewer hours than were budgeted d. Actual overhead costs incurred exceed overhead applied to 7. All of the following would most likely use a job-order costing system except; a. A dental practice b. An auto repair shop c. An architectural firm d. A small appliance maker 8. When JIT manufacturing is used, which of the following costs is considered an indirect product cost?  a. The cost to set up cell equipment b. Property taxes on the plant c. The cost of maintenance on equipment d. Salary of the cell supervisor 9. Which of the following statements about materials is false? a. The use of indirect materials gives rise to a credit to Manufacturing Supplies Inventory b. Acquisitions of materials are normally charged to the Purchases account c. The use of indirect materials gives rise to a debit to Manufacturing Overhead. d. The use of direct materials gives rise to a debit to Work-in-Process Inventory 10. Which of the following is not charged to work-in-process in a normal cost system? a. Actual direct materials b. Estimated indirect labor c. Actual direct labor d. Actual Overhead 11. Which of the following product cost would be charged to work-in-process assuming a standard costing system? a. Actual direct materials b. Actual Overhead costs c. Actual direct labor d. Applied Overhead costs 12. Equivalent units of production are equal to the: a. Number of whole units that could have been completed if all work of the period had been used to produce whole units b. Identifiable units existing at the end of the period in a production department c. Number of units worked on during the period by a production department d. Units completed by a production department in the period PROBLEMS: 1. Suits Inc. is a manufacturing company engaged in the production of a single special product known as“Marvel.” Production costs are accumulated with the use of a job-order-cost system. The following information is available as of June 1, 2011: Work-in-process P10,710 Direct materials inventory 48,600 In analyzing the job-order cost sheets, the records disclosed that the composition of the work-in- process inventory on June 1,2011 were as follows: Direct materials used P 3,960 Direct labor (900 hours) 4,500 Factory overhead applied 2,250  P10,710 The following manufacturing activity occurred during the month of June 2011: - Purchased direct materials costing P60,000. - Direct labor worked 9,900 hours at P5 per hour. - Factory overhead of P2.50 per direct labor hour was applied to production. - At the end of June 2011, the following information was gathered in connection with the inventories: Inventory of work-in-process: Direct materials used P12,960 Direct labor (1,500 hour s) 7,500 Factory overhead applied 3,750 P24,210 Inventory of direct material P51,000 What is the cost of goods manufactured? a. PI08,6 b. P131,85 c. P142,56 d. P118,350 2. Lori Manufacturing Company uses process costing in accounting for its production department, which uses two raw materials. Materials XX is added at the beginning of the process. Normal spoilage units amount to 5% of the good output. The company records contain the following information for October 2013: Material XX P26,740 Material Yy 19,000 Direct labor cost 75,160 Factory overhead cost 93,950 Transferred to finished goods 14,000 units Ending inventory,95% complete 4,000 units What is the number of abnormal lost units? a. 1,400 units b. 700 units c. 900 units d. 1,100 units 3. UNC Inc. applies factory overhead as follows: The following additional data are provided: - The actual factory overhead expenses for the period/is P100,000. - The ending balances of the inventories and cost of goods sold after the application of overhead are as follows: Rawmaterials, P200,000; Work in process, P100,000,Finished Goods, P400,000; Cost of goods sold, P500,000. - The over/(under) applied overhead during the period is considered material if at least 30% of actual factory overhead. What is the adjusted cost of goods sold after closing the under/(over) application of factory overhead? a. P460,000 b. P540,000 c. P483,333 d. P480,000 4. Maia uses the job order costing system. Factory overhead is applied to production at a predetermined rate of 150% of direct labor cost. Any over and under applied factory overhead is closed to the cost of goods sold account at the end of the month. Additional information is available as follows: Direct materials 4,000 Direct labor 2,000 Applied factory overhead 3,000 Job 102, 103, and 104 were started during February. Direct materials requisitions fot the month of February totaled P26,000; Direct labor costs of P20,000 was incurred for February Actual factory overhead amounted to P32,000 for February. The only job still in process on February was Job 104, with costs of P2,800 for direct materials and P1,800 for direct labor. What is the cost of goods manufactured? a. 77,700 c. 9,700 b. 78,000 d. 85,000 5. The Pearl Company manufactures product W. One order from the ABC Company for 2,000 units showed the following costs per unit: direct materials, P3.50; direct labor P1.25; and factory overhead at 140% of direct labor cost if defective work is charged to the job, 150% if it is not.  Final Inspection revealed that 100 of the units were improperly manufactured. These units were disassembled, and properly manufactured. The per unit cost correcting the defective products consists of P0.15 for materials, P0.25 for direct labor; and factory overhead at the predetermined rate. The cost per unit produced assuming that the rework is attributed to internal failure. a. 6.82500 c. 6.6250 b. 6.5375 d. 7.4000 6. The following information for Cedric Company during March: Accounts payable, March 1 P36,000 Work in process, March 1 180,000 Finished goods, March 1 300,000 Materials, March 31 90,000 Accounts payable, March 31 60,000 Finished goods, March 31 360,000 Actual factory overhead for March 900,000 Cost of goods sold 1,800,000 Payment of accounts payable 210,000 (account is used for materials only) Factory overhead is applied at 200% of direct labor cost. Jobs still in process on March 31 have been charged P36,000 for materials ant P72,000 for direct labor (3,000 hours). Actual direct labor hours 60,000 at P6 per hour. Compute for the materials inventory on March 1, 2023 a. P204,000 c. 234,000 b. 348,000 d. 408,000 7. The following information are available: A. Opening inventory 4,000 units % of completion Value Material all P1,992 Labor 50% 1,074 Overhead 50% 846 B. Put in process 20,000 units Material 12,000 Labor 9,894 Overhead (100% of direct labor) C. Units completed and transferred to stock 27,000 units D. In process, end 3,000 units Materials all Labor and overhead 60% What is the total cost of work in process at the end under average method? a. 3,528 b. 3,477 c. 3,577 d. 3,500 8. OLYMPIA Company manufactures mobile device outer casings. During the year just ended, the company incurred prime cost of P3,000,000 and conversion costs of P3,600,000 Overhead applied at the rate of 200% of direct labor cost. How much of the above costs represent material costs? a. P1.800,000 b. P600,000 c. P3,000,000 d. P1,200,000 9. NOP Company's Job 921 manufactured 13,750 units that was completed in August at unit costs presented as follows: Direct materials P50 Direct labor 45 Factory overhead (includes an allowance of P2.50 for spoiled work) 45 Final inspection of Job 921 disclosed 1,250 spoiled units which were sold for P37,500 What would be the unit cost of good units if the spoilage loss is attributable to exacting specifications of Job 921? a. P140 c. 137.50 b. P143.75 d. 148.25 10. Ziffel Company had the following account balances and results from operations for the month of July: direct materials consumed, P10.400; direct labor, P5.000; factory overhead, P8,800; July 1, work in process Inventory, P2,400; July 31, work in process inventory, P1,800; finished goods inventory, July 1, P1,200; finished goods inventory, July 31, P1,000. The total manufacturing cost for the month of July was/The cost of goods sold was: a. P26, 600 c. P27,200 b. P28,000 d. P27,800 11. Jean Smith knows the following about the production process in her plant: Department 1: Prime costs are 40% of the total manufacturing cost. Direct labor is 25% of the factory overhead costs. Factory overhead is P500,000. What is the direct labor cost? a. 225,000 c. 450,000 b. 300,000 d. 150,000 What is the total direct material cost? a. P150,000 c. P400,000 b. P250,000 d. P1,000,000 12. 13. Hershel Inc. applies factory overhead to production at 75% of labor cost. The following data are drawn from the company records. During the month of May 2013, what is the aggregate cost of materials purchased? a. P146,400 c. 144,000 b. 142,400 d. 178,400 14. NNN Machine Shop manufactures lifting equipment. One order from OOO Company for 3,000 lifting equipment showed the following cost per unit: materials P3.50 Labor P2; fon applied at 150% of direct labor cost (125% in cases in which any defective unit costs are to be charged to specific order or a 25% allowance for reworking defective units). Final inspection showed that 250 units were not properly produced. Correction of each defective unit requires P0.35 for materiais, P0.40 for labor and FOH at appropriate rate. Assuming defective units are the result of internal failure, how much is the unit cost for each unit manufactured? a. P8.50 c. P8.61 b. P8.00 d. P8. 15. Superhuman Co. provided the following data: Superhuman do not typically expect spoilage in its production process. On job 312, the cost of the spoiled units is P52,200 but the disposal value of these units were determined to be P24,000 and P17,000 were found to be abnormal cost of spoilage. How much is the total cost of good units? a. P1,606,000 b. 1,817,800 16. The GUMAMELA Corporation, engaged in a manufacturing business, uses process costing and gave us the following data from different situations. Stages of completion of inventories apply to all cost elements A. Started in process, 6,500 units; transferred 5,500 units; In process, 400 units, 50% completed and 600 units 25% completed.  B. Beginning Inventory, 6,250 units, 40% completed; started in process, 25,000 units; transferred 26,250 units; in process at the end of the period, 3,000 units, 50% completed and 2,000 units, 25% completed; C. Beginning inventory, 6,000 units, 30% completed; started in process, 13,000 units, lost in processing, 500 units from production started this period (loss was normal and occurred throughout the production process), transferred 14,000 units; in process at the end of period, 3,000 units, 50% completed and 1,500 units, 75% completed. What is the equivalent units of production using average method in Situation No. 1? a. 5,850 c. 5,508 b. 5,580 d. 5,085 13. (GUMAMELA Corporation) What is the equivalent units of production using average method in Situation No. 2? a. 28,250 c. 28,025 b. 25,580 d. 22,850 14. (GUMAMELA Corporation) What is the equivalent units of production using FIFO method in Situation No. 3? a. 15,428 c. 16,625 b. 14,825 d. 18,425 15. ST. THERESE Machine Shop manufactures lifting equipment. One order from ORLANDO Company for 3,000 lifting equipment showed the following costs per unit: materials P3.50, labor P2.00, FOH applied at 150% of direct labor cost (125% in cases which any defective units costs are to be charged to a specific order or 25% allowance for reworking defective units) Final inspection showed that 250 units were not properly produced. Correction of each defective unit requires P0.35 or materials, P0.40 of labor and FOH applied at appropriate rate. Assuming the defective units are the result of an internal failure, how much is the unit cost for each unit manufactures? a. P8.61 b. P8.10 c. P8.50 d. P8.00 16. Jam Company uses a job order costing system and the following information is available from its records. The company has three jobs in process: #4, #7, and #11. Direct materials were requisitioned as follows for each job respectively: 30%, 25%, and 25%; the balance of the requisitions was considered indirect. Direct labor hours per job are 2,500, 3,100; and 1,200; respectively. Indirect labor is P33,000. Other actual overhead costs totaled P36,000. If Job #11 is completed and transferred, what is the balance of the Work in Process Inventory at the end of the period if overhead is applied at the end of the period?  a. P96,700 b. P99,020 c. P170,720 d. P139,540 17. Glenn Manufacturing Co. started 150 units in process on Job Order No. 13. The prime costs placed in process consisted of P30,00 and P18,000 for materials and direct labor, respectively, and predetermined rate was used to charged factory overhead to production at 133 1/3% of the direct labor cost. Upon completion of the job order, units equal to 20% of the good output were rejected for failing to meet strict quality standard. The company sells rejected unit as scrap at only 1/3 of production cost, and bills costumers at 150% of production cost, If the rejected units were ascribed to company failure the billing price of Job Order No. 13 would be a. P86,400 b. P90,000 c. P102,000 d. P108,000 18. The work in process account of MARCELINE Company which uses a job order cost system follows: Overhead is applied to production at a predetermined rate based on direct labor cost. The work-in-process on April 30 represents the cost of Job 456, which have been charged with direct labor cost of P3,000 and Job 789 which have been charged with applied overhead of P2,400. The cost of direct materials charged to Job 456 and 789 a. P8,700 b. P4,200 c. P4,500 d. 7,500 19. PINOY Corp. uses job order cost system, and relevant data for the month of May 2014 are summarized The closing work in process include Job #12 with direct labor cost of P12,000 abd Job #15 with overhead applied of P9,600 What is the total cost of materials included in the closing work in process? a. P16,800 b.P30,000 c. P34,800 d. P36,000 20. PBC Company’s Job 004 manufactured 13,750 units that was completed in February at a unit cost presented as follows: Direct materials P300 Direct labor 270  Factory overhead (includes an allowance of P15 spoiled work) 270 Final inspection of Job 004 disclosed 1,250 spoiled units which were sold for P225,000. What would be the unit cost of good untis if the spoilage lss is attributable to exacting specifications of Job 004? a. P840 b. P889.50 c. P825 d. P862.50 21. The following selected information pertains to AJAX Processing Co.: direct materials, P62,500; indirect materials, P12,500; factory payroll, P75,00 of direct labor and P11,250 of indirect labor, and other factory overhead incurred, P37,500 What is the total conversion cost? a. P136,250 b. P137,500 c. P250,000 d. P273,750 22. The following information pertains to SIGMA Company for September Direct Materials Direct Labor Overhead Job 323 3,200 4,500 Job 325 5,000 Job 401 P5,670 550 SIGMA applies overhead for Job 323 at 140% of direct labor cost and 150% of direct labor for Jobs 325 and 401. The total cost of Jobs 323 and 325 is identical. Assume that Jobs 323 and 401 are incomplete at the end of September, what is the balance in Work in Process at that time? a. P30,120 b. P22,620 c. P18,920 d, P28,920 23. The following information refers to Job No. 0323 which is being carried out only by CHICKEN FEET CO. …. meet a customer order: Assembly Painting Direct materials consumed P5,000 P3,000 Direct labor rate per hour 4 5 Production overhead per direct labot hour 4 4 Direct labor hours employed 400 200 Administrative and other overhead costs 20% of full production cost Profit markup 25% of selling price 24. What os the selling price to the customer of Job No. 0323? a. P16.520 b. P17,333 c. P19,800 d. P20,800 25. During October 2015, YUMYUM CO, put 60,000 worth of raw materials in process. The filtering Dept used 4,600 labor hours at P6.00 an hour while the Finishing Deptused 8,000 labor hours at P5.60 an hour. Factory overhead was applied at P8.00 per labor hour in the Filtering Dept and P6.00 per labor hour in Finishing Department. Inventories were The total cost of goods sold was a. P108,000 b. P214,600 c. P217,200 d. P219,600 64. Selected cost data (in thousands) concerning the past fiscal year operations of Moscow Manufacturing Company are presented below. Inventories Beginning Ending Materials P75 P85 Work in process 80 30 Finished goods 90 110 Materials used, P326 Total manufacturing costs charged to production during the year (including direct materials, direct labor and factory overhead applied at a rate of 60% of direct labor cost), P686 Selling and general expenses, P25 The total cost of goods manufactured during the year was: a. 776 b. 736 c. 716 d. 636 65. For Job Order No. 1208, CANNON Company incurred the following costs for the manufacure of 200 units of novelty gadget: Original cost accumulation: Direct materials P13,200 Direct labor 16,000 Factory overhead 24,000 Total P53,200 Direct cost of ten reworked units: Direct materials P2,000 Direct labor 3,200 Total P5,200 The rework cost was attributed to exacting specifications required by the job and was charged to the specific order. The unit cost of Job Order Np. 369 is: a. 266 b. 280 c. 292 d. 316 66. The following information pertains to Gamma Company for September 2015. Gamma Company applies overhead for Job#323 at 140 percent of direct labor cost and at 150 percent of direct labor cost for Jobs# 325 and 401. The total cost of Jobs #323 and #325 is identical. Assume that Jobs #323 and #401 are incomplete at the end of September. What is the balance of the Work in Process Inventory at that time? a. P22,620 b. P30,120 c. P18,920 d. P28,920 NOTE: check whether C/D ang correct answer 67. Rick Company manufactures custom cabinets for modular and prefabricated housing companies During the current period, an order of 1,000 custom cabinets was begun on Job 808 for Carl Housing Corporation. Custom Jobs are mark up to 150% of cost Total cost charged to Job No. 808 are: Materials P92,000 Labor (3,000 hours @12/hour) 36,000 Factory overhead (P24, per labor hour) 72.000 Total cost charged to Job 808 2200.000 On inspection, 100 of the cabinets were found to have defects. Materials costing P4 and 30 minutes of labor are required to correct each defective unit. Factory overhead is charged to production on the basis of direct labor hours. What is the unit cost, assuming that: (1) the defective units are the result of an-internal failure and (2) the defective units are the result of change in design specified by the customers after the units are completed? a. P200 and P202.20 b. P202.20 and 202.20 c. P202.20 and P200 d. P200 and P200 Question sa quiz 1: What is the gross profit per unit, (1) the defective units are the result of an-internal failure and (2) the defective units are the result of change in design specified by the customers after the units are completed? a. 100 and P101.10 b. P 202.20 and P200 c. P101.10 and P100 d. P200 and P202.20 68. J. D. Doonesbury Company manufactures tools to customer specifications. The following data pertain to Job 1501 for April: Direct materials used P4,200 Direct labor hours worked 300 Direct labor rate (per hour) P8.00 Machine hours used 200 Applied factory overhead rate per machine hour P15.00 What is the total manufacturing cost recorded on Job 1501 for April? a. 10,300 b. 11,100 c. 9,600 d. 5,400 69. The Waltkins Company estimated Department A’s overhead ar P225,000 for the period based on estimated volume of 100,000 direct labor hours. At the end of the period, the factory overhead control account for Department A has a balance of P265,500; actual direct labor hours were 105,000. What was the over or underappliedd overhead for the period? a. 2,250 b. (2,250) c. 15,000 d. (15,000) PROCESS COSTING 1. Examview Company uses average costing method and adds materials at the start the production in the Mixing Department. Data related to materials in August are as follows: Units Work in process, August 1 2,150 Started in August 10,850 Completed and transferred out 10,000 Abnormal lost units 25 Work in process, August 31 2,975 Cost Data: Materials in beginning WIP inventory P60,000 Cost of materials added during the month 304,000 Using this data, what is the entry to record the costs related to the units of abnormal loss (ignore labor and overhead transferred costs)? a. Loss from Abnormal Spoilage 700 Work in process - Mixing Dept. 700  b. Manufacturing Overhead Control 850 Work in process - Mixing Dept. 850 c. Manufacturing Overhead Control 700 Work in process - Mixing Dept. 700 d. Loss from Abnormal Spoilage 850 Work in process - Mixing Dept. 850\ 2. Dong Abay had the following production for the month of March: Units Work in process at March 31 3,000 Work in process at March 1 2,000 Started in Progress during March 8,000 Abnormal Spilage incurred 400 Materials are added at the beginning of the process. As to conversion costs, the beginning work in process was 70% completed, and the ending work in process was 60% completed. Spoilage is detected at the end of the process. Using the weighted average method, the equivalent units for June with respect to conversion were: a. 10,000 b. 8,400 c. 8,800 d. 9,000 3. ULTRA Inc. makes a product in two manufacturing processes. Cutting and Fitting. The product is cut out precious stones, and then fitted with additional materials. A process cost system using average cost is used. Relevant data for the Cutting Department for October follow: Beginning Inventory Added this Period Cost charged to department Materials 4,120 44,880 Direct Labor 522 12,638 Factory overhead 961 18,779 During October 9, 200 units were transferred to Fitting Department. The Cutting Department had 1,000 units in process at the end of Septemer and 800 units still in process at the end of October. The opening inventory is complete as to materials but only 40% converted. While closing inventory had 75% materials only 25% converted. Per equivalent unit, the average cost in Cutting Department for October is: a. P6.4 b. P8.50 c. P9.50 d. P8.40 4. JESS Company has a Mixing Department and a Refining Department. Its process costing system in the Mixing Department has two direct materials categories (Material AA and Material BB) and conversion cost pool. The company uses the FIFO method. The following data pertain to the Mixing Department for May 2012. Material AA Is introduced at the start of operations in the Mixing Department and Material BB is added when the product is 3/4 completed in the Mixing Department. Conversion costs are added uniformly during the process. What is the cost of units completed in Mixing Department? a. P2,700,000 b. P3,101,000 c. P3,861,500 d. P3,200,000 5. The Wiring Department is the second stage on LOWBAT Corporation's production cycle. On May 1, the BWIP contained 25,000 units which were (60% complete as to conversion costs. During May, 100,000 units were transferred -in from the first stage of LOWBAT Corporation's production cycle. On May 31, EWIP contained 20,000 units which were 80% complete as to conversion costs. Materials added at the end of the process. What are the equivalent units of production of conversion cost in May 31 inventories? a. 100,000 b. 105,000 c. 121,000 d. 125,000 6. ZZZ Company produces wooden chairs. Three percent of normal input is expected to be spoiled in the process. Inspection occurs at the end of the process and rejected units are disposed of as scrap with no recovery cost. In recent period, the followig data were obtained. Units Total units started 1,000,000 Defective units rejected 50,000 Cost Materials P75,000 Conversion P43,000 Total P118,000  How much is the cost for the units transferred to Finished Goods during this 24 hour period, assuming no ending work in process? a. 112,100 c. 115,640 b. 118,000 d. 114,460 7. Goode Manufacturing has three producing departments in its factory. The ending inventory in the Milling Department consisted of 3,000 units. These units were 60% complete with respect to labor and factory overhead. Materials are applied at the end of the milling process. Unit costs for the complete process in the Milling Department are: materials, P1; labor, P2; and factory overhead, P3. The appropriate unit cost for each unit in the ending inventory is: a. P 3.00 c. P 6.00 b. P 2.00 d. P 5.00 8. In the Final Department of Sasha Co., materials are introduced when processing is half-done. In May 2013, charges to this department were: May 1 inventory, 15,000 units (40% done) P27,000 Received from prior department, 50,000 units 125,000, Materials added 19,500 Conversion cost 27,500 During the month, 5,000 unitsfrom May 1 inventory were spoiled when these were 80% done due to abnormal event, and 48,000 were completed and transferred to stock. Units that remained in process vere ascertained to be 75% done. What is the cost of the completed units? a. P153,900 P158,400 c. P149,400 d. P135,900 9. ZZZ Company produces wooden chairs. Three percent of normal input is expected to be spoiled in the process. Inspection occurs at the end of the process and rejected units are disposed of as scrap with no recovery cost. In recent period, the following data were obtained. How much is the cost for the units transferred to Finished Goods during this 24 hour period, assuming no ending work process? a. P 118,000 b. P 115,640  c. P 112,100 d. P 114,460 10. JVC Company makes fabric-covered hat boxes. The company began September with 500 boxes in process that were 100 percent complete as to cardboard, ⅘ complete as to cloth, ⅗ complete as to conversion costs. During the month, 3.300 boxes were started. On September 30, 350 boxes were in process (100 percent as to cardboard. 30% incomplete as to cloth, and 45% incomplete as to conversion cost) Using FIFO Method, what are the equivalent units for cloth? a. P3,395 b. 3,295 c. P3,450 d. P3,595 11. CHANGELY Inc. manufactures a product which goes through three consecutive processes: Cutting, Assembling, and Painting. Data for the month of September 2013 are as follows: What was the value of the output transferred from Painting 3 to the finished goods warehouse for the month of September 2013? a. P63,000 c. 57,000 b. 65,000 d. 69,000 12. Bly Company uses weighted-average method in its process costing sy March, Bly Company's Department Y costs per equivalent unit were Materials, P1: Conversion, P3; Transferred-In, P5. There were 4,000 complete with respect to conversion cost and 0% complete with material cost) in work-in-process at March 31. The total cost assigned to the March 31, Work in Process inventorY a. P28,800 c. P24, 800 b. P36,000 d. P27,200 13. The Trisha Clock Shop manufactures clocks on a highly automated assembly line. It's costing system uses two categories, direct materials and conversion costs. Each product must pass through the Assembly Department and Testing Department. Direct materials are added at the beginning of the production process. Conversion costs are allocated evenly throughout production Trisha Clock Shop uses weighted average costing. Data for the Assembly Department for June 2015 are: Work in process, beginning Inventory 250 units Direct materials (100% complete) Conversion costs (50% complete) Units started during June 800 units Work in process, ending inventory 150 units Direct materials (100% complete)  Conversion costs (75% complete) Cost for June 2015: Work in process, beginning inventory: Direct materials P90,000 Conversion costs P135,000 Direct materials costs added during June P400,000 Conversion costs added during June P500,000 What amount of conversion costs are assigned to the ending inventory Work in process account for June? a. P90,074 c. P70,555.50 b. P50,978.32 d. P63,225.25 Quiz 1 question: What is the direct material cost per equivalent unit during June? a. P 865.10 c. P 945.18 b. P 789.50 d. P 561.90 14. WARRIORS Company manufactures compact disks. In June 2011, production for 2,000,000 units were started. At the end of the month, the following data were gathered: Completed units 2,700,000 Defective units 400,000 In process, 1/2 complete 800,000 How many units were in process at the beginning of the month? a. 1,500,000 b. 2,300,000 c. 2,000,000 d. 1,900,000 15. Bulls Company manufactures compact disks. In June 2015, production for 2,000,000 units were started. At the end of the month, the following data were gathered Completed units 2,700,000 Defective units 400,000 In process, 1/2 complete 800,000 How many units were in process at the beginning of the month? a. 1.900,000 b. 1,500,000 c. 2,300,000 d. 2,000,000 16. Andrea Company makes fabric covered hat boxes. The company began August with 500 boxes in process that were 100% complete as to cardboard, 80% complete as to cloth, and 60% complete as to conversion cost. During the month, 3,300 boxes were started. On August 31, 350 boxes were in process (100% complete as to cardboard, 70% complete as to cloth, and 55% complete as to conversion cost). Compute the equivalent units for doth and conversion cost under Average FIFO  Cloth Conversion Cost Cloth Conversion Cost a. 3,295 3,642.50 3,695 3,642.50 b. 3,695 3,642.50 3,695 3,642.50 c. 3,295 3,342.50 3,295 3,342.50 d. 3,695 3,642.50 3,295 3,342.50 17. The Jake Department is the first of a two-stage production process. Spoilage is identified when the units have completed Jake process. Costs of spoiled units are assigned to units completed and transferred to the second department in the period spoilage is identified. The following information concerns Jake's conversion costs in May 2014: Using the average method, what was Jake's Conversion cost transferred to the second department? a. 71,250 b. 64,125 c. 59,850 d. 67,500 18. BASIC Chemical Industries, Inc. produces a product through a continuous process in different departments. Each department has an independent cost accountant who is tasked with accumulating costs and the preparation of reports for the department assigned to him. You have been assigned as cost accountant of Department A. In this department, costs are applied as follows: Materials-added at the start Labor and overhead-evenly distributed Compute the current total unit cost for material, labor, and overhead using FIFO method. a. P1.04 b. P1.25 c. P1.23 d. P1.17 19. Nature Chicken Farms raises chicks to the egg-laying stage and then moves the hens to the laying sheds. Information about the Chick Raising Operation for March is: a. Beginning inventory of chicks is 12,000, 100% complete for chicks and 20% for raising costs b. Beginning inventory costs are P129,600 for chicks and P11,530 for raising costs. c. Chicks added during March totaled 20,000. d. Costs Incurred during the month are P200,000 for chicks and P121,800 for raising cost e. Ending Inventory at March 31 consisted of 2,000 chicks, 100% complete for chicks and 70% for raising costs. Determine the cost of hens transferred to laying sheds during March. a. P26,550 b. P437,050 c. 436,300 d. 25,800 20. The cost data and production data for Beth Company for the month of August were as follows: Cost Data: Work in process, August 1: Material P52,000 Conversion cost P69,000 Cost added this month: Materials P600,000 Conversion costs P1,602,000 Production data: Work in process, August 1 (60% incomplete) 9,375 units Started in production this August 100,000 units Transferred out 90,625 units Work in process, August 31 (30% to be done) 16,250 units Normal lost units 1,375 units Abnormal lost units ? All materials are added at the start of the process and lost units are detected at the inspection point of 75% completion Using the FIFO method, what are the cost assigned to units transferred and units in ending work in process? a. P2,023,250 and P279,500 b. P2,019,125 and P283,625 c. P2,019,125 and P279,500 d. P2,023,250 and P283,625 21. Daryl Company has over applied overhead of P60,000 for the year. Before disposition of over-plied overhead, selected year-end balances from Daryl's accounting records were:  Under Daryl's accounting system, over or under applied overhead is allocated to appropriate Inventories and cost of goods sold on year-end balances. What should be reported as cost of goods sold its year-end income statement? a. 712,500 b. 787,500 c. P714,000 d. 730,000 22. (Daryl Company) In process, end is 42,400 units which are 5/8 incomplete and in process, beg is 29,250 units which are 1/3 to be completed. The units started in process are 175% of the work in process at the end. How much is the EUP for conversion under FIFO method? a. 57,450 b. 69,350 c. 67,200 d. 73,240 b. 23. In process, beg is 10, 125 units which are 3/5 work to be done. Transferred out units are 15,750. Half of the units started in process represents work in process at the end which is 20% complete. How much is the EUP for conversion under weighted average? a. 15,375 b. 17,625 c. 16,875 d. 14,950 24. The Company uses process costing in accounting its production. During the year, 55,000 units are processed however, beginning units are 8,500 units and 30% complete. At the end of the process, there were only 7,000 units left and are 35% undone. Based on the previous productions, materials are always added at the start. How much is the cost of the EUP of conversion if FIFO pethod is used? a. 2.64 b. 2.25 c. 2.50 d. 3.00 25. The cost data and production data for Beth Company for the month of August were as follows: Cost Data: Work in process, August 1: Material P52,000 Conversion cost P69,000 Cost added this month: Materials P600,000 Conversion costs P1,602,000 Production data: Work in process, August 1 (60% incomplete) 9,375 units Started in production this August 100,000 units  Transferred out 90,625 units Work in process, August 31 (30% to be done) 16,250 units Normal lost units 1,375 units Abnormal lost units ? All materials are added at the start of the process and lost units are detected at the inspection point of 75% completion What is the cost of abnormal lost units under FIFO and average, respectively? a. P24,750 and P24,800 c. P29,250 and P20,280 b. P20,250 and P20,250 d. P13,575 and P13,500 26. The cost department of WestMin Corp. operates a process cost system using the average method. Production records showed the following data for one of the three production departments. In this department, additional material is added to the units from the preceding department. Three distinctly different types of materials are used at three separate stages of production in this department. Water is added at the start of the process. Lemon is added when the process is one-fourth completed. Sugar is added when the process is three-fourth completed. Labor and overhead are incurred at a uniform rate throughout the process in this department. Examination of the unfinished work discloses that: ¼ was ⅞ complete, ½ was ½ completed, and ¼ was ⅙ completed What is the equivalent unit of production for Lemon and Sugar? a. 94,000; 88,250 c. 100,000; 100,000 b. 94,000; 82,000 d. 88,250; 82,000 27. Vita Products Company produces Dalandan Fruit Drink. The units and equivalent units (in liters), as well as unit costs, for the initial Mix Department are as follows: Materials Conversion Equivalent units in beginning work in process 6,000 1,200 Units started and completed 40,00 40,000 Equivalent units in ending work in process 3,000 1,800 Unit costs 6.50 10.50 Assuming the company uses the weighted average method. If the beginning work in process was valued at P126,000, what would be the cost of ending work in process Inventory?  a. P19,500 c. P18,900 b. P38,400 d. P51,600 28. (Vita Products Company) Assuming the company uses the FIFO method. If the beginning work in process was valued at P126,000, what would be the cost of goods completed? a. P857,600 c. P770,000 b. P644,000 d. P896,000 29. UPDATES Processors is a company that sells food processors, and it manufactures these in a single continuous processing operation. At the end of August 2014, there were 200 units on hand with a cost of P30,095 consisting of P25,200 in materials cost and P4,985 in conversion cost. These were 100% complete as to materials, and 25% complete as to conversion cost. During the month of September 2014 1,200 units were added to production cost of P168,000. Conversion cost during the month were P158,125. At the end of September 2014, the processors which have not been completed total 200 units which were 100% complete as to materials and 50% complete as to conversion cost. There were no units lost in process. What were the equivalent units of production for conversion cost for the men of September 2014 a. 1,350 units b. P1,100 units c. P1,150 units d. 1,250 units 30. Roger Company manufactures Product X in a two-stage production cycle in Dapareants A and B. Materials are added at the beginning of the process in Department B. Roger uses the averaging method. Conversion costs for Department B were 50% complete as to the 5,000 units in beginning work in process. A total of 12,000 units were completed and transferred out of Department B. during February. An analysis of the costs relating to work in process and production activity in Deartment B for February follows: Transferred in Materials Conversio Work in process, 2/1: Costs attached P12,000 P2,500 P1,000 February activity: Costs added 29,000 5,500 5,000 The total cost per equivalent unit transferred out for February of Product X, rounded to the nearest centavos was: a. P2.78 b. P2.82 c. P2.75 d. P2.05 31. LMN Company uses FIFO process costing system. The company had 5,000 units that were 60% complete as to conversion costs at the beginning of the month. The company started 72,000 units this period and had 7,000 units in ending Work in Process Inventory that were 35% complete as to conversion costs What are the equivalent units for materials, if materials are added at the beginning of the process? a. 27,000 b. 18,000 c. 22,000 d. 25,000 32. The following production information for Department B of Clipboard Product is for the month of May 2013: Received from Department A 600,000 units Completed and transferred to Department C 500,000 units Additional information: No in process beginning  In process ending is 75% complete May’s production costs total P2,760,000 What is the unit cost of production for May 2013? a. 4.80 b. 5.02 c. 4.60 d. 5.52 33. PHILEX Manufacturing Co., makes a single product in two departments. The production department for Department 2 for May 2012 follows: Quantities: In process, May 1 (40% done) 4,000 units Received from Department 1 30,000 units Completed and transferred 25,000 units In process, May 31 (60% done ) 6,000 units Materials are added at the start of the process, and losses normally occurring during the early stages of the operation. What is the cost of ending inventory using average method? a. 44,640 b. 46,800 c. 51,680 d. 45,600 22. (PHILEX Manufacturing Co) What is the cost of goods manufactured assuming FIFO method costing is used? a. 187,250 b. 193,040 c. 195,250 d. 214,040 NOTE: verify whether A/D ang right answer 23. NETGEAR Corporation manufactures only one product in which raw materials must pass through mixing, assembling, and painting process before completion. Inventories of Painting and of Finished Goods on October 1 were as follows: Painting - 1,200 units, 2/3 completed 4,200 Finished goods - 1,000 units at P3.00 per unit. During October the following transactions were completed: 2,000 units with a value of P5,000 were transferred from Assembling Direct labor applied to Painting during October was P3,100. Overhead costs for October applied to Painting were P3,200. Inventories on October 31 are as follows: Painting - 600 units 1/2 completed Finished Goods- 1,300 units Using FIFO, what is the value of ending Inventory in Painting for October 31 a. 4,200 b. 3,500 c. 5,400 d. 2,400  JOINT AND BY-PRODUCT COSTING THEORIES 1. Select the incorrect statement concerning the split-off point. a. Output may be sold at the split-off point or processed further and then sold. b. The split-off point is the point at which joint process outputs are identifiable as individual products. c. If joint output is processed beyond the split-off point & additional costs will beincurred and must beassigned to the specific products for which those costswere incurred. d. A single joint process cannot have multiple spit-off points. Select the incorrect statement concerning the accounting for byproducts and scrap a. Reducing joint cost by the NRV of the by-product/scrap is the traditional method used to account for such goods b. Regardless of whether a company uses the NRV or the realized value approach, the specific method used to account for by-product should be established before the joint cost is allocated to the joint products. c. Two common methods used to account for by-products are the NRV approach and the realized value approach. d. Under the realized value approach, the estimated selling price of the by-product is recognized prior its actual sale. 2. For purposes of allocating joint costs to joint product using the relative sales value at split-off method, the costs beyond split-off a. Do not affect the allocation of the joint costs b. Are allocated in the same manner as the joint costs c. Are deducted from the relative sales value at point of sale d. Are deducted from the sales value at the point of sale 3. 4. 1. MELROSE Company produces joint products A and B together with by-product C. A is sold at split off but B and C undergo additional processing. Production data pertaining to these products for the year ended December 31, 2012 are as follows A B C TOTAL Joint costs 1,200,000 Separable costs 435,000 56,000 491,000 Production in pounds 100,000 150,000 40,000 290,000  Sales price per pound 5.00 9.00 2.50 There are no beginning or ending inventories. No materials are spoiled in the production. Joint costs are allocated to joint products to achieve the same gross profit rate for each joint product. Net revenue from by product is deducted from joint production cost of the main product. How much is the share of B in the joint costs? a. P747,520 c. P843,658 b. P726,000 d. P430,000 2. Soni Sawmill manufactures two lumber products from a joint milling process. The two products developed are mine support braces (MSB) and unseason commercial building lumber (CBL). A standard production run incurs joint cost of P300,000 and results in 60,000 units of MSB and 90,000 units of CBL. Each MSB sells for P2 per unit and each CBL sells for P4 per unit. Assume no further processing work is done after the split off point, the amount of joint cost allocated to CBL on a physical quantity allocation basis would be: a. 120,000 b. 225,000 c. 75,000 d. 180,000 3. Edge Chemical Company produces Chemical J2 and L2. The process also yields Chemical X2. The joint costs of processing is reduced by the net realizable of X2. Joint costs for the month of August were P2.9 million. Below are additional data: An additional 120,000 were spent to complete the processing of X2. The company uses the NRV method of allocating joint costs. How much is the amount of joint cost allocated to L2? a. P840,000 b. P1,600,000 c. P1,260,000 d. P1,680,000 4. Refinery Company produces four types of oil from the same process: A, B, C, and D. Joint product costs are P70,000. If Refinery sells the products after further processing, the following disposal costs will be incurred: A, P7.50; B, P3.00; C, P10.50; D. P18.00. Using the net realizable value at split-off, what amount of joint processing cost is allocated to Product C? a. P 16,878 c. P 21,315 b. P 17,701 d. P 10,850 5. Irish Co., recovers three products from a joint process in October 2011, the joint costs amounted to P25,000. Other data follow: Products Red Blue Green Quantities 3,000 4,000 5,000 After split off cots 50,000 75,000 125,000 Ultimate market value 150,000 275,000 225,000 a. 250,000 b. 187,500 c. … d. 162,500 6. POLARIS Corp. processes materials up to the split off point, and it recovers products POL and RIS which are thereafter sold. For the month of October 2012, the following information are available: Direct materials processed: (20,000 gallons yield; 19,000 gallons of good output; and 1,000 gallons of shrinkage) Production: POL 10,000 gallons RIS 9,000 gallons Selling price: POL P500/gallon RIS P400/gallon The cost of buying 20,000 gallons of direct materials, and processing these up to the split-off point yield 19,000 gallons of good output, total P570,000. The beginning inventories were 800 gallons and 500 gallons respectively of POL and RIS; the ending inventories were 1,200 gallons and 1,300 gallons, respectively of POL and RIS. Using the volume of productiona s the basis for allocation of the joint costs, the cost assignable to RIS would be: a. P300,000 b. P285,000 c. 280,000 d. P270,000 7. Joint Products A, B, and C are produced by JNT Corporation. For the month just ended, these data are available: There were no beginning inventories, and joint cost data during the month amounted to P49 830. Using the market value method, the joint cost apportioned to Product C will be: a. 10,588 b. 13,335 c. 10,821 d. 11,385 8. Viva Co. produces three products, A, B and C. A and C are joint products while B is a by-product. No joint cost is allocated to the by-product. The production data for the year 2011 were as follows:  In Department I, 220,000 kilos of raw materials are processed at a total cost of P240,000. After processing, 60% of the units are transferred to Department II while 40% of the units (now C) are transferred to Department III. In Department II, the materials are processed further at total additional cost of P76,000. On completion of the process, 70% of the units (now A) are transferred to Department IV while the other 30% emerge as B, the by-product, which is sold at P1.20 per kilo. The selling expenses related to B amounted to P16,200. In Department III, C is processed further at total additional cost of P330,000. In this department, a normal loss units of C Occurs during processing, which is equal to 10% of the good output. The good output is sold at P12 per kilo. In Department IV, A is processed further at total additional cost of P47,320 after which it is ready for sale at P5 per kilo. Market value method is used in allocating joint costs and treating the net realizable value of by product as an addition to product A sales. How much of the total joint cost of P240,000 is allocated to product A and C, respectively? a. P101,564 and P138,436 c. P88,800 and P151, 200 b. P91,210 and P148,790 d. P95,267 and P144,743 9. GREY Company manufactures products XO and YE from joint process that also yields a vy-product, ZU. Revenue from sales of ZU is treated as reduction of joint costs. Additional information were as follows: Joint costs were allocated using the sales value at split-off What is the joint costs allocated to product YE? a. P453,600 c. P675,000 b. P378,000 d. P756,000 10. JIT & BACKFLUSH COSTING 1. The following events pertain to Brahm Beach Wear, Inc. during June 2010. a. Raw material costing P100,000 was purchased on account. b. Direct-labor costs of P65,000 were incurred, but not yet paid in cash. Actual manufacturing overhead costs of p105,000 also were incurred, but not yet paid in cash. c. Goods with raw material costs of P180,000 were finished, and conversion costs of P170,000 were applied. d. Goods costing P348,000 were sold on account for P420,000. Prepare the entry to record the number 1 transaction using backflush costing.  a. Raw and In-Process Inventory 180,000 Accounts Payable 180,000 b. Materials Inventory 180,000 Accounts Payable 180,000 c. Purchases 180,000 Accounts Payable 180,000 d. Work in Process Inventory 180,000 Accounts Payable 180,000 2. NTF provided the following information for the transaction occurred during August. The production plant uses the JIT costing system - Raw materials costing P750,000 were purchased. - All direct materials costing P750,000 were requisitioned for production. - Direct labor costs of P500,000 were incurred. - Actual factory overhead cost amounted to P2,487,500. - Applied conversion cost totaled P3,250,00, including direct labor cost. - All units are completed and immediately sold. The total RP used to be backflushed to Finished Goods and the adjusted cost of goods sold, respectively are: a. P4,000,000 and P4,262,500 c. P750,000 and P4,262,500 b. P750,000 and P3,737,500 d. P4,000,000 and P3,737,500 3. HALO Company uses a raw and in process (RIP) account in charges all conversiort cost to cost of goods sold. At the end of each month, all inventories are counted, their conversion cost components are estimated and Inventory account balances are adjusted. Raw material cost is back flushed from RIP to finish goods. The following information is for the month of July: How much is the material cost of the units completed? P693,000 a. P700,000 c. P693,000 b. P690,500 d. P690,000 ACTIVITY-BASED COSTING 1. Ambrose Company uses three products with the following production cost information:  Slim Fit Straight Fit Regular Fit Units produced 2,000 6,000 12,000 Direct laor hours (total) 4,000 2,000 4,000 Number of set-ups 100 150 250 Number of shipents 200 225 275 Design change orders 15 10 5 Overhead costs include setups of P45,000; shipping cost of 70,000; design costs of P90,000 Which of the following products has the largest per unit overhead allocation using the ABC Costing? a. Regular Fit c. Straight Fit b. Slim Fit d. Fit Right 2. Ambrose Company uses three products with the following production and cost information: Model S Model M Model L Units produced 2,000 6,000 12,000 Direct labor hours (total) 4,000 2,000 4,000 Number of setups 100 150 250 Number of shipments 200 225 275 Engineering change 15 10 5 orders Overhead costs include setups of P45,000; shipping cost of P70,000; and engineering costs of P90,000 What would be the per unit overhead cost for Model M if ABC were used? a. P11.00 c. P61.50 b. P33.00 d. P41.00 3. SCQ Corporation has provided the following data from its activity-based costing system: Data concerning one of the company’s products, Product W58B appears below:  According to the activity-based costing system, the product margin for Product W58B is: a. P19,418,40 c. P5,515.40 b. P3,668.60 d. P5,957.60 4. Winterfell Corporation has provided the following data from its activity based cost system Activity Cost Pool Total Cost Total Activity Assembly P613,250 55,000 Machine hours Processing orders 46,170 1,500 orders Inspection 146,110 1,900 Inspection hours Data concerning one of the company’s products, Product Snow 115 appear below Selling price per unit P113.70 Direct materials cost per unit P48.14 Direct labor cost per unit P11.62 Annual unir production and sakes 360 Annual machine hours 1,040 Annual orders 60 Annual inspection hours 30 According to the activity based costing system, the product margin for the Product Snow 115 is: a. P5,975.60 b. P19,418.40 c. P5,515.40 d. P3,668.60 5. MARIA KRISTINA Inc. has decided to institute a plot activity-based costing project in its five-person purchasing departmental cost of P473,500. Because of finding the best supplier takes the majority effort in the department, most of the costs are allocated to this area.  During the year, the purchasing department made 150,000 telephone calls, issued 10,000 purchase orders, and reviewed 7,000 receiving reports. Many purchase orders are received in a single shipment. One product manufactured by the company required the following purchasing department activities: 125 telephone calls, 60 purchase orders, and 15 receipts. What would be the purchasing department cost per unit if 200 units of the product are manufactured during the year? a. 10.50 b. 2.00 c. 5.04 d. 10.00 STANDARD COSTING 1. Moonpools Corporation’s standard wage rate is P12.20 per direct labor hour (DLH) and according to the standards, each unit of output requires 3.9DLHs. In April, 5200 units were produced, the actual wage rate was P12.10 per DLH and the actual hours were 24,150 DLHs. The labor rate variance for April would be recorded as a: a. Debit of P2,028 b. Credit of P2,028 c. Debit of P2,415 d. Credit of P2,415 2. REDD CO., uses a standard cost system for its production process and applies overhead based on direct labor hours. The following information is available for August when REDD made 4,500 units: Using the two-variance approach, what is the controllable variance? a. P5,812.50 favorable b. P4,375.00 favorable c. P4,375.00 unfavorable d. P5,812.50 unfavorable 3.