Finished goods

Problem 1: Computation of Estimated P25,000

Overhead Work in process
Nafoolish Company applies factory 18,500
overhead on the basis of direct labor Materials
hours. Budget and actual data for direct 22,000
labor and overhead for the year are as
follows: The work in process account controls two
jobs

Budget Actual
Direct labor hours Job 401 Job 402
P600,000 P550,000 Materials
Factory overhead costs P 3,000 P 5,600
720,000 680,000 Labor
2,500 3,000

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Required: Factory overhead

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2,000 2,400

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1. Compute for Predetermined Factory

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Overhead Rate P 7,500 P11,000
2. How much is the applied overhead?

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3. How much is the over or under applied? The following information pertains to
rs e August operations:
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Problem 2: Computation of Estimated 1. Materials purchased on account,
Overhead P28,000.
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Miriam, Inc. had the following information 2. Materials issued for production,
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relating to 2011 P25,000. Of this amount, P3,000 was for

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indirect materials; the difference was

Budgeted factory overhead distributed: P5,500 to Job 401; P7,000 to
P74,800 Job 402; and P9,500 to Job 403.
Actual factory overhead 3. Materials returned to the warehouse
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P78,300 from the factory, P800, of which P300 was

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Applied factory overhead for indirect materials, the balance from Job
P76,500 403.
Estimated labor hours 4. Materials returned to vendors, P1,000.
44,000 5. Payroll after deducting P3,025 for
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withholding taxes, P1,600 for SSS

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If Miriam decides to use the actual results Premiums, P375 for

from 2011 to determine the 2012 Medicare, and P1,200 for Pag-ibig, was
overhead rate, what will the 2012 P32,800. The payroll due the employees
overhead rate be? was paid during the month.
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6. The payroll was distributed as follows:

Problem 3 — Job Order Costing P10,400 to Job 401; P12,500 to Job 402,
The Anda Company had the following P10,500 to Job 403 and the balance
inventories on August 1 of the current represents indirect labor.
year. 7. The share of the employer for payroll
was recorded - P2,000 for SSS Premiums,

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 P375 for Medicare Contributions, and 1. Benhur company consumed P450,000
P1,200 for Pag-ibig Funds. worth of direct materials during May 2011.
8. Factory overhead, other than any At the end of the month the direct
previously mentioned, amounted to materials inventory of Benhur was
P15,000. Included in this figure were P25,000 lower than the May 1 inventory
P3,000 for depreciation of factory building level. How much were the direct materials
and equipment, and P 950 for expired procured during May 2011?
insurance on the factory. The remaining A. P475,000 C.
overhead was unpaid at the end of P400,000
August. B. P375,000 D.
9. Factory overhead was applied to P425,000
production at the rate of 80% of direct
labor cost. 2. Pin company incurred the following
10. Jobs 401 and 402 were completed and costs during the month: direct labor,
transferred to the finished goods P122,000; factory overhead, 108,000 and
warehouse. direct materials purchases, P160,000.

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11. Job 401 was shipped and billed at a Inventories show the following costs:

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gross profit of 40% of the cost of goods

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sold. Beginning Ending

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12. Cash collections from accounts Finished goods
receivable during August were P35,000. P27,000 P30,000

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Work in process
Required: rs e 61,500 57,500
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Direct materials
1. Journal entries to record the above 37,500 43,500
transactions.
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2. Job order cost sheets. How much is the cost of goods

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3. Cost of goods sold statement. manufactured?

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A. P443,500 C.
P386,000
B. P382,000 D.
P388,000
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Beginning Ending
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Finished goods
P22,000 P17,000
Work in process
15,000 17,600
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Materials
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20,000 18,000

What is the total cost of goods sold?

A. P219,600 C.
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B. (1) P672,000; (2) 480,000

D. (1) 360,000; (2) P480,000

5. National Marketing Corp. uses a job-

order costing system. It has three
MULTIPLE CHOICE QUESTIONS

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 production departments, X, Y and Z. labor hours. Actual overhead amounted to
P325,000 with actual direct labor hours
The manufacturing cost budget for 2011 is totaling 110,000. How much was the
as follows: overapplied or underapplied overhead?
A. P30,000 overapplied
C. P5,000 overapplied
Dept. X Dept. Y Dept. B. P30,000 underapplied
Z D. P5,000 underapplied
Direct Materials
P600,000 P400,000 7. Yolanda Company provided the
P200,000 iñventory balances and manufacturing
Direct Labor cost data for the month of January.
200,000 500,000
400,000 Under Yolanda’s cost system, any over-or
Manufacturing overhead underapplied overhead is closed to the
600,000 100,000 cost of goods

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200,000 sold account at the end of the calendar

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year.

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For Job no. 01-90 which was completed in

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2011, direct materials cost was P75,000 Inventories January 1
and direct labor was as follows: January31

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Direct materials P30,000
Dept. X rs e P40,000
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P 40,000 Work in process 15,000
Dept. Y 20,000
100,000 Finished goods 65,000
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Dept. Z 50,000
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20,000
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The corporation applies manufacturing Month of January

overhead to each job order on the basis of
direct labor cost, using departmental rates Factory overhead applied
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predetermined at the beginning of the P150,000

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year based on the manufacturing cost Cost of goods manufactured

budget. 515,000
Direct materials used
The total manufacturing cost of Job No. 01- 190,000
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90 which was completed is 2011 is: Actual factory overhead

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A. P235,000 144,000
C. P385,000 .
B. P310,000 What would cost of goods sold be if under-
D. P150,000 or overapplied overhead were closed to
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cost of goods
6. Avery Co. uses a predetermined factory sold?
overhead rate based on direct labor hours. A. P509,000 C.
For the month of October, Avery’s P530,000
budgeted overhead was P300,000 based
on a budgeted volume of 100,000 direct

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 B. P524,000 D. following:
P536,000
Direct materials used
8. Using the same information in No. 7, P341,000
what would cost of goods sold be if under- Direct labor incurred
or overapplied were allocated to 324,500
inventories and cost of goods sold? Factory overhead
A. P509,700 C. 259,600
P526,300 Transferred to finished goods
B. P524,700 D. 825,000
P530,300
Two jobs are still in process on which
9. The following date were taken the materials of P70,400 are expended Factory
records of Best Company: overhead is applied at a predetermined
percentage based on direct labor cost.
12. The BAM Manufacturing Co. uses a job- What are the direct labor and overhead

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order costing system, and it applies components of the jobs transferred to

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factory overhead to production at a pre- finished goods?

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determined rate based on direct labor

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cost. The following account appears in the A.
general ledger: B. C. D.

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Direct labor P308,000
rs e WORK P310,500 P324,500
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IN PROCESS P341,000
Beg. Bal P50,000 Overhead P246,400
Finished goods P250,900 P248,400 P259,600
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Direct Materials 100,000 P272,000

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Direct Labor 80,000

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Applied overhead 60,000

Questions 14 through 16 are based
on the following information
The ending work in process represents the The following information is taken fr the
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cost of Job# 26 which has been charged records of JOHN REY Manufacturing
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with P6,000 of direct labor and the cost of Company for the first calendar quarter of
Job # 27 which has been charged with 2011:
applied factory overhead of P4,800. Total
cost of direct materials in the ending work Jan. 1
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in process was March31

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A. P8,400 C. Inventory, Raw materials

P15,200 P32,300
B. P9,000 D. P34,100
P17,400 Inventory, Goods in Process
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38,500 35,050
Inventory, Finished Goods
44,600 48,800
13. ANGGARA Co. manufactures leather Direct labor
products and uses a job order costing 254,000
system. Its work in process show the

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 Factory overhead cost Janitor’s wages for cleaning factory
236,900 premises 15,000
Cost of goods sold
676,300 How much of these costs should be
inventoried for external purposes?
14. How much is the total “cost of goods A. P625,000 C.
manufactured» during the first quarter of P585,000
2011? B. P610,000 D.
A. P676,100 C. P500,000
P680,500
B. P243,000 D. 22. Blum Corp. which manufactures plastic
P713,350 coated metal clips. The information was
among Blum’s year-end manufacturing
15. How much is the total cost of goods costs.
placed in process during the first quarter
of 2011? Wages

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A. P680,500 C. Machine operators

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P715,550 P200,000

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B. P677,050 D. Maintenance workers

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P719,050 30,000
Factory foremen

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16. How much is the total cost of raw 90,000
rs e
materials used during the first quarter of Materials Used
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2011? Metal wire
A. P263,150 C. 500,000
P224,650 Lubricant for oiling machinery
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B. P186, 150 D. 10,000

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P286, 150 Plastic coating

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380,000

Blum’s year-end:
Direct labor Direct
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Materials
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17. NANCY Products has no work-in- A. 230,000

process or finished goods 890,000
B. 200,000
880,000
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C. 290,000
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21. Luna Co.’s year-end manufacturing 510,000

costs were as follows: or underapplied factory overhead is
closed to the cost of goods sold account at
Direct materials and direct labor the end of each month. Additional
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P500,000 information is available as follows:

Depreciation of manufacturing
equipment 70,000  Job 101 was the only job inproceSs
Depreciation of factory building at January 31, 2011,With
40,000 accumulated costs as follows:

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 Direct materials Direct materials issued to
P4,000 production
Direct labor P90,000
2,000 Indirect materials issued to
Applied factory overhead production
3,000 8,000
Manufacturing overhead incurred
9,000 125,000
Manufacturing overhead applied
 Jobs 102, 103 and 104 were started 113,000
during February Direct labor costs
 Direct materials requisitions for 107,000
February totaled P26,000
 Direct-labor cost of P20,000 was Pick had neither beginning nor ending
incurred for February work in process inventory. What was the
 Actual factory overhead was cost of jobs completed in January 2011?

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P32,000 for February A. P302,000 C.

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 The only job still in process at P322,000

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February 28, 2011 was Job 104, B. P310,000 D.

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with costs of P2,800 for direct P330,000
materials and P1,800 for direct

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labor 26. A company manufactures pipes and
rs e uses a job order costing system. During
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The cost of goods manufactured for May, the following jobs were started (no
February 2011 was other jobs were in process) and the
A. P77,700 C. following costs
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P79,700 ,000 for Job 1002.

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B. P78,000 D.
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P85,000 The cost of goods manufactured would be:

A. P55,500 C.
24. Using the same information in No. 23, P56,495
any over or under-applied factory B. P55,495 D.
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overhead should be closed to the cost of P57,500

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goods sold account at February 28, 2011,

in the amount of 28. Job No. 210 has, at the end of the
A. P700 overapplied C. second week in February, an accumulated
P1,700 underapplied total cost of P4,200. In the third week,
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B. P1,000 overapplied D. p1,000 of direct materials were used on

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P2,000 underapplied the Job, together with P10 of indirect

materials.
25. Under Pick Company’s job order
costing system, manufactUring overhead Twenty (20) hours of direct labor services
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is applied to work in process using a were applied to the job at a cost of P5 per
predetermined annual overhead rate. hour.
During January 2011, Pick’s transactions
included the following: Manufacturing overhead was applied at
the basis of P2.50 per direct labor hour for
fixed overhead and P2 per hour for

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 variable overhead.
Job No. 210 was the only job completed Debit
during the third week. Work in process, Sept. 1
P30,000
The total cost of Job Order No. 210 is: Direct materials
A. P5,390 C. 60,000
P5,350 Factory overhead
B. P5,360 D. 40,000
P5,400 Direct labor
50,000
29. The workinPr0ss account of the
MatamiS Company which uses a job order On September 30, 2011, finished goods
cost system follows: completed, from work in process cost
P160,000.
Work
in Process Job No. 327 was the only job not

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April 1 Balance P25,000 completed in September, and it has been

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Finished goods P125,450 charged P4,600 for factory overhead.

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Direct Materials 50,000

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Direct labor 40,000 Direct materials charged to Job No. 327
Factory Overhead Applied 30,000 was:

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A. P10,350 C.
rs e
Overhead is applied to production at a P9,650
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predetermined rate, based on direct labor B. P 14,650 D.
cost. The work in process at April 30 P25,000
represents the cost of Job No. 456, which
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has been charged with direct labor cost of

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p3,000 and Job No 789, which has been

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charged with applied overhead of P2,400.

Questions 31 and 32 are based on the
The cost of direct materials charged to Job following:
No. 456 and Job No. 789 amounted to:
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A. P8,700 C. Newport Company, a manufacturer of fiber

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P4,500 optic communications equipment, uses a

B. P7,600 D. job-order costing system. Since the
P4,200 production process is heavily automated,
manufacturing overhead is applied on the
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30. The Narra Company uses a job order basis of machine hours using a
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cost accounting system. Overhead is predetermined overhead rate. The current

applied to production at a predetermined annual rate of P15 per machine hour is
rate based on direct labor cost. based on budgeted manufacturing
overhead costs of P1,200,000 and a
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The following postings appear in the budgeted activity level of 80,000 machine
ledger accounts of the company for the hours. Operations for year 2013 have
month of been completed, and all of the accounting
September, 2011: entries have been made for the year
except the application of manufacturing
overhead to the jobs worked on during

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 December, the transfer of costs from Work
in Process to Finished Goods for the jobs
completed in December, and the transfer
of costs from Finished Goods to Cost of
Goods Sold for the jobs that have been
sold during December.

Summarized data as of November 30,

2013 and for December 2013 are
presented in the following table. Jobs Tu-
007, Nu-013, and Nu-015 were completed
during December. All completed jobs
except Job Nu-013 have been turned over
to customers by the close of business on
December 31, 2013.

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Work in

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Process

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December 2013 Activity

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Balance
Direct Direct

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Machine
Job No. rs e
11/30/2013
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Material Labor
Hours
Tu-007 P 87,000
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P 1,500 P 4,500 300

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Nil 013 55,000

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4,000 12,000 1,000

N 11-015 -0-
25,600 26,700 1,400
D12-002 -0-
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37,900 20,000 2,500

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D12-003 -0-
26,000 16,800 800
Total P142,000
P95,000 P80,000
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A. P1,500,000 C.
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P900,000
B. P300,000 D.
P600,000
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