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Problem Sets 2:

Cost Accounting Job Order Costing

Summer
Class 2013

PROBLEMS:
Total manufacturing costs
i

Direct materials and direct labor costs total P120,000, conversion costs total P100,000, and factory
overhead costs total P400 per machine hour. If 150 machine hours were used for Job #201, what is the
total manufacturing cost for Job #201?
A. 120,000

C. 180,000

B. 160,000

D. 280,000

Overhead
Budgeted overhead
ii

Machine hours used to set the predetermined overhead rate were 25,000, actual hours were 24,000, and
overhead applied was P60,000. Budgeted overhead for the year was
A. P57,600.

C. P60,000.

B. P59,000.

D. P62,500.

Overhead per unit


iii

iv

vi

ABC Company had a total overhead of P360,000 and selling and administrative expense of P140,000 for
the year. 1,000 units of A and 3,000 units of B were produced. A requires 3 machine hours and B requires
one machine hour per unit. What is overhead chargeable per unit of A
A. P 60

C. P120

B. P 90

D. P180

ABC Company had a total overhead of P360,000 and selling and administration expense of P140,000 for
the year. 1,000 units of A and 3,000 units of B were produced. A requires 3 and B requires one machine
hours per unit. A requires 6 direct labor hours and B requires 4 direct labor hours per unit. 40% of
overhead is related to labor and the balance to machines. Labor-related overhead per hour amounts to
A. P 8

C. P18

B. P12

D. P24

ABC Company had a total overhead of P360,000 and selling and administration expense of P140,000 for
the year. 1,000 units of A and 3,000 units of B were produced. A requires 3 and B requires one machine
hours per unit. A requires 6 direct labor hours and B requires 4 direct labor hours per unit. 40% of
overhead is related to labor and the balance to machines. The overhead per unit of B amounts to
A. P 60

C. P156

B. P 68

D. P180

ABC Company had a total overhead of P360,000 and selling and administration expense of P140,000 for
the year. 1,000 units of A and 3,000 units of B were produced. Assuming that 20% of all overhead are
batch-related for 1,000 batches, 40% of which was for producing product A, batch-related overhead for

Problem Sets 2:
Cost Accounting Job Order Costing

Summer
Class 2013

product A per unit amounts to

vii

A. P20

C. P60

B. P40

D. P80

. ABC Company had a total overhead of P360,000 and selling and administration expense of P140,000 for
the year. 1,000 units of A and 3,000 units of B were produced. Assuming that 30% of overhead is product
related overhead - 20% of which is related to product A, product-related overhead per unit of A amounts to
A. P30

C. P50

B. P40

D. P60

Total overhead variance


viii

. Cooke Company uses the equation P450,000 + P1.50 per direct labor hour to budget manufacturing
overhead. Cooke has budgeted 150,000 direct labor hours for the year. Actual results were 156,000 direct
labor hours and P697,500 total manufacturing overhead. The total overhead variance for the year is
A. P4,500 favorable.

C. P4,500 unfavorable.

B. P18,000 favorable.

D. P18,000 unfavorable.

Over(under)-applied overhead
ix

If estimated annual factory overhead is P800,000, estimated annual direct labor hours are 400,000, actual
June factory overhead is P82,000, and actual June direct labor hours are 38,000, then overhead is:
A. P6,000 overapplied

C. P1,800 underapplied

B. P1,800 overapplied

D. P6,000 underapplied

Answer: C
Direct materials and direct labor
Factory overhead P400 x 150
Total manufacturing cost

ii

iii

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Answer: D
Overhead rate per hour

(P60,000 24,000)

Budgeted overhead

(25,000 x P2.50)

P2.50
P62,500

Answer: D
Total number of hours: (1,000 x 3) + (3,000 x 1)

6,000

Overhead cost per hour (P360,000 6,000)

P 60

Overhead charged per unit of product A: 3 hrs. x P60

P180

Answer: A

Total number of labor hours: (1,000 x 6) + (3,000 x 4)


Labor-related overhead per DLH: (P144,000 18,000)
.

60,000
P180,000

Labor-related overhead: (P360,000 x 0.40)

P120,000

P144,000
18,000
P 8

Answer: B
Machine-related overhead: (P360,000 x 0.6)
Total number of machine hours (1,000 x 3) + 3,000
Machine-related OH per MH: (P216,000 6,000)

P216,000
6,000
P36

Overhead applied per unit of Product B:


Labor-related (4 hours x P8)

P32

Machine-related (1 x P36)

36

Overhead per unit

P68

The overhead is broken down into two volume-based cost pools. This is a more modified example of traditional costing.
vi

Answer: B

Batch related costs: (360,000 + 140,000) 20%


Batch related costs, Product A: 100,000 40%
Batch-related overhead per unit of Product A: 40,000 / 1,000

P100,000
40,000
P 40

In ABC costing, there is no need to make a distinction between manufacturing and non-manufacturing costs in
computing the relevant product costs
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Answer: A
Product-related overhead cost (360,000 + 140,000) 30%

P150,000

Product-related overhead cost, Product A: 150,000 20%

P 30,000

Product-related overhead cost per unit, Product A: 30,000 / 1,000 P 30


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Answer: A
Variable overhead
Predetermined fixed overhead

P1.50
(P450,000 150,000)

Total overhead rate

P4.50

Actual overhead
Applied overhead

3.00

P697,500
(156,000 hours x P4.50)

702,000

Total overhead variance, favorable


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Answer: D
Applied overhead

P 4,500
38,000 x P2

P76,000

Actual overhead

82,000

Underapplied overhead

P6,000

Overhead rate per direct labor hour

(P800,000 400,000)

P2.00