AFAR- COST ACCOUNTING

JOB ORDER COSTING

Lara Company has a cycle time of 3 days, uses a raw and in process (RIP) account, and charges all conversion cost
to cost of goods sold. At the end of each month, all inventory items are counted, their conversion cost component
are estimated, and inventory account balances are adjusted. Raw material cost is backflushed from RIP to Finished
goods.

The following information is for June.

Beginning balance of RIP account, including 3,000 of conversion cost 29,250
Beginning balance of FG account, including 10,000 of conversion cost 30,000
Raw materials received on credit 562,500
Direct labor cost, 375,000, FOH applied, 450,000.
Ending RIP inventory per physical count, including 4,500 of CC 32,000
Ending FG inventory per count, including 8,750 of CC 26,250

1. The material cost of the units completed, and the units sold are?
a. 561,250 and 563,750 c. 588,750 and 581,250
b. 562,500 and 565,000 d. 563,750 and 561,250

The accounting records for 2016 of Eggs Manufacturing Company showed the following information:
Increase in raw materials inventory 45,000
Decrease in finished goods inventory 150,000
Increase in work in process inventory 60,000
Raw materials purchased 1,290,000
Direct labor 600,000
Factory overhead 900,000
Freight out 135,000
2. The cost of raw materials used for the period amounted to?
a. 1,245,000 c. 1,335,000
b. 1,290,000 d. 1,380,000

A company has identified the following overhead costs and cost drivers for the coming year.

Overhead item Cost driver Budgeted Activity Budgeted Overhead

Machine set-up # of set-up 200 P20,000
Inspection # of inspection 6,500 130,000
Material handling # of material 8,000 80,000
Engineering # of engineering hours 1,000 50,000
Total 280,000

The following information was collected on three jobs that were completed during the year:

Job 101 Job 102 Job 103

Direct materials P5,000 12,000 8,000
Direct labor 2,000 2,000 4,000
Units completed 100 50 200
 # of set-ups 1 2 4
# of inspections 20 10 30
# of material moves 30 10 50
# of engineering hours 10 50 10

Budgeted direct labor cost was P100,000 and budgeted direct material cost was 280,000.

3. If the company uses activity-based costing, how much overhead cost should be assigned to Job 103?
a. 1,300 c. 5,000
b. 2,000 d. 5,600

The following information pertains to Alma Co., manufacturing process:

2016
March 1 March 31
Inventories
Direct materials 36,000 30,000
Work in process 18,000 12,000
Finished goods 54,000 72,000

Additional information for the month of March:

Direct materials purchased 84,000

Direct labor 60,000
Direct labor rate per hour 7.50
Factory overhead rate per direct labor hour 10.00

4. How much must be the prime cost, conversion cost and cost of goods manufactured for the month?
Prime Cost Conversion Cost Cost of goods manufactured
a. 90,000 60,000 236,000
b. 150,000 140,000 296,000
c. 144,000 170,000 230,000
d. 150,000 140,000 236,000

Adams company uses a job order costing system and the following information is available from the records. The
company has 3 jobs in process: 501, 502 and 503.
Raw materials used 120,000
Direct labor per hour 8.50
Overhead applied based on direct labor cost 120%

Direct material was requisitioned as follow 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 4,200, respectively. Indirect
labor is 33,000. Other actual overhead cost totaled P36,000.

5. What is the total amount of actual factory overhead?

a. 36,000 c. 93,000
b. 69,000 d. 99,960
6. If Job 503 is completed and transferred, how much is the total cost transferred to finished goods inventory?
a. 96,700 c. 108,540
b. 99,020 d. 139,540

Miracle Company provides you with the following information:

Jan. 1, 2016 Jan. 31, 2016
Inventories:
Materials P? 50,000
Work in process 80,000 95,000
Finished goods 60,000 78,000
January transactions:
Purchased of materials 46,000
Factory overhead (75% of direct labor cost) 63,000
Selling and Admin expenses (12.5% of sales) 25,000
Factory overhead control 62,800
Net income for January 25,200
Indirect materials used 1,000

7. Compute for materials inventory, Jan. 1, cost of goods manufactured, and cost of goods sold (normal) for the
month of January 2016.
Materials Invty, Jan 1 Cost of goods manufactured Cost of good sold
a. 40,000 168,200 150,200
b. 40,200 168,000 150,000
c. 40,800 167,800 149,800
d. 41,000 168,000 150,000

8. Job No. 41 (consisting of 5,000 units) was started in September 2016 and it is special in nature because of its
strict specification. Factory overhead is charged at P0.80 per unit and includes a P0.05 provision for defective
work. The prime cost incurred in September are: Direct materials, 9,000 and Direct labor, 4,800. Upon
inspection, 80 units were found with imperfections and required the following reprocessing costs, Direct
materials, 1,500 and Direct labor, 800.
The unit cost of Job No. 41, upon completion, is?
a. 4.10 c. 3.98
b. 4.05 d. 3.62

Work in process of Alonzo Corporation on July 1, 2016 (per general ledger) is P22,800.
Per cost sheets:
Job 101 Job 102
Direct materials 6,000 8,000
Direct labor 3,000 2,500
Amount charged to Work in process for July 2016.
Job 101 Job 102 Job 103 Job 104
Direct materials 3,000 2,000 6,000 4,500
Direct labor 1,000 1,500 2),600 2,000
Factory overhead is applied to production based on direct labor cost. Jobs 101 and 103 are completed during the
month.
9. Cost of goods put into process must be:
a. 42,100 c. 45,400
b. 26,860 d. 49,660

10. The cost of goods manufactured for the month of July is?
a. 21,600 c. 25,560
b. 15,400 d. 31,800

Marco Corporation has a job order cost system. The following debits (credits) appeared in the general ledger
account work-in-process for the month of September 2016:
September 1 balance 12,000
September 30, Direct materials 40,000
September 30, Direct labor 30,000
September 30, Factory overhead 27,000
September 30, to Finished goods (100,000)
Marco applies overhead to production at a predetermined rate of 90% based on the direct labor cost. Job no. 232,
the only job still in process at the end of September 2016, has been charged with factory overhead of 2,250.

11. What was the amount of direct materials charged to Job 232 as at end of September 2016?
a. 2,250 c. 4,250
b. 2,500 d. 9,000

Justine Company budgeted total variable overhead costs at P180,000 for the current period. In addition, they
budgeted costs for factory rent at 215,000, costs for depreciation on office equipment at 12,000, costs for office
rent at 92,000, and cost for depreciation of factory equipment at 38,000. All these costs were based upon
estimated machine hours of 80,000. Actual factory overhead for the period amounted to 387,875 and machine
hours used totaled 74,000 hours.

12. What was the over or underapplied factory overhead for the period?
a. 12,650 overapplied c. 108,850 overapplied
b. 12,650 underapplied d. 108,850 underapplied

Process Costing

The following data for the month of September were taken from the cost records of Department A of ABED which
uses average costing:
Opening inventory of work in process
Units – (all materials and 50% converted) 500
Cost – Materials P2,400
Labor 1,500
Factory Overhead 760
Put into production:
 Units 5,000
Cost – Materials 25,100
Labor 19,380
Factory Overhead 14,900
Completed and Transferred 4,800 units
Ending inventory of WIP:
Units – (all materials and 60% converted) 700

1. The equivalent production for labor is:

a. 5,000 c. 5,220
b. 4,970 d. 5,020

2. The unit cost of materials for the month is:

a. 5.00 c. 5.50
b. 4.00 d. 4.50

Cost and statistics for Dept. B of a company manufacturing a single product in three departments follow:
Work in process, Oct. 1
Cost in Dept. A 11,380
Cost in Dept. B
Materials None
Labor 500
Overhead 50
Cost added in Dept. B in October:
Labor 13,000
Overhead 450
Units in process, Oct. 1 (60% converted) 500
Units received from Dept. A at P2.60/unit 6,700
Units completed and transferred 6,800
Units in process, Oct. 31 (50% converted) 400
The company uses average costing method.

3. The equivalent production for labor was:

a. 7,200 c. 7,000
b. 6,800 c. 6,900

4. The conversion costs per unit in Dept. B was:

a. 2.00 c. 6.00
b. 5.00 d. 4.00
Charlene Casuals Inc. uses a process costing system to accumulate costs related to silk scarf production. Selected
data for scarf production for last quarter is provided below:
Materials Conversion Cost
Unit Cost, FIFO method ? P2.25
FIFO equivalent units 4,200 4,500
Cost in WIP, beg. P630 270
Total cost to be accounted for P24,780 ??

5. What are the unknown amounts above

a. 5.75 and 2,270 c. 5.90 and 2,000
b. 5.75 and 10,395 d. 5.90 and 10,395

Beginning Inventory:
Prior Department costs P4,800 3,000 units
Materials 1,080 20% complete
Conversion costs 600 25% complete
Current work:
Prior Department costs P9,600 8,000 units
Materials 20,460
Conversion costs 7,640
8,000 units were started this period.
The ending inventory has 2,000 units, which are 45% complete as to materials, 65% complete with respect to
conversion costs. FIFO costing is used.

6. How many units were started and completed this period?

a. 6,000 c. 10,000
b. 8,000 d. 11,000

7. What are the equivalent units produced for conversion costs?

a. 8,000 c. 9,550
b. 9,300 d. 10,300

Production in July resulted in 100 lost units of which 60 was considered normal and 40 abnormal. The 100 units
were complete with respect to materials and 40% complete with respect to conversion costs. Unit cost for
materials, labor and overhead were P10, 15 and 9 respectively. The unit costs have been determined after
including normal and abnormal lost units separately in the computation of total equivalent units.

8. The cost of lost units charged to factory overhead would be:

a. 2,040 c. 1,360
b. 1,176 d. 784
 Summer company makes a single product in two departments. The production data for Department B for 2012 as
follows:
Units:
In process, August 1 (40% completed) 4,000
Received from department 1 30,000
Completed and transferred 25,000
In process, August 31 (60% completed0 6,000
Costs In process, August 1 Added during August
Received from Dept. 1 14,400 97,200
Materials 3,800 67,500
Conversion costs 1,940 81,000
Materials are added at the start of the process and losses normally occur during the early stages of the operation.

9. Cost of goods manufactured using FIFO method?

a. 195,250 c. 211,040
b. 193,040 d. 218,440

KUKU Co. manufactures product X in a two-stage production cycle in Dept. A and B. Materials are added at the
beginning of the process in Dept. B. KUKU uses the weighted average method. Conversion costs for Dept. B were
50% complete as to the 6,000 units in the beginning WIP and 75% complete as to the 8,000 units ending WIP.
12,000 units were completed and transferred out of Dept. B during February. An analysis of the costs relating to
work in process and production activity in Dept. B for February are as follows:
Trans-in Materials Conversion costs
WIP, Feb 1 12,000 2,500 1,000
Feb- Cost added 29,000 5,500 5,000

10. The total cost per equivalent unit transferred out for February of product X, rounded to the nearest centavo
is?
a. 2.75 c. 2.78
b. 2.82 d. 2.77

The wiring department is the second stage of TIMS Company’s production cycle. On May 1, the beginning WIP
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 TIMS production cycle. On May 31, the ending WIP contained 20,000 units
which were 80% complete as to conversion costs. Materials are added at the beginning of the process.

11. Using the weighted-average method, equivalent units were:

Trans-in Materials Conversion cost
a. 100,000 125,000 100,000
b. 125,000 105,000 105,000
c. 125,000 105,000 121,000
d. 125,000 125,000 121,000
Information concerning Dept. B of the Abbey Co. is as follows:
Units Costs
Beg. WIP 5,000 6,300
Units transferred in 35,000 58,000
Units completed 37,000
Costs:
Trans-in Materials Conversion
Beg. WIP 2,900 0 3,400
Units trans-in 17,500 25,500 15,000
Conversion costs were 20% complete as to the beginning WIP and 40% complete as to the ending WIP. All
materials are added at the end of the process. Abbey uses average method.

12. The cost per equivalent unit for conversion costs, is?
a. 0.44 c. 0.46
b. 0.48 d. 0.50

13. The portion of total cost of ending WIP attributable to transferred-in costs is?
a. 0 c. 1,550
b. 1,530 d. 1,650

Joint and By Product Costing

Comely products manufactures three products, R, S and T, in a joint process. For every ten kilos of raw materials
input, the output is five kilos of R, three kilos of S, and two kilos of T. During August, 50,000 kilos of raw materials
costing P120,000 were processed and completed, with joint conversion costs of P200,000. Conversion costs are to
be allocated to the products on the basis of market values. To make the products saleable, further processing
which does not requires additional raw materials was done at the following costs:
Further Processing Cost Selling Price
Product R P30,000 P10.00
Product S 20,000 12.00
Product T 30,000 15.00

1. The unit cost of product R is?

a. 7.12 c. 10.00
b. 8.00 d. 25.32

2. Assuming that all units are sold, the gross margin on sales for Product S is?
a. 80,000 c. 60,000
b. 72,000 d. 48,000
3. If all units of Product T are sold, and selling and administrative expenses are 20% of sale, the net income for
the sale of Product T is?
a. 18,000 c. 24,000
b. 22,000 d. 64,000

Life Company manufactures product X and Y from a joint process that also yields a by-product Z. Revenue from
sales of Z is treated as a reduction of joint costs. Additional information are as follows:

X Y Z TOTAL
Units produced 20,000 20,000 10,000 50,000
Joint costs ? ? ? P262,500
Sales Value at P300,000 150,000 10,000 460,000
split-off point

Joint costs were allocated using the sales value at split-off point method.

4. The joint costs allocated to Product X were?

a. 75,000 c. 150,000
b. 100,000 d. 168,000