difficult

1. A mentally deranged employee, Mr. Arson, put a torch to a factory on February 20, 2010.
The resulting fire completely destroyed the plant and its contents. Fortunately, certain
accounting records were kept in another building. They revealed the following for the period
December 31, 2009 to February 20, 2010:
Prime cost P301,000
Gross profit rate on sales 20%
Cost of goods available for sale P460,000.
Direct materials purchased P170,000
Work in process, December 31, 2009 P34,000
Direct materials, December 31, 2009 P16,000
Finished goods, December 31, 2009 P30,000
Factory overhead 40% of conversion cost
Sales P500,000
Direct labor P180,000
The insurance company wants to know the approximate cost of the inventories as a basis for
negotiating a settlement.
Compute for February 20, 2010: (1) The direct materials inventory; (2) work in process
inventory, and (3) finished goods inventory:
a. (1) 65, 000; (2) 25, 400; (3) 60,000
b. (1) 49,000; (2) 25,000; (3) 30,000
c. (1) 6,000; (2) 25,400; (3) 30,000
d. (1) 65, 000; (2) 25,000; (3) 60,000

2. A company has a plant that manufactures transistor radios. One component is an XT transistor.
Expected demand is for 5,200 of these transistors in March 2008. A company estimates the
ordering cost per purchase order to be P250. The carrying cost for one unit of XT in stock is P5.
What is the total cost for the XT transistors using the EOQ approach?
a. 1,803 c. 3,606
b. 1,603 d. 3,206

3. The job cost sheet show the following data for Job 055 for the month of November, 2010:
Requisition Returned Materials Report
044 P31,920 039 P340
045 143 043 34
049 1,592 048 103
050 2,933
054 338
What is the materials cost for Job 055?
a. 36,449

4. Maria Company presented the following data for the month of May 2010:
Finished goods, May 1, 2010 P129,640
Finished goods, May 31, 2010 142,840
Cost of goods manufactured 395,440
Loss on inventory write-down 9,740
Compute the cost of goods sold to be shown in the income statement for the month ended
May 31. 2010:
b. 391,980
5. The BBB Company has decided to value its materials inventory at the lower of cost or net
realizable value. The materials account has an ending balance of P110,462. The estimated
selling price and selling expenses are P134, 315 and P26,855 respectively.
What is the journal entry to value the inventory at the lower of cost or NRV?
a. Loss on inventory write-down 3,032
Allowance for inventory write-down 3,032