1.

Unacceptable units of production that are subsequently repaired and sold as acceptable finished goods are:
A. reworked units
B. spoilage
C. scrap
D. defective units

2. Spoilage that is an inherent result of the particular production process and arises under efficient operating
conditions is referred to as:
A. ordinary spoilage
B. normal spoilage
C. abnormal spoilage
D. None of these answers is correct.

3. Spoilage that should NOT arise under efficient operating conditions is referred to as:
A. ordinary spoilage
B. normal spoilage
C. abnormal spoilage
D. None of these answers is correct.

4. Costs of normal spoilage are usually accounted for as:

A. part of the cost of goods sold
B. part of the cost of goods manufactured
C. a separate line item in the income statement
D. an asset in the balance sheet

5. Costs of abnormal spoilage are usually accounted for as:

A. part of the cost of goods sold
B. part of the cost of goods manufactured
C. a separate line item in the income statement
D. an asset in the balance sheet

6. When spoilage occurs because of some action taken by the customer, the unrecoverable cost of the spoilage
should be charged to:
A. Work in Process
B. Spoiled Goods Inventory
C. Factory Overhead Control
D. Applied Factory Overhead

7. When rework occurs because of some internal failure, the cost of rework should be charged to:
A. Work in Process
B. Spoiled Goods Inventory
C. Factory Overhead Control
D. Applied Factory Overhead

8. During March, Silver Company incurred the following costs on Job 009 for the manufacture of 200 motors:
Original cost accumulation:
Direct materials P660
Direct labor 800
Factory overhead (150% of direct labor) 1,200
P2,660

Direct costs of reworking 10 units:

Direct materials P100
Direct labor 160
P260

The rework costs were attributable to the exacting specifications of the customer. What is the cost per finished
unit of Job 009?
A. P15.80
B. P14.60
C. P14.00

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 D. P13.30

The following information will be used for Questions 9 and 10

Ukay Company's Job 165 for the manufacture of 2,200 coats was completed during August at the unit costs
presented below. 200 coats were found to be spoiled during final inspection that were sold to a jobber for P6,400.

Direct materials P30

Direct labor 16
Factory overhead 16
P62
9. If the spoilage is due to an internal failure during production, what would be the unit cost of good coats produced
on Job 165?
A. P62.00
B. P65.00
C. P60.00
D. P63.00

10. If the spoilage is due to an extraordinary request of a customer on Job 165, what would be the unit cost of good
coats produced on Job 165?
A. P62.00
B. P65.00
C. P60.00
D. P63.00

The following information will be used for Questions 11-20

Black Sand Co. uses a job order costing system. At the beginning of October, the company only had Job 151 in
process with the following costs:
Direct Material P20,000
Direct Labor 10,000
Overhead 15,000

Job 151 has 100 units of customized products. The company pays its workers P300 per hour and applies
overhead based on direct labor cost.

During October, the company worked on Jobs 151, 152 and 153. The materials used totaled to P200,000 in which
20%, 30% and 40% were requisitioned for Job 151, 152 and 153, respectively. The balance of the requisitions
was considered indirect. Direct labor hours per job are 80, 110 and 130 respectively. Indirect labor is P67,000.
Other actual overhead costs totaled P53,000. Jobs 151 and 153 were finished but only Job 151 was sold in
October. 10 spoiled units were discovered in Job 151 during the production.

11. If the spoiled units were attributable to the inherently meticulous nature of the job order, how much is the total
production cost of Job 151 after removing the spoiled units? The spoiled units were sold at P7,500.
A. P145,000
B. P137,500
C. P138,000
D. P130,500

12. If the spoiled units were attributable to the inherently meticulous nature of the job order, how much is the cost per
unit of Job 151 after removing the spoiled units? The spoiled units were sold at P7,500.
A. P1,450.00
B. P1,611.11
C. P1,527.78
D. P1,533.33

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13. If the spoiled units were attributable to the inherently meticulous nature of the job order, how much is the adjusted
cost of goods sold during the period? The spoiled units were sold at P7,500.
A. P133,500
B. P141,500
C. P134,000
D. P142,000

14. If the spoiled units were attributable to an internal failure during production, how much is the total production cost
of Job 151 after removing the spoiled units? The spoiled units were sold at P7,500.
A. P145,000
B. P137,500
C. P138,000
D. P130,500

15. If the spoiled units were attributable to an internal failure during production, how much is the cost per unit of Job
151 after removing the spoiled units? The spoiled units were sold at P7,500.
A. P1,450.00
B. P1,611.11
C. P1,527.78
D. P1,533.33

16. If the spoiled units were attributable to an internal failure during production, how much is the under(over)applied
overhead variance after effecting the cost of spoiled units? The spoiled units were sold at P7,500.
A. P3,000
B. P11,000
C. (P4,000)
D. P7,000

17. If the spoiled units were attributable to an internal failure during production and were reworked to become salable
goods, how much is the cost of rework? The company spent P3,000 of direct materials and P900 of direct labor
for the rework.
A. P3,900
B. P4,800
C. P5,250
D. P5,700

18. If the spoiled units were attributable to the inherently meticulous nature of the job order and were reworked to
become salable goods, how much is the total production cost of Job 151 after the rework? The company spent
P3,000 of direct materials and P900 of direct labor for the rework.
A. P145,000
B. P148,900
C. P149,800
D. P150,250

19. If the spoiled units were attributable to the inherently meticulous nature of the job order and were reworked to
become salable goods, how much is the cost per unit of Job 151 after the rework? The company spent P3,000 of
direct materials and P900 of direct labor for the rework.
A. P1,450.00
B. P1,502.50
C. P1,611.11
D. P1,489.00

20. If the spoiled units were attributable to the inherently meticulous nature of the job order and were reworked to
become salable goods, how much is the adjusted cost of goods sold during the period? The company spent
P3,000 of direct materials and P900 of direct labor for the rework.
A. P144,900
B. P152,900
C. P141,000
D. P146,250

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