Saint Vincent College of Cabuyao

Brgy. Mamatid, City of Cabuyao, Laguna

Job Order Costing

Prelim Exam- PART 2

Name Score
Course and Section Date

1. CR Company has the following estimated costs for the next year:

Direct materials ..................... P 4,000

Direct labor ......................... 20,000
Rent on factory building ............. 15,000
Sales salaries ....................... 25,000
Depreciation on factory equipment .... 8,000
Indirect labor ....................... 10,000
Production supervisor’s salary ....... 12,000

CR Company estimates that 20,000 labor hours will be worked during the year. If overhead is applied on
the basis of direct labor hours, the overhead rate per hour will be:

a. P2.25.
b. P3.25.
c. P3.45.
d. P4.70.

2. Lucy Sportswear manufactures a specialty line of T-shirts. The company uses a job-order costing
system. During March, the following costs were incurred on Job ICU2: direct materials P13,700
and direct labor P4,800. In addition, selling and shipping costs of P7,000 were incurred on the
job. Manufacturing overhead was applied a the rate of P25 per machine-hour and Job ICU2
required 800 machine-hours. If Job ICU2 consisted of 7,000 shirts, the Cost of Goods Sold per
shirt was:

a. 6.50
b. P6.00
c. P5.70
d. P5.50

3. Lucas Co. has a job order cost system. For the month of April, the following debits (credits)
appeared in the Work in Process account:

April
1 Balance .................. P 24,000
30 Direct materials ......... 80,000
30 Direct labor ............. 60,000
30 Manufacturing overhead ... 54,000
30 To finished goods ........ (200,000)
Lucas applies overhead at a predetermined rate of 90% of direct labor cost. Job No. 100, the only job still
in process at the end of April, has been charged with manufacturing overhead of P4,500. The amount of
direct materials charged to Job No. 100 was:

a. P18,000.
b. P8,500.
c. P5,000.
d. P4,500.

4. Worrell Corporation has a job-order cost system. The following debits (credits) appeared in the
Work in Process account for the month of March:

March 1, balance ....................... P 12,000

March 31, direct materials ............. 40,000
March 31, direct labor ................. 30,000
March 31, manufacturing overhead applied 27,000
March 31, to finished goods ............ (100,000)

Worrell applies overhead at a predetermined rate of 90% of direct labor cost. Job No. 232, the only job
still in process at the end of March, has been charged with manufacturing overhead of P2,250. What was
the amount of direct materials charged to Job No. 232?

a. P2,250
b. P2,500
c. P4,250
d. P9,000

5. The Samuelson Company uses a job-order cost system. The following data were recorded for
June:

June 1
Added During June
Work in Process Direct Direct
Job Number Inventory Materials Labor
475 P1,000 P 400 P 200
476 P 900 P 600 P 800
477 P 800 P 900 P1,400
478 P 600 P 1,100 P1,900

Overhead is charged to production at 70% of the direct materials cost. Jobs 475, 477, and 478 have been
delivered to the customer.

Samuelson’s Work in Process inventory balance on June 30 was:

a. P6,450.
b. P2,860.
c. P2,300.
d. P2,720.

6. Beaver Company used a predetermined overhead rate last year of P2 per direct labor hour, based
on an estimate of 25,000 direct labor hours to be worked during the year. Actual costs and
 activity during the year were:

Actual manufacturing overhead cost incurred P47,000

Actual direct labor hours worked .......... 24,000

The under- or overapplied overhead last year was:

a. P1,000 underapplied.
b. P1,000 overapplied.
c. P3,000 overapplied.
d. P2,000 underapplied.

7. Dowan Company uses a predetermined overhead rate based on direct labor hours to apply
manufacturing overhead to jobs. Last year Dowan Company incurred P156,600 in actual
manufacturing overhead cost. The Manufacturing Overhead account showed that overhead was
underapplied by P12,600 for the year. If the predetermined overhead rate is P6.00 per direct labor
hour, how many hours did the company work during the year?

a. 26,000 hours
b. 24,000 hours
c. 28,200 hours
d. 25,000 hours

8. Paul Company used a predetermined overhead rate during the year just completed of P3.50 per
direct labor hour, based on an estimate of 22,000 direct labor hours to be worked during the year.
Actual overhead cost and activity during the year were:

Actual manufacturing overhead cost incurred .. P90,000

Actual direct labor hours worked ............. 25,000

The under- or overapplied overhead for the year would be:

a. P13,000 underapplied.
b. P10,500 overapplied.
c. P2,500 overapplied.
d. P2,500 underapplied.

9. Sweet Company applies overhead to jobs on the basis of 125% of direct labor cost. If Job 107
shows P10,000 of manufacturing overhead applied, how much was the direct labor cost on the
job?

a. P8,000
b. P12,500
c. P11,250
d. P10,000

10. Knowlton Company applies overhead to completed jobs on the basis of 70% of direct labor cost.
If Job 501 shows P21,000 of manufacturing overhead applied, the direct labor cost on the job
was:
a. P14,700.
b. P21,000.
 c. P30,000.
d. P27,300.

11. The balance in White Company's Work in Process inventory account was P15,000 on August 1
and P18,000 on August 31. The company incurred P30,000 in direct labor cost during August and
requisitioned P25,000 in raw materials (all direct material). If the sum of the debits to the
Manufacturing Overhead account total P28,000 for the month, and if the sum of the credits
totaled P30,000, then:

a. Finished Goods was debited for P82,000 during the month.

b. Finished Goods was credited for P83,000 during the month.
c. Manufacturing Overhead was underapplied by P2,000 at the end of the month.
d. Finished Goods was debited for P85,000 during the month.

12. Under Lamprey Company's job-order costing system, manufacturing overhead is applied to Work
in Process inventory using a predetermined overhead rate. During January, Lamprey's
transactions included the following:

Direct materials issued to production .... P 90,000

Indirect materials issued to production .. 8,000
Manufacturing overhead cost incurred ..... 125,000
Manufacturing overhead cost applied ...... 113,000
Direct labor cost incurred ............... 107,000

Lamprey Company had no beginning or ending inventories. What was the cost of goods
manufactured for January?

a. P302,000
b. P310,000
c. P322,000
d. P330,000

13. Compute the amount of direct materials used during November if P20,000 in raw materials were
purchased during the month and if the inventories were as follows:

Balance Balance
November 1 November 30
Raw materials .... P 4,000 P 3,000
Work in process .. 12,000 15,000
Finished goods ... 24,000 27,000

a. P21,000.
b. P19,000.
c. P18,000.
d. P15,000.

14. Sharp Company's records show that overhead was overapplied by P10,000 last year. This
overapplied overhead was closed out to the Cost of Goods Sold account at the end of the year. In
trying to determine why overhead was overapplied by such a large amount, the company has
discovered that P6,000 of depreciation on factory equipment was charged to administrative
expense in error. Given the above information, which of the following statements is true?
 a. Manufacturing overhead was actually overapplied by P16,000 for the year.
b. The company's net income is understated by P6,000 for the year.
c. Under the circumstances posed above, the error in recording depreciation would have no
effect on net income for the year.
d. The P6,000 in depreciation should have been charged to Work in Process rather than to
administrative expense.

Wayne company uses a job costing system and applies overhead to jobs using a predetermined overhead
rate based on direct labor-hours. The company had the following inventories at the beginning and end of
March:

March 1 March 31
Direct Materials....... P36,000 P30,000
Work in Process........ 18,000 12,000
Finished Goods......... 54,000 72,000

The following additional data pertain to operations during March:

Direct materials purchased... P84,000

Direct labor cost............ P60,000
Direct labor rate............ P7.50 per direct labor-hour
Overhead rate................ P10.00 per direct labor-hour

15. During March total debits to Work in Process were:

a. P84,000.
b. P220,000.
c. P144,000.
d. P230,000.

16. The Cost of Goods Manufactured for March was:

a. P212,000.
b. P218,000.
c. P230,000.
d. P236,000.

Hamilton Company uses job-order costing. Manufacturing overhead is applied using a predetermined rate
of 150% of direct labor cost. Any over- or under- applied manufacturing overhead is closed to the Cost of
Goods Sold account at the end of each month. Additional information is available as follows:

• Job 101 was the only job in process at January 31. The job cost sheet for this job contained the
following costs at the beginning of the month:

Direct materials .................. P4,000

Direct labor ...................... P2,000
Applied manufacturing overhead .... P3,000
• Jobs 102, 103, and 104 were started during February.
• Direct materials requisitions for February totaled P26,000.
• Direct labor cost of P20,000 was incurred for February.
• Actual manufacturing overhead was P32,000 for February.
• The only job still in process at February 28 was Job 104, with costs of
P2,800 for direct materials and P1,800 for direct labor.

17. The cost of goods manufactured for February was:

a. P77,700.
b. P78,000.
c. P79,700.
d. P85,000.

18. For the month of February, the manufacturing overhead was:

a. P700 overapplied.
b. P1,000 overapplied.
c. P2,000 overapplied.
d. P2,000 underapplied.

Meyers Company had the following inventory balances at the beginning and end of November:

November 1 November 30
Raw Materials ...... P17,000 P20,000
Finished Goods ..... P50,000 P44,000
Work in Process .... P 9,000 P11,000

During November, P39,000 in raw materials (all direct materials) were drawn from inventory and used in
production. The company's predetermined overhead rate was P8 per direct labor-hour, and it paid its
direct labor workers P10 per hour. A total of 300 hours of direct labor time had been expended on the jobs
in the beginning Work in Process inventory account. The ending Work in Process inventory account
contained P4,700 of direct materials cost. The Company incurred P28,000 of actual manufacturing
overhead cost during the month and applied P26,400 in manufacturing overhead cost.

19. The raw materials purchased during November totaled:

a. P42,000.
b. P45,000.
c. P36,000.
d. P39,000.

20. The direct materials cost in the November 1 Work in Process inventory account totaled:

a. P6,600.
b. P6,000.
c. P3,600.
d. P3,000.
21. The actual direct labor hours worked during November totaled:
 a. 2,800 hours.
b. 3,300 hours.
c. 3,500 hours.
d. 3,600 hours.

22. The amount of direct labor cost in the November 30 Work in Process inventory was:

a. P2,800.
b. P3,300.
c. P3,500.
d. P6,300.

The following T accounts are for Stanford Company:

Raw Materials Cost of Goods Sold  

Beg. Bal. 7,000 | 24,000(2) |
(1)19,000 | |
| |
| |
| |

Sales Salaries Expense Work in Process  

(4) 11,000 | Beg. Bal. 11,000 | ? (7)
| (2) 15,000 |
| (4) 18,000 |
| (6) 31,000 |
| |

Accounts Payable Manufacturing Overhead  

| 19,000 (1) (2) 9,000 | 31,000 (6)
| 5,000 (5) (3) 16,000 |
| (4) 8,000 |
| (5) 5,000 |
| |

Wages & Salaries Payable Finished Goods  

| 7,000 Beg. Bal. Beg. Bal. 18,000 |
| 37,000 (4) (7) 62,000 |
| End. Bal. 15,000 |
| |

Accumulated Depreciation—
Factory  
| 82,000 Beg. Bal.
| 16,000 (3)

23. The indirect labor cost is:

a. P8,000.
b. P15,000.
 c. P18,000.
d. P37,000.

24. The cost of goods manufactured is:

a. P82,000.
b. P64,000.
c. P71,000.
d. P62,000.

25. The cost of goods sold (after adjustment for under- or over- applied overhead) is:

a. P58,000.
b. P69,000.
c. P72,000.
d. P65,000.

26. The manufacturing overhead applied is:

a. P24,000.
b. P31,000.
c. P38,000.
d. P42,000.

27. The cost of direct materials used is:

a. P14,000.
b. P15,000.
c. P18,000.
d. P24,000.

28. The ending Work in Process account balance would be:

a. P13,000.
b. P75,000.
c. P20,000.
d. P64,000.

Mallet Company has only Job 844 in process on March 1 of the current year. The job has been charged
with P2,000 of direct material cost, P2,500 of direct labor cost, and P1,750 of manufacturing overhead
cost. The company assigns overhead cost to jobs at a predetermined rate of 70% of direct labor cost. Any
under- or overapplied overhead cost is closed to Cost of Goods Sold at the end of the month.

During March, the following activity and amounts were recorded by the company:

Raw materials (all direct materials):

Purchased during the month ..................... P29,500
Used in production ............................. P30,500
 Labor:
Direct labor hours worked during the month ..... 2,500
Direct labor cost incurred ..................... P26,500
Indirect labor costs incurred .................. P5,500

Manufacturing overhead costs incurred (total) .. P18,500

Inventories:
Raw materials (all direct) March 31 ............ P7,500
Work in process, March 31 ...................... P14,500

Work in process inventory contains P5,500 of direct labor cost.

29. The amount of direct materials cost in the March 31 work in process inventory account was:

a. P5,150.
b. P9,350.
c. P9,000.
d. P3,850.

30. The cost of goods manufactured for March was:

a. P67,300
b. P67,250
c. P81,800
d. P75,550

31. The entry to dispose of the under- or over- applied overhead cost for the month would include:

a. a debit of P50 to Cost of Goods Sold.

b. a debit of P50 to Manufacturing Overhead.
c. a debit of P5,500 to Manufacturing Overhead.
d. a credit of P5,500 to Cost of Goods Sold.

32. The balance in the March 1 in the Raw Materials inventory was:

a. P10,500.
b. P9,500.
c. P6,500.
d. P8,500.

The Milo Company's records for May contained the following information:

Actual direct labor-hours ....... 9,000 hours

Actual direct labor cost ........ P 47,000
Direct material purchased ....... 16,000
Direct material used ............ 14,000
Cost of goods sold .............. 100,000
Overapplied overhead ............ 5,000
Ending inventories:
 Raw materials ................. 30,000
Work in process ............... 50,000
Finished goods ................ 70,000

The company uses a predetermined overhead rate of P5.00 per direct labor hour to apply manufacturing
overhead to jobs.

33. The actual overhead cost incurred during the month was:

a. P50,000.
b. P55,000.
c. P40,000.
d. P45,000.

34. The total cost added to Work in Process during May was:

a. P101,000.
b. P106,000.
c. P61,000.
d. P111,000.

The information below has been taken from the cost records of Tercel Company for the past year:

Raw materials used in production ......................... P326,000

Total manufacturing costs charged to jobs during
the year (includes raw materials, direct labor, and
manufacturing overhead applied at the rate of 60 per
cent of direct labor cost) ............................. 686,000
Cost of goods available for sale ......................... 826,000
Selling and administrative expenses ...................... 25,000

Inventories
Beginning Ending
Raw Materials ............. P75,000 P 85,000
Work in Process ........... 80,000 30,000
Finished Goods ............ 90,000 110,000

35. The cost of raw materials purchased during the year amounted to:

a. P411,000.
b. P360,000.
c. P316,000.
d. P336,000.