Cost Accounting Answer Key Chapter 8 16 PDF

Chapter 8
ACTIVITY-BASED COSTING (ABC)
MULTIPLE CHOICES-THEORETICAL
1. Traditional costing system are characterized by their use of which of the following
measures as bases for allocating overhead costs to output:
a. Unit-level drivers.
b. Batch-level drivers.
c. Product-level drivers.
d. Plant-level drivers.
2. ABC systems are characterized by their use of which of the following measures as bases
for allocating overhead to output:
a. Unit-level drivers.
b. Batch-level drivers.
c. Product-level drivers.
d. All of the above.
3. All of the following are distinctions that usually exist between traditional and ABC costing
sytems, except that:
a. The number of overhead cost pools tends to be lower in ABC systems.
b. The number of allocation bases tends to be higher in ABC system.
c. Costs within an ABC cost pool tend to be more homogeneous than the costs within a
traditional system's cost pool.
d. All ABC systems are two-stage costing systems, while traditional systems may be one or
two stage.
4. Activity-based costing:
a. Is the initial phase of converting to a just in time operating environment.
b. Can be used only in a job order costing system.
c. Is a two-phase overhead cost allocation system that identifies activity cost pools and cost
drivers.
d. Uses direct labor as its primary cost driver.
5. Examples of activities at the batch level of cost include:

a. scheduling, setting up, and moving
b. cutting, painting, and packaging,
designing, changing, and advertising
d. heating, lighting, and security
6. Compared to an ABC system, a traditional costing system reports:

a. A lower unit cost for high volume product and a higher unit cost for low volume products.
b. A higher unit cost for high volume products and a lower unit cost for low volume products
c. The same unit costs for high and low volume products as does an ABC system
d. Either higher or lower unit cost for high volume products than an ABC system depending
upon the level of fixed costs
7. Any activity that causes resources to be consumed is called:

a. Just in time activity
b. Facility level nativity
c. Cost driver
d. Nonvalue-added activity
8. Activity based costing:

a. Can be used only in a process cost system
b. focuses on units of production
c. focuses on activities performed to produce a product
d. Uses only a single basis of allocation
9. Examples of activities at the product level of costs include:

a. designing, changing and advertising
b. cutting, painting, and packaging
c. scheduling setting up and moving
d. heating, lighting, and security
10. Example of batch level activity drivers include

a. number of batches and material moves
b. units of output and direct labor hours
c. number of products and design changes
d. square footage occupied
MULTIPLE CHOICES-COMPUTATIONAL
1. Tower Company incurs about P860,000 in manufacturing overhead costs each month
which had been allocated to individual product lines based on their relative shares of direct
labor hours (DLH). The company works about 100,000 DLH per month. The company is
concerned that using DLH is inappropriate because some costs are driven by other
activities. The following information regarding cost pools and drivers has been developed:
Product AB are produced in large batches, while Product CD are as specialty line that only a
few customers buy.
What is the overhead to be allocated to each product line using DLH as the only cost driver?
Product AB : Product CD
a. P13,760 : P1,270
b. P13,760 : P1,720
c. P14,000 : P7,120
d. P14,760 : P2,170
2. Using the data in No. 1, the overhead to be allocated to each product Line using the
Activity. Based Costing (ABC) is:
Product AB : Product CD
a. P11,560 : P14,760
b. P10,760 : P14,760
c. P11,560 : P19,760
d. P10,760 : P14,670
3. Babes Company accumulated the following cost information for its two products, BB and
CC.
A traditional costing system would allocate setup costs on the basis of direct labor hours. An
ABC system would trace costs by spreading the cost per batch over the units in a batch.
What is the setup cost per unit of Product BB under each costing system?
Traditional Costing : ABC
a. P 4.80 : P40.00
b. P 2.40 : P10.00
c. P10.00 : P10.00
d. P 4.80 : P20.00
4. Power Company manufactures a line of high-end exercise equipment of commercial

quality. The accountant has proposed changing from a traditional costing system to an
activity-based costing system. The president is not convinced of making the changes, so he
requests that the next large order for equipment be costed under both systems for purposes
of comparison and analysis. An order from Slim World, Inc, for 150 treadmills is received.
The following cost data relate to the Slim World order.
What is the cost per unit under both methods?
Traditional Activity-Based
Costing System : Costing System
a. P700.50 : P809.50
b. P763.50 : P808.50
c. P763.60 : P807.55
d. P763.60 : P907.55
5. Believing that traditional conting system provides misleading information, Sweet

Company is considering a shift to activity based costing (ABC) approach At present, the
company is using full cost system, which applies manufacturing overhead on the basis of
machine hours.
Sweet Company plans on using 50,000 direct labor hours and 30,000 machine hours in the
coming year. The following data show the manufacturing overhead that is budgeted:
Under the two methods of costing, the cost per unit for product described for the coming
year will be:
a. P5.39 : P6.00
b. P5.44 : P6.08
c. P6.11 : P6.30
d. P6.95 : P6.30
6. Jose Company specializes in the production of two types of products, the A-1 and the B-3.
The A-1 has been a bread-and-butter product for a number of years, while the B-3 is
relatively new and struggling to gain public acceptance: Data on the two products follow:
Thus, the company performs one setup for every 10 units of A-1 (100/10,000) and one setup
for every two units of B-3 (250/500). Similarly, the company spends 0.20 hours
(2,000/10,000) testing an A-1 and 5.5 hours (2,750/500) testing a B-3.
The controller also determined that of the total overhead of P660,000, about P140,000 is
related to setups and P190,000 to testing. The remaining P330,000 is related to labor.
What is the cost of each product, using the ABC system:
Product A-1 : Product B-3
a. P280 : P565
b. P262 : P925
c. P232 : P925
d. P262 : P565
7. Pablo Company produces two types of products Product RR and Product SS. The president
of the company decided to change from unit-based, traditional costang system to an activity
based cost system.
To assess the effect of the change, the following data have been gathered (for simplicity,
assume one process):
Under the current system, the costs of operating equipment, materials handling, and setups
are assigned to products on the basis of machine hours. Products are produced and moved
in batches.
Under the current unit-based approach, what is the unit cost of each product?
Product RR : Product SS
a. P6.00 : P5.50
b. P6.50 : P5.00
c. P6.00 : P6.50
d. P6.50 : P5.50
8. Using the data in No. 7, what is the unit cost of each product using an
activity-based costing approach?
Product RR : Product SS
a. P5.50 : P6.00
b. P5.50 : P7.50
c. P6.00 : P7.50
d. P7.50 : P5.50
9. BM Motors Corporation has identified activity centers to which overhead costs are
assigned. the cost pool amounts for these centers and their selected cost drivers for 2014
are as follows:
The company sets selling prices at cost plus a 20% markup.

What is the unit cost of Product A using the appropriate cost drivers?
a P49.86
b. P52.50
c. P41.55
d. P48.96
10. Using the data in No. 9, assuming that the company before installing ABC system, used
a traditional costing system that allocated manufacturing overhead to products using direct
labor hours. What is the unit selling price of Product B?
a. P57.20
b. P51.30
c. P50.69
d. P59.16
11. United Company has used the traditional costing system to apply overhead costs to all
the products that it manufactures at 14.5% of direct labor cost. Monthly direct labor cost for
its Product JJ is 27,000. In attempt to distribute costs more equitably. United is consdering
activity-based costing. the monthly data shown below have been gathered for product JJ:
What is the monthly overhead cost allocated to Product JJ using the activity based costing?
a. P525.50 lower than the cost using the traditional cost system.
b. P68.64 per order.
c. P8,500
d. P525.50 higher than the cost using the traditional cost system
12. Pedro Company has two major products, LL and MM. Data on the operations are as
follows:
What are the incomes (losses) for each product under the ABC:
Product LL : Product MM
a. (P 6,500) : P66,500
b. P 6,500 : (P60,500)
c. (P66,500) : P66,500
d. P66,500 : P67,500
Items 13 and 14 are based on the following data:

Panday Company manufactures vacuum cleaners and floor polishers. The company sells
10,000 vacuum cleaners and 1,000 floor polishers annually. Revenues and cost incurred for
each product are as follows:
Total manufacturing overhead total P1,105,000
13. What is the profit (loss) per unit for each product if overhead is allocated to product
using a direct labor hour basis?
Vacuum Cleaners : Floor Polishers
a. P(465.50) : P (2,200)
b. P(450.50) : P(2,250.50)
c. P 389.50 : P 2,949.50
d. P 465.50 : P 2,200
14. Assume that manufacturing overhead is divided into two activity centers as follows:
P650,000, which has a cost driver of direct labor hours totaling 130,000; and P455,500,
which has a cost driver of machine hours totaling 50,000 hours. Vacuum cleaners production
uses 30,000 direct labor hours and 15,000 machine hours; floor polisher production uses
100,000 direct labor hours and 35,000 machine hours. What is the profit (loss) per unit for
each product if overhead is allocated to products using ABC method?
Vacuum Cleaners : Floor Polisher
a. P 461.30 : P 2,231.20
b. P 475.00 : P 2,731.15
c. P 461.30 : P(2,231.20)
d. P(461.30) : P(2,231.20)
15. Uratex Company manufactures a variety of classroom chairs. Its job costing system uses
an activity-based approach. There are two direct cost categories (direct materials and direct
labor) and three indirect cost pools. The cost pools represent three activity areas at the
plant
The direct labor rate is P20 per hour. Assume no beginning or ending inventory.
What are the unit cost of the high school chair and the college chair?
a. P240.50 and P571.75 respectively
b. P242.50 and P570.25 respectively
c. P252.50 and P571.25 respectively
d. P242.50 and P571.25 respectively
16. The Manila Company manufactures and sells packaging machines. It recently used an
activity based approach to refine the job costing system at its Bulacan plant. The resulting
job costing system has one direct-cost category (direct materials) and four indirect
manufacturing cost pools. These four indirect cost pools and their allocation
bases are:
Manila Company recently sold 50 can-packaging machines to iLocos Company. Each
machine has direct material costs of P3,000, requires 50 component parts, 12 machine-
hours, 15 assembly-hours, and 14 inspection hours.
Manila Company's previous costing system had one direct-cost category (direct materials)
and one indirect-cost category (manufacturing overhead allocated at the rate of P100 per
assembly-hour)
In comparison to the traditional costing system used by Manila Company, the total
manufacturing cost of the machines sold under the ABC is:
a. P114,850 higher
b. P141,850 lower
c. P114,950 higher
d. Equal
17. Believing that its traditional cost system may be providing misleading information, BMW
company is considering an activity based costing approach. It now employs a full cost
system and has been applying its manufacturing overhead on the basis of machine hours.
Number 17 - Continued:
The company plans on using 50,000 direct labor hours and 30,000 machine hours in the
coming year. The following data show the manufacturing overhead that is budgeted.
Cost, sales, and production data for one of the company's product for the coming year are
as follows:
If the company employs an activity-based costing system, the cost per unit for the product
described for the coming year will be:
a. P6.00
b. P6.08
c. P6.21
d. P6,30
18. Tamiya Corporation has used a traditional costing system to apply quality control costs
uniformly to all products at a rate of 14.5% of direct labor cost. Monthly direct labor cost for
its Product X is P275,000. In an attempt to distribute quality control costs more equitable,
Tamiya is considering activity based costing (ABC). The June data shown below have been
gathered for Product X.
What is the monthly quality control assigned to product X using the ABC?
a. P686.40 per order.
b. P5,255 higher than the traditional costing system.
c. P85,0005.
d. P5,255 lower than the traditional costing system.
19. Yokomo Inc. accumulated the following cost information for its two products, A and B.
A traditional costing system would allocate setup costs on the basis of direct labor hours. An
ABC system would trace costs by spreading the cost per batch over the units in a batch.
What is the setup cost per unit of Product A under each costing system.
a. P 4.80 : P 10
b. P 2.40 : P 10
c. P40.00 : P200
d. P 4.80 : P 20
20. Product ABC uses 200 hours of direct labor and has 2,000 machine set-ups. Larry Tan,
the cost accountant, has been considering using either direct labor hours or machine set-
ups as the cost driver. The ratio of overhead cost to direct labor hours is P60. The
assignment of overhead cost to Product ABC using direct labor hours would result in a higher
charge by P4,000 than if machine set-ups were used as the cost driver
What is the ratio of overhead cost to machine set-up?
a. P 6
b. P 2
c. P60
d. P 4
21. Mactan Enterprises is a Philippine exporter of souvenir items manufactured in the capital
city of Cebu. The following overhead cost data
have been accumulated:
Job RST contains 3,000 units. It weights 10,000 kilos and uses 300 hours of labor.
What is the total overhead costs assigned to Job. RST?

a. P31,955
b. P27,750
C. P26,000
d. P32,000
Numbers 22 and 23 are based on the following data:

Omega company is preparing its annual profit plan. As part of its analysis of the profitability
of individual products, the controller estimates the amount of overhead that should be
allocated to the individual product lines from the information given as follows:
22. Under a costing system that allocates overhead on the basis of direct labor hours
(traditional), the materials handling costs allocated to one unit of wall mirrors would be
a. P1,000
b. P 500
C. P2,000
d. P5,000
23. Under activity based costing (ABC), what is the materials handling costs allocated to one
unit of wall mirrors?
a. P1,000
b. P 500
c. P1,500
d. P2,500
24. Delta Machine Tool Incorporated produces a varied product line without the use of direct
labor. An extensive setup procedure is required. Because no single hase for a predetermined
overhead rate will provide Delta with reliable product cost information, overhead is classified
into two cost pools and two predetermined overhead rates are used. For 2018, it is
estimated that total overhead costs will consist of P525,000 of overhead related to setups
and P900,000 of overhead related to machine usage. Total machine usage is expected to be
3,600 hours for the year, and the total number of setups
is expected to be 300.
Job RST required parts and materials costing P56,000, 70 hours of machine time, and four
setups.
What is the cost of Job RST?
a. P80,500
b. P78,500
c. P83,050
d. P79,500
Problems:
Problem 8-1 : Santa Fe Company
Problem 8-2 : San Juan Company
Problem 8-3 : Gigabytes Computers, Inc.
Problem 8-4 : PPG Company
Problem 8-5 : CPA manufacturing Company
Problem 8-6 : Jose Miguel
Problem 8-7 : RC Corporations
Problem 8-8 : Pedro Company
Problem 8-9 : Coffee Blends, Inc. (CBI)
Problem 8-10 : Maria Company
Chapter 9
COMPLETING THE COST CYCLE & ACCOUNTING FOR PRODUCTION
LOSSES
1. A company produces stereo speakers for automobile manufacturers. The automobile

manufacturers emphasize total quality control (TQC)
in their production processes and reject approximately 3% of the stereo speakers received
as being unacceptable quality. The company
inspects the rejected speakers to determine which ones should be reworked and which ones
should be discarded. The discarded speakers
are classified as:
a. Waste
b. Scrap
c. Spoilage
d. Rework costs
2. Scrap materials consists of:

a. Defective units that may be used or sold.
b. Raw materials remaining from the production cycle but usable for purposes other than
the original purpose.
c. Raw materials remaining from the production cycle but not usable for any purpose.
d. Finished goods that do not meet quality control standards and cannot be reworked.
3. The sale of scrap from a manufacturing process is recorded as a (n):

a. Decrease in manufacturing overhead control
b. Increase in manufacturing overhead control
c. Decrease in finished goods control
d. Increase in finished goods control
4. Assuming the value of scrap sales is material, when is it not necessary to record the value
of scrap in inventory as it is produced?
a. When it is sold regularly, e.g., daily, weekly, etc.
b. When the unit value fluctuates.
c. When it is recognized as miscellaneous revenue.
d. When it is recognized as an offset to overhead.
5. Waste materials consists of

a. Raw materials remaining from the production cycle but not usable for any purpose
b. Finished goods that do not meet quality control standards and cannot be reworked.
c. Defective units that may be used or sold.
d Raw materials remaining from the production cycle but usable for purposes other than the
original purpose.
6. A product that does not meet quality control standards and needs to be reworked to be
salable as either an irregular or a good product is classified as:
a. Spoiled goods
b. Defective units
d. Scrap materials
d. Waste material
7. A manufacturing process normally results in defective units equal to 1% of production.

Defective units are subsequently reworked and sold. The cost of reworking these defective
units should be charged
to:
a. Manufacturing overhead
b. Work-in-procese
c. Finished goods
d. Cost of goods sold
8. In a job-order costing system, the net cost of spoilage that is common to all jobs should
be charged to:
a. Materials
b. Work in process
c. Manufacturing overhead
d. Applied manufacturing overhead
9. If the 300 defective belts (normal spoilage) were repaired and management wanted to be
sure the incremental costs did not exceed the cost of producing new units, how would the
rework costs be
accounted for:
a. As normal materials, labor, and overhead.
b. Charged to those belts repaired.
c. Expensed as extraordinary
d. Charged to overhead and spread over the costs of all products
10. Some units of output failed to pass final inspection at the end of the manufacturing
process. The production and inspection supervisors determined that the estimated
incremental revenue from reworking the units exceeded the cost of rework. The rework of
the defective units was authorized, and the following costs were incurred in
reworking the units:
Materials requisitioned from stores:

Direct materials P5,000
Miscellar supplies 300
Direct labor 14,000
The manufacturing overhead budget includes an allowance for rework. The predetermined
manufacturing overhead rale is 150% of direct labor cost. The account(s) to be charged and
the appropriate charges for the rework would be:
a. Work-in-process inventory for P19,000
b. Work-in-process inventory for P5,000 and manufacturing overhead for P35,300.
c. Manufacturing overhead for P19,300.
d. Manufacturing overhead for P40,300.
11. In a job-order costing, the disposal value of spoilage that is common to all jobs should be
credited to:
a. Materials
b. Work in Process
c. Manufacturing Overhead
d. Applied Manufacturing Overhead
12. In a job-order costing system, the cost incurred to rework unit that are common to all
jobs should be debited to:
a. Materials
b. Work in Process
c. Manufacturing Overhead Applied
d. Manufacturing Overhead
13. In a job-order costing system; the recovery value of scrap that is significant in economic
value, abnormal, and due to the nature of particular jobs should be credited to:
a. Materials
b. Work in Process
d. Loss from Abnormal Spoilage
14. In a job-order cost system, the cost incurred to rework units that are normal and due to
the nature of particular jobs should be debited to:
a. Materials
b. Work in Process
15. In a job-order costing system, the disposal value of spoilage that is normal and due to
the nature of particular jobs should be debited to:
a. Materials
b. Work in Process
1. ILU Company's Job 506 for the manufacture of 2,200 coats was completed during August
at the unit costs presented as follows. Final inspection of Job 506 disclosed 200 spoiled
coats, which were sold to
a jobber for P6.000,
What would be the unit cost of good coats on Job 506, if (1) the spoilage loss is charged to
all production during August, and (2) if the spoilage loss is attributable to exacting
specifications of Job 506?
a. (1) P56.00 ; (2) P57.50
b. (1) 57.50 ; (2) 56.00
C. (1) 56.00 ; (2) 57.57
d. (1) 58.60 ; (2) 57.50
2. SLU Company incurred the following costs on Job 119 for the manufacture of 200 motors:
What is the cost per finished unit of Job 119, if the rework costs is charged to:
Specific Job 119 : All Production due to Internal Failure
a. P15.80 : P13.30
b. P14.60 : P13.30
c. P15.80 : P14.60
d. P13.30 : P15.80

MJ Lumber & Wood Products, Inc. manufactures custom wooden cabinets and furniture.
During the current period, 160 tables were incorrectly shaped on job number 222 and had to
be replaced. Although the defective table legs cannot be used on the job, they can be sold
to a local lumber company for P2 each. The cost of the 160 defective table legs is:
Materials (160 legs x P5.00) P800.00
Labor (4 hours x P24.00 per hour) 96.00
Manufacturing overhead (4 hours x P48.00 per hour)
192.00
3. The journal entry to record above information would be:

a. Spoiled Goods Inventory 320
Work in Process 320
b. Spoiled Goods Inventory 1,088
Work in Process 1,088
c. Spoiled Goods Inventory 768
Work in Process 768
d. Spoiled Goods Inventory 320
Manufacturing Overhead Control 768
4. What is the journal entry if the spoilage loss is due to exacting specifications:
a. Spoiled Goods Inventory 320
Work in Process 320
c. Spoiled Goods Inventory 768
Work in Process 768
d. Spoiled Goods Inventory 320
Manufacturing Overhead Control 768
5. AJD Company had a production run of 8,000 pairs of jeans during the last week of June,
with the following unit costs:
Direct materials P5.00
Direct labor 4.00
Manufacturing overhead (includes a P.50 allowance for spoiled work) 3.50
Final inspection revealed that 600 pairs, a normal number, did not meet quality standards,
but can be sold as seconds at a price of P7 a pair.
What is the unit cost for each jeans, assuming that the spoilage costs is charged to:
Specific Job : All Production due to Internal Failure
a. P12.50 : P12.50
b. P12.50 : P12.41
c. P12.41 : P12.50
d. P11.48 : P11.98
6. The Jar Equipment Company manufactures lifting equipment. One order from the LGU
Machine Works for 2,000 lifting equipment showed the following costs per unit: direct
materials, P3.50; direct labor, P1.25, and manufacturing overhead at 140% of direct labor
cost if defective work is charged to the job, 150% if it is not.
Final inspection revealed that 100 of the units were improperly manufactured. These units
were disassembled, and properly manufactured. The per unit cost of correcting the defective
products consists of P0.15 for materials, P0.25 for direct labor; and manufacturing overhead
at the predetermined rate.
The cost per unit produced, assuming that the rework costs is charged to:
LGU Machine Works : Factory Overhead Control
a. P6.5375 : P6.8250
b. P6.5375 : P6.6250
c. P6.6250 : P6.5375
d. P7.2500 : P7.4000
BATCH 445 called for the making of 7,000 units with these unit costs:
Direct materials P19.60
Direct labor 17.20
Manufacturing overhead (includes a P1 allowance for spoiled work) 14.80
When the batch was completed, 350 rejected units were sold for reasons they are spoilage
at P15.60 each. A separate work in process account is used for each cost element.
7. The journal entry to record the spoilage loss if it is due to internal failure because of
machine breakdown (round off all amounts to the
nearest peso):
a. Spoiled Goods Inventory 5,460
Manufacturing Overhead Control 12,600
Work in Process - materials 6,860
Work in Process - payroll 6,020
Work in Process - applied manufacturing overhead 5,180
Work in Process – applied manufacturing overhead 1,490
c. Manufacturing Overhead Control 18,060
d. Spoiled Goods Inventory 10,920
8. What is the journal entry to record the spoilage loss if charged to BATCH 445 (round off all
amounts to the nearest peso):
a. Spoiled Goods Inventory 5,460
Manufacturing Overhead Control 12,600
Work in Process- materials 2,114
c. Manufacturing Overhead Control 18,060
d. Spoiled Goods Inventory 18,060
9. Ceferino Company received an order for 25 automatic mixing machines. Because of the
order's exacting specifications, it is anticipated that defective and spoiled work will exceed
the normal rate. The materials costs per unit is P80; labor cost, P194; and manufacturing
overhead for this order is to be applied at 100% of the labor cost. During production, 5 units
were found to be defective and
required the following total additional costs; materials, P97, labor, P125, and manufacturing
overhead at the 100% rate. On final inspection, 2 units were classified as seconds and sold
for P400 each, the proceeds being credited to the order. The purchaser has agreed to accept
the 23 machines, although the acceptable units are fewer
than the number ordered.
What is the unit cost of the completed units?
a. P489.00
b. P523.78
c. P457.08
d. P473.91
10. LL Metal Fabricators, Inc. has a large job, Job. No. 7456, which calls for producing various
ore bine, chutes, and metal boxes for enlarging a copper concentrator. The following
charges were made to the job in November 2018:
Direct labor 15,076
Manufacturing overhead 7,538
The contract with the customer called for the total price to be based on a cost-plus
approach. The contract defined cost to include direct materials, direct labor, and factory
overhead to be applied at 50% of direct labor.
A cutting error was made by an employee during the production. The up-to-date job-cost
record for the batch of spoilage loss showed materials of P650; direct labor of P500; and
applied overhead of P250.
Because fairly large pieces of metal were recoverable, the company believed that the
salvage value was P6,000.
What is the unit cost of the product, if 2,200 units that were originally manufactured
includes the 200 spoiled goods?
a. P21.60
b. P22.53
C. P24.78
d. P25.48
11. Sentra, Inc. produces small motors on special orders. In March, Mr. Sy contracted for the
production of 240 motors at cost plus fixed fee of P4,580 and was completed. This invoice
was mailed to the contracting officer of the Air Force:
Direct materials P23,629.40
Direct labor 31,320.44
Manufacturing overhead 10,440.16
Production cost P65,390.00
Add: Fixed fee 4,580.00
Total for 240 motors = P69,970.00
Mr. Sy objected to this billing, stating that the spoilage of 10 motors and additional costs of
2 defective motor had been charged directly to him, whereas the procedure previously had
been to spread such costs over all the jobs.
The spoiled motors had been sold as scrap for P100 each, and the original serap value was
assigned to them. The defective motor required P60 of additional materials and 10 labor
hours to correct its defects. Workers on the contract were paid P6 per hour and had worked
a total of 14,400 hours, of which 5,260 hours had been spent for Mr. Sy contract. The
Company uses a predetermined factory overhead rate of P2 per labor hour. Each
motor requires P95 of direct materials. Spoiled and defective motors are discovered during
the final inspection after all normal labor costs has been incurred.
What is the unit cost for each motor?
a. P282.08
b. P263.32
c. P291.54
d. P272.46
12. The Chang Manufacturing Company produces an article which must meet certain
exacting specifications. Products are therefore inspected after completion before being
forwarded to the finished goods warehouse. Spoiled units are immediately forwarded to the
warehouse at estimated sales values, but defective units are
reworked. Spoilage is considered normal; however, additional costs of reworking defective
units are charged to the production order involved.
During the first week of February, a production order of 10,000 units was placed in process.
Costs charged were as follows:
Materials P30,000
Labor (at P2.50 per hour) 12,500
Overhead (applied at the rate of P1.50 per hour)
Inspection showed that 1,200 units did not meet specifications, but 200 of these could be
reworked to correct imperfections at additional costs of P100 for materials, P125 for labor,
and P75 for overhead. The spoiled units have an estimated sales value of P4 per unit.
What is the unit cost for this production order?
a. P5.8889
b. P7.0000
c. P5.3667
d. P5.1444

During March Trinity Company incurred the following costs on Job Order 111 for
manufacturing of 200 units:
Original cost accumulation:
Direct materials P 660
Direct labor 800
Factory overhead (150% of direct labor cost) 1,200
total = P2,660
Direct costs of reworking 10 units:

Direct materials P 100
Direct labor 160
total = P 260
13. The rework costs were attributable to the exacting specifications of Job Order 111 and
the full rework costs were charged to this specific job. What is the cost per finished unit of
Job Order III?
a. P15.80
b. P14.60
c. P14.00
d. P13.30
14. Assuming the rework costs were attributable to internal failure, what is the cost per
finished unit of Job 109?
a. P15.80
b. P14.60
c. P14.00
d. P13.30
15. True Value Company manufactures electric drills to the exact specifications of various
customers. During April 2016, Job 403 for the production of 1,100 units was completed at
the following costs per
unit:
Direct materials P10
Direct labor 8
Applied factory overhead 12
Total P30
Final inspection of Job 403 disclosed 50 defective units and 100 spoiled units. The defective
units were reworked at a total cost of P500, and the spoiled units were sold to an employee
for P1,500.
What would be the unit cost of the good units produced on Job 403?
a. P33
b. P32
c. P30
d. P29
16. Some units of output failed to pass final inspection at the end of the manufacturing
process. The production and inspection supervisors determined that the incremental
revenue from reworking the units exceeded the cost of rework. The rework of the defective
units was authorized, and the following costs were incurred in reworking the
units:
Materials requisitioned from stores:
Direct materials P 5,000
Indirect materials P 300
Direct labor P14,000
The manufacturing overhead budget includes an allowance for rework. The predetermined
manufacturing overhead rate is 150% of direct labor cost. The account(s) to be charged and
the appropriate charges for the rework cost would be:
a. Work-in-process inventory control for P19,000.
b. Work-in-process inventory control for P5,000 and manufacturing overhead control for
P35,300.
c. manufacturing overhead control for P19,300.
d. Manufacturing overhead control for P40,300.
Question 17 and 18 are based on the following information:

Roque Metal Shop Inc., manufactures metal products that require casting, such as engine
blocks, pistons, and engine housings. During the current year, an order of 30,000 custom
housing was begun on job number 202 for Mr. German. After the job was completed, the
housing was inspected and 4% of the units were determined to be defective. Mr. German
agreed to accept the goods units only at 140% of cost. The spoiled units can be sold as
seconds for P15 each. Spoiled goods are kept in an inventory account separate from finished
goods.
Total costs charged to job number 202 are:
Materials P276,000
Labor (6,000 hours x P14 per hour) 84,000
Factory overhead (P30 per labor hour) 180,000
17. If the spoilage unis are the result of an internal failure, what is the unit cost of good
units?
a. P18.00
b. P19.50
c. P18.50
d. P19.00
18. If the spoilage is attributable to Job 202 only, what is the unit selling price of the good
units?
a. P25.375
b. P20.50
c. P25.00
d. P20.375
Use the following data for Question 19 and 20:

Simmer's World for 200 lifting equipment showed the following costs per unit:
Materials P400
Labor 175
Factory overhead, 160% of direct labor cost (150% in
cases in which any defective unit costs are to charged to a specific order).
Final inspection revealed that 15 of the units were not properly produced Correction of each
defective unit requires P50 for materials, P80 for labor, and factory overhead at the
appropriate rate.
19. Assuming cost of defective units is charged to all the jobs, what is the unit cost of
finished goods?
a. P650
b. P640
c. P655
d. P550
20. Assuming cost of defective units is charged to the job order, what is the unit cost of each
unit manufactured?
a. P674.85
b. P475.50
c. P656.25
d. P690.50
Problems:
Problem 9-1 : SLU Metal Fabricators, Inc.
Problem 9-2 : That Girl Company
Problem 9-3 : Blue Girl Plastico Company
Problem 9-4 : Smiling GG Metal Works
Problem 9-5 : La Union Metal Crafts
Problem 9-6 : LUG Company
Problem 9-7 : ILU Metal Shop
Problem 9-8 : BGP Melting and Repair Shop
Problem 9-9 : LUV Kitchens
Problem 9-10 : TGIL Furniture Shop
Problem 9-11 : Deeco Electronics, Inc.
Problem 9-12 : ULS Housing, Inc.
Problem 9-13 : TGB Machine Shop
Problem 9-14 : JhenaCo
Chapter 10
PROCESS COSTING : NATURE AND OPERATIONS
1.In process cost system, costs ure assigned only:

a. to one work in process inventory account.
b. to work in process and finished goods inventories
c. to work in process, finished goods, and cost of goods sold
d. to work in process inventory accounts
2. Indicate which of the following statement is not correct.

a. Both a job order and a process cost system track the same three manufacturing cost
elements - direct materials, direct labor, and manufacturing overhead
b. In a job order cost system, only one work in process is used, while in process cost system,
multiple work in procesa inventory accounts are used
c. Manufacturing costs are accumulated the same way in a job order and in a process cost
system
d. Manufacturing costs are assigned the same way in a job order and in a process cost
system
3. in making the journal entry to record raw material costs.

a. the debit is to Finished Goods Inventory
b. the debit is often to two or more work in process inventory accounts
c. the credit is generally to two or more work in process accounts.
d. the credit is to Finished Goods Inventory.
4. The analysis of the activity in a department or cost center for a period is called a:
a. Quantity report.
b. Cost of production report.
c. Cost of goods manufactured.
d. Equivalent production.
5. A cost of production report

a. is an external report,
b. show costs charged to department and costs accounted for
c. shows equivalent units of production but not physical flow of units
d. contains six sections.
6. The restatement of incomplete units in terms of completed units is called

a. Quantities produced,
b. Total production
c. Equivalent production.
d. Approximate production
7. Purchased materials are added in the second department of a three-department process;

this increases the number of units produced in the second department and would always:
a. Change the direct labor coat percentage in the ending work in process inventory
b. Cause no adjustment to the unit cost transferred in from the first department.
c. Increase total unit costs.
d. Decrease total ending work in process in inventory
8. Purchased materials are added in the second department of a three department process;
this does not increase the number of units produced in the second department and would:
a Not change the peso amount transferred to the next department.
b. Decrease total work in process inventory
c. Increase the factory overhead portion of the ending work in process inventory
d. Increase total unit cost.
9. An equivalent unit of material or conversion cost is equal to:

a. The manufacturing costs necessary to complete one unit of production
b. A unit of work in process inventory.
c. The manufacturing costs necessary to start a unit of production into work in process
d. Fifty percent of manufacturing costs of a unit of finished goods inventory
10. Which statement is correct?

a. Units started in process (or received from preceding departments) plus units added to
production will always equal to units transferred out plus units completed and still in hand
plus ending units in process.
b. Units added in subsequent departments will affect the transferred in equivalent unit cost
in the costs to be accounted for section.
c. The stage of completion of ending work in process is most often based upon the actual
physical state of completion of each unit in ending work in process.
d. The Cost Accounted For section of the cost of production report shows which costs were
accumulated by the department.
11. An item that does not appear on a cost of production report is:
a. beginning work in process inventory
b. cumulative costs through the end of departmental production
c. ending work in process inventory
d. ending finished goods inventory
1. Department 1 had put 95,000 units into process during the period and had ending units in
process of 21,000 units.
What is the number of units transferred to finished goods inventory. if Department 2's
ending units in process are 12,000?
a. 104,000
b. 83,000
c. 74,000
d. 62,000
2. Red Company had 6,000 units in process at the beginning of the month in Department 1.
During the month an additional 14,000 units were placed into process.
If Red Company had 4,200 units in process at the end of the month, what is the number of
units transferred to department 2, assuming all units completed in Department 1 are
transferred to Department 2?
a. 15,800
b. 18,200
C. 20,000
c. 24,200
3. The cost of materials put into production in a department during the month totaled
P188,400. By the end of the month, these materials had been used for 32,000 units, of
which 29,000 were completed and transferred out and 3,000 were in process. Eighty percent
of materials were added to the units in process.
What is the equivalent unit production for materials?
a. 31,400
b. 32,000
d. 29,600
d. 81,000
4. Using the data in Number 3, what is the cost per eqvalent unit for materials
a. P6.00
b. P5 89
c. P6.50
d. P6 36
Items 5 to 7 are based on the following data for the Finishing Department of the Lovely
Company in January:
Beginning inventory -0-
Units transferred in during month 4,700
Units transferred to Finished Goods during month 4,300
Ending work in process (25% complete as to labor) 400
Labor costs incurred for month P14,080
5. What is the equivalent production for labor during the month?

a. 4,400
b. 4,600
c. 4,700
d. 4,300
6. What is the labor cost per equivalent unit?
a. P3.20
b. P3.06
c. P3.00
d. P3.27
7. What is the labor cost in the ending work process?

a. P 320
b. P 306
c. P1,280
d. P 960
items 8 to 11 are based on the following data for the Grinding Department of the west
company in november:
Beginning inventory -0-
Units placed in production during month 73,000
Units transferred to next department during month 67,000
Ending work in process (1/3 complete as to overhead) ?
Overhead costs incurred for month P282.900
8. What is the number of units in the ending work in process?

a. 6,000
b. 4,000
c. 5,000
d. 7,000
9. What is the equivalent production for overhead during the month?

a. 69,000
b. 73,000
c. 71,000
d. 67,000
10. What is the overhead cost in the units transferred out?

a. P247,000
b. P274.700
c. P247,700
d. P250,800
11. What is the overhead cost in the ending inventory of work in process?
a. P 8,200
b. P24,600
c. P 7,720
d. P 7,960
Use the following data in answering items 12 to 15

During the month, 3,900 units of product were started into production in a department, of
which 3,700 were completed. Of the 3,700 completed units, 80 are still on hand in the
department and have not been physically transferred to the next department. There are
also units still in process; they are estimated to be 65 percent complete as to labor and
overhead. Labor for the month was P27,193.
12. What is the labor cost applicable to the units transferred to the next department?
a. P25, 702
b. P27,198
c. P27,502
d P20,705
13. What is the labor cost applicable to the units completed and still on hand?
a. P 668
b. P1,420
c. P1,240
d. P5,680
14. What is the number of uncompleted units on hand?

a. 200
b. 300
c. 400
d. 500
15. What is the labor cost applicable to the uncompleted units on hand?
a. P923
b. P9,230
c. P1,420
d. P 142
Questions 16 and 17 relate to Spring Company which bottles mineral water. The water is
filtered in Department 1 and then flows through to Department 2 where it is bottled The
company's only direct material cost occurs in the bottling stage The quantity schedules of
Spring Company are as follows:
Department 1
Units started in process 110,000
Units transferred to Department 2 80,000
Units in process, end 30,000
Department 2
Unite received from Department 1 80,000
Unita transferred to finished goods inventory 61,400
Units in process, end 18,600
Ending units in process in both departments are 72% complete as to conversion costs
16. Direct materials equivalent units of production for Department 1 are:

a. 0
b. 80,000 units
c. 101,600 units
d. 110,000 units
17. Department 2 would have how many equivalent units of production, on the basis of a
conversion cost computation?
a. 61,400 units
b. 68,929 units
c. 74,792 units
d. 80,000 units
18. Belows the quantity schedule for Department 2 of Tuason Company:

What is the cost of units in process, end?
a. P5,850
b. P7,740
c. P1,890
d. P6,540
19. The production data for Department 2 are as follows:

What is the total unit cost?
a. P1.4825
b. P1.52
c. P1.07
d. P1.450
20. The RC Corporation manufactures toy cars In Department 1. the body of the toy car is
formed out of plastic. In Department 2 four rubber wheels are placed on each car at the end
of the process. Below is the activity of Department 2 for May:
What is the total costs of completed units transferred out to Department 2

a. P21,935
b. P23,940
c. P21,915
d. P23,220
21. Below are data pertaining to Department 2 of Magdalo Company that uses a process
cost system:
Direct materials are added at the 62% stage of production and conversion costs are added
evenly throughout the process. No beginning work in proces inventory exists.
What is the cost of ending work in process inventory?
a. P119,630
b. P 84,630
c. P191,630
d. P126,630
22. Production data taken from the Costs to be Accounted For section of the Cost Schedule
of Oakwook Company with two production departments is as follows:
If Department 1 transferred 32,000 units to Department 2, what is the total cost to be

accounted for Department 2?
a. P356,280
b. P255,600
c. P419,716
d. P 87,800
23. Department 3 of the Peninsula Company has the following pieces of data included in its
cost of production report:
What is the amount of total costs accounted for?

a. P556,321
b. P656,059
c. P656,321
d. P701,321
24. National Electroniccs manufactures microchips in large quantities. Each microchip

undergoes assembly and testing. The total assembly costs during January 2018 is as follows:
direct materials used P 720,000
Conversion costs 760,000
Total manufacturing costs P1,480,000
Asume there was no beginning inventory on January 1, 2018. During January, 10,000
microchips were placed into production and all 10,000 were fully completed at the end of
the month.
What is the unit cost of an assembled microchip in January?
a. P148
b. P158
c. P150
d. P145
25. Using the data in Number 24, assume that during February 10,000 microchips are
placed into production. Further assure the same total assembly costs for January are also
incurred in February, but only 9,000 microchips are fully completed at the end of the month
all direct materials have been added to the remaining 1,000 microchips. However, on
average, these remaining 1,000 microchips are only 50% complete as to conversion costs.
What are the unit costs for direct materials and conversion costs for February?
Direct Materials : Conversion Costs
a. P72 : P80
b. P70 : P80
c. P72 : P84
d. P70 : P85
26. Viagra Chemicals has a Mixing Department and a Refining Department. Its process
costing system in the Mixing Department has two direct materials cost categories (Chemical
P and Chemical Q) and
one conversion costs pool. The following data pertain to the Mixing Department for July,
2018:
Chemical P is introduced at the start of operations in the Mixing Department, and Chemical
Q is added when the product is three-fourths completed in the Mixing Department.
Conversion costs are
added evenly during the process. The ending work in process in the Mixing Department is
two thirds complete
What is the cost of goods completed and transferred to the Refining Department during July?
a. P350,000
b. P400,000
c. P300,000
d. P450,000
27. Using the data in Number 26, what is the cost of work in process as of July 31, 2018?
a. P105,000
b. P120,000
c. P115,000
d. P150,000
28. Rose Co. had 3,000 units in work in process at April 1, 2018, which were 60% complete
as to conversion cost. During April 10,000 units was completed. At April 30, 4,000 units
remained in work in process which were 40% complete aş to conversion cost. Direct
materials are added at the beginning of the process
How many units were started during April?
a. 9,000
b. 9,800
c. 10,000
d. 11,000
29. Department CC has the following April lproduction information:
Beginning work in process 24,000 units

Units started during the month 780 000 units
Units transferred to next operation in April 744,000 units
Ending work in process (40% complete) 60,000 units
Beginning work in process cost P 120.000
April's production cost 5,256,000
The unit cost of production is
a. P 7.00
b. P20.22
c. P 6.89
d. P 6.69
30. The Masaya Corporation manufactures only one product, and the raw materials must
pass through Processes A, B, and C, in that order, before completion.
On October 1, the inventories of Process C and Finished Goods were:

Process C - 1,200 units, 2/3 completed, P4,200.
Finished Goods - 1,000 units, at P3.00 per unit.
During October, 2,000 units valued at P5,000 were transferred in from Process B. Direct
labor cost in Process C was P3,100 and the overhead cost applied to Process C was P3,200.
The inventories on October 31 were:

Process C - 600 units, 1/2 completed.
Finished Goods - 1,300 units
The conversion cost per equivalent unit for October is:

a. P1.50
b. P2.75
c. P3.00
d. P3.50
Questions 31 and 32 are based on the following information

A sporting goods manufacturer buys wood as a direct material for baseball bats. The
Forming Department processes the baseball bats, and the bats are then transferred to the
Finishing Department where a sealant is applied. The Forming Department hegan
manufacturing 10,000 "Casey sluggers" during the month of May. There was no beginning
inventory
Costs for the Forming department for the month of May were as
follows:
Total P50,000
A total of 8,000 bats were completed and transferred to the Finishing Department, the
remaining 2,000 bats were still in the forming process at the end of the month. All of the
Forming Department's direct materials were placed in process, but, on average, only 25% of
the conversion cost was applied to the ending work-in-process inventory
31. The cost of the units transferred to the Finishing Department is:
a. P50,000
b. P40,000
c. P53,000
d. P42,400
32. The cost of the work-in-process inventory in the Forming Department at the end of May
is:
a. P10,000
b. P 2,500
e. P20,000
d. P 7,600
Problems:
Problem 10-1 : JAG Manufacturing Company
Problem 10-2 : ABC Toy Company
Problem 10-3 : Rhina Company
Problem 10-4 : Department 2 for the Month of July, 2018
Problem 10-5 : AMG Plastic Co.
Problem 10-6 : Camay Soap Corporation
Problem 10-7 : October data for CPA Company
Problem 10-8 : Nature Medicine Co.
Problem 10-9 : Peninsula Company
Problem 10-10 : Glorieta Factories, Inc.
Chapter 11
COST OF PRODUCTION REPORT : AVERAGE COSTING
MULTIPLE CHOICES – THEORETICAL
1. A cost of production report

a. Is an external report
b. Shows costs charge to department and costs accounted for
c. Shows equivalent of production but not physical units
d. Contains six sections
2. A characteristic of a process costing system is that.

a. Costs are accumulated by order
b. It is used by a company manufacturing machinery
c. Standard costs are not applicable.
d. Work in process inventory is restated in terms of completed units.
3. Indicate which of the following statements is not correct.

a. Both a job order and a process cost system track the same three elements of costs -
direct materials, direct labor, and manufacturing overhead
b. In a job order cost system, only one work in process account is used, whereas in a process
cost system, multiple work in process accounts are used.
c. Manufacturing costs are accumulated the same way in a job order and in a process cost
system
d. Manufacturing costs are assigned the same way in a job order and in a process cost
system.
4. In a process cost system, costs are assigned only:

a. To one work in process account
b. To work in process and finished goods inventory
c. To work in process, finished goods, and cost of goods sold.
d. To work in process accounts.
5. An equivalent unit production of material or conversion cost is equal to:

a. Prime cost.
b. The amount of material or conversion cost necessary to complete one unit of production.
c. A unit of work in process inventory.
d. The amount of prime cost necessary to start a unit of production into work in process.
6. An item that does not appear on a cost of production report is:

a. Work in process, beginning inventory.
b. Cumulative costs through the end of departmental production.
c. Finished goods, ending inventory.
d. Unit costs added by the department.
7. Transferred in costs as used in a process cost accounting system are:

a. Salaries that are transferred from an overhead cost center to a production cost center.
b. Ending work in process inventory of a previous process that will be used in a succeeding
process.
c. Labor that is transferred from another department within the same plant
d. Costs of the product of a previous process that is subsequently used in a succeeding
process.
8. In accounting for beginning inventory costs, the method that allows the addition of
beginning inventory costs with costs incurred during the period is referred to as:
a. First In, First Out
b. Addition
c. Last In, First Out
d. Average
9. Assuming that there was no bexinning work in pronun inventory and the ending work in
process inventory in 90% complets as to conversion costs, the number of equivalent units as
to conversion costs would be:
a. less than the units completed
b. more than the units completed
c. less than the units placed in process
d. the same as the units placed in process
10. The first step in applying the average cost method is to:
a. Add the beginning work in process costs to the current period's production costs
b. Divide the current period's production costs by the equivalent units
c. Subtract the beginning work in process costs from the current period's production costs
d. A and B.
11. In determining the cost of goods transferred in from preceding department under the
average costing method:
a. A simple average of unit costs is used.
b. Beginning inventory costs are separated from costs transferred in during the period.
c. A weighted average unit costs is used.
d. A first in, first out approach is used.
12. The average and FIFO process costing methods differ in that the average method:
a. Can be used under any cost flow assumption.
b. Does not consider the degree of completion of beginning work in process inventory when
computing equivalent units of production.
c. Is much more difficult to apply than the FIFO method.
d. Considers the ending work in process inventory only partially complete.
1. Red Corporation's production starts in Department 1. The following data is available for
April:
Units work in process, April 1 (50% complete) 40,000
Units started in April 240,000
Units work in process, April 30 (60% complete) 25,000
Materials are added at the beginning of the process in Department 1. Using the average
cost method, what are the equivalent units of production for the month of April?
Materials : Conversion Costs
a. 255,000 : 255,000
b. 270,000 : 280,000
c. 280,000 : 270,000
d. 305,000 : 275,000
2. Information concerning Department 1 of Black Company for June is as follows:
All materials are added at the beginning of the process. Using the average cost method, the
unit cost for material is:
a. P0.825
b. P0.833
c. P0.85
d. P0.97
3. White Company adds materials in the beginning of the process in Department 1, which is
the first of two stages of its production cycle. Information concerning the materials used in
Department 1 in July is as follows:
Using the weighted average cost method, what was the materials cost of work in process at
July 31?
a. P3,000
b. P6,120
c. P3,060
d. P6,000
4. During March, Brown Company's Department 2 equivalent unit costs, computed under the
average cost method were as follows:
Materials P10
Conversion 30
Transferred in 50
Materials are introduced at the end of the process in Department 2. There were 4,000 units
(40% complete as to conversion costs) in work in process at March 31. The total costs
assigned to the March 31 work in process inventory should be:
a. P360,000
b. P248,000
c. P272,000
d. P284,000
5. Green Company adds materials at the beginning of the process in Department O. The
following data pertains to Department O's work
in process during April:
Units work in process on April 1:(60% complete as to conversion cost) 3,000

Units started in April 25,000
Units completed in April 20,000
Units work in process on April 30: (75% complete as to conversion cost) 8,000
Under the average costing method, the equivalent units for conversion cost is:
a. 26,000
b. 25,000
c. 24,000
d. 21,800
6. Blue Company manufactures Product X in a two-stage production cycle in Departments 1

and 2. Materials are added at the beginning of the process in Department 2. Blue uses the
average costing method. Conversion costs for Department 2 were 50% complete as to the
6,000 units in beginning work in process and 75% complete as to the 8,000 units in ending
work in process. A total of 12,000 units were completed and transferred out of Department 2
during May. An analysis of the costs relating to work in process and production activity in
Department 2 for May follows:
What is the total cost of the units completed and transferred out for May of Product X?
a. P33,600
b. P30,500
c. P20,500
d. P27,500
7. The beginning work in process inventory in the Assembly Department of the Sun
Company on August I was 600 units, to which 60% of labor had been applied at a cost of
P2,880. During August, 8,000 units were transferred into the department and 7,200 units
were transferred out to the next department. Labor costs of P91,227 were incurred during
the month. The units in the ending work in process in the Assembly Department were
estimated to be 30 percent complete as to labor.
What is the labor cost of the units transferred out during the month?
a. P89,064
b. P80,964
c. P86,400
d. P88,920
8. Using the data in Number 7, what is the labor cost in the ending work in process
inventory?
a. P 5,195.40
b. P 5,187.00
C. P 5,950.50
d. P17,310.00
9. The beginning work in process in the Cooking Department of KFC Company on April 1 was
1,000 units, to which 100 percent of materials had been added at a cost of P10,000. During
April, 6,000 units were transferred into the department and 6,700 units were transferred out
to finished goods. Material costs of P63,272 were incurred during the month. The units in the
ending work in process were 60
percent complete as to materials.
What is the materials cost in the units transferred out to finished goods and in the ending
work in process inventory?
Transferred out : Ending WIP

a. P71,335 : P1,917
b. P75,820 : P1,922
c. P76,824 : P1,855
d. P75,820 : P1,179
10. Consider the following data for the Assembly Department of Pink Manufacturing
Company:
The Assembly Department uses the average method of process costing.

What are the equivalent units for direct materials and conversion costs?
a. 532 : 496
b. 500 : 502
c. 496 : 532
d. 532 : 500
11. Using the data in Number 5, what is the cost of the units completed and the ending work
in process?
Completed : Ending WIP
a. P458,620 : P61,020
b. P450,600 : P61,000
c. P450,000 : P60,000
d. P459,600 : P65,020
12. The Wilkens Company makes a water-treatment chemical in a single processing

department. Direct materials are added at the start of the process, Conversion costs are
added evenly during the process. Wilkens uses the average method of process costing. The
following
information for July 2018 is available.
What is the cost per equivalent unit for direct materials and conversion costs?
a. P 6.80 : P10.50
b. P10.80 : P 6.80
c. P 8.60 : P10.50
d. P 6.80 : P15.00
13. Using the data in No. 9, what are the costs of units completed and units in ending work
in process?
Completed : Ending WIP
a. P588,200 : P192,800
b. P580,200 : P190,800
c. P588,200 : P190,800
d. P582,800 : P192,800
14. Tide Chemicals Company manufactures an industrial solvent in two departments, mixing
and cooking. The question below focuses on the Cooking Department. During June 2018, 90
units (tons) of solvent were completed and transferred out from the Cooking Department.
Direct materials are added at the end of the process. Conversion costs are added evenly
during the process. Tide Chemicals uses the average method of process costing. The
following information for June 2018 is available.
What is the cost per equivalent unit for transferred-in costs, direct materials, and conversion
costs?
Transferred-in costs : Direct materials : Conversion costs
a. P1,060 : P400 : P645
b. P 979 : P400 : P645
c. P 907 : P400 : P368
d. P1,111 : P400 : P501
15. Using the data in No. 11, what is the cost assigned to units completed (and transferred
out) and to units in ending work in process?
Units Completed : Units in ending WIP
a. P189,450 : P31,475
b. P182,111 : P39,029
c. P180,450 : P31,475
d. P189,450 : P41,475
16. Rolex, Inc. is a manufacturer of high quality wrist watches. All watches go through an
identical manufacturing process. The process-costing system of the company has a single
direct cost category (direct materials) and a single indirect-cost category (coversion costs).
Each watch passes through two departments: the Assembly Department and the Testing
Department. Direct materials are added at the beginning of the process in Assembly.
Conversion costs are added evenly during the Assembly Department's process. When the
Assembly Department finishes work on each watch, it is immediately transferred to Testing.
Rolex uses the weighted average method of process costing. Data for the Assembly
Department for April 2018 are:
What are the costs per equivalent unit of each cost element?
a. P 98,000 : P43,500.00
b. P109,330 : P46,888.88
c. P 89,400 : P34,505.15
d. P190,400 : P45,305.15
17. Using the data in No. 16, what are the cost of the units completed and transferred out
and the units in ending work in process?
Units Completed : Units in Ending WIP
a. P12,735,000 : P1,284,500
b. P10,771,464 : P1,828,500
c. P10,770,400 : P1,200,000
d. P11,770,464 : P1,288,536
18. The Taylor Manufacturing Company manufactures leather golf gloves that require
processing in two departments, X and Y. During the month of May, Department X completed
10,500 gloves, of which 8,000 were transferred to Department Y. There were 500 gloves in
process
in Department X and 300 in Department Y on May 1. During the month, 15,000 additional
gloves were started in production in Department X; no additional units were added by
Department Y. All 7,000 gloves completed during the month were transferred from
Department Y to finished goods storeroom. The remaining units for Department X and Y
were still in process on May 31.
What is the number of units still in process in each department?
Department X : Department Y
a. 5,000 : 1,300
b. 3,000 : 1,500
c. 4,500 : 1,350
d. 5,500 : 1,400
19. You have been hired as the cost accountant for Marikina Micro, manufacturer of leather
cases for cell phones. This position has been vacant for one month. The manager of the
company made some incomplete computations. Your examination of the company's
production process reveals that materials are added at the beginning of production and
overhead is applied to each product at the rate of 70 percent of direct labor cost. There was
no finished goods inventory at the beginning of June. A further review of the company's
inventory cost records provides you with the following data:
At the end of June, the cost of finished goods inventory was determined to be P72,500.
What is the total units of production costs using the average costing?
a. P45.50
b. P45.00
c. P54.50
d. P54.00
20. Using the data in Number 19, what is the cost of goods sold?
a. P2,202,500
b. P2, 200,500
e. P2,502,500
d. P2,275,000
21. Production report from Moon Company for a 2 month period shows the following data:
All units were transferred out as they were completed. The company is using the average
costing method.
How many units were still in process at the end of June in both departments?
Department 1 : Department 2
a. 20,500 : 34,000
b. 18,500 : 34,300
c. 52,500 : 77,300
d. 20,000 : 34,000
22. Using the data in Number 21, what are the equivalent units of production for materials
and conversion costs for Department 2 for June?
Materials : Conversion costs
a. 151,000 : 140,825
b. 165,500 : 156,925
c. 117,000 : 134,025
d. 132,500 : 130,525
23. Tuesday Corporation manufactures a product which goes through three departments in a
continuous process. Production data for the month of June 2018 are as follows:
What was the cost of the units transferred from Department 3 to the finished goods
inventory for the month of June?
a. P63,000
b. P65,000
c. P67,000
d. P69,000
24. A company uses a process onsting system in which all materials are added at the
beginning of the first process. Conversion costs are added evenly throughout the process.
During the past month, 10,000 units were started in production and 8,000 were completed
and transferred to the next department. There were no beginning inventories. The ending
inventories were 70% complete at the end of the month. The company uses the average
costing method for inventory valuation
If materials used in production cost P15,000 and conversion costs incurred were P24,440,
what amount of inventory was transferred to the next department?
a. P32,000
b. P33,280
e. P36,280
d. P32,800
25. Using the data in Number 24, what is the cost of the ending work in process inventory in
the first department?
a P6,720
b. P8,000
e. P3,720
d. P6,640
Questions 26 and 27 are based on the following data:
Revel Corporation uses a process coating system. Products are many factured in a series of
three departments. The following data relate to Department Two for the month of May:
Beginning work in process (70% complete) 10,000 units

Started in production 80,000 units
The beginning work in process was valued at P66,000 consisting of P20,000 of transferred in
costs, P30,000 of material costs, and P16,000 of conversion costs. Materials are added at
the beginning of the process; conversion costs are added evenly throughout the process.
Cost added to production during May was:
Transferred in P16,000
Materials used 88,000
The company uses the average costs method of valuing inventories. All preliminary and final
computations are rounded to two decimal
places.
26. How much materials and conversion costs did Revel Corporation transfer out of
Department Two during May?
Materials cost : Conversion costs
a. P111,350 : P63,750
b. P112,500 : P69,259
c. P 88.000 : P66,000
d. P 93,500 : P64,148
27. What is the total of equivalent units for transferred in costs for the month?
a. 75,000 units
b. 80,000 units
c. 81,000 units
d. 90,000 units
Questions 28 and 29 are based on the following data:

Oro Mining Corporation uses a process costing system for its ore extraction operations. The
following data pertains to work in process inventories and operations for the month of June:
The company uses the average method of costing inventories.
28. What is the equivalent unit cost of materials and conversion costs
for June?
a. P2.00 : P2.92
b. P2.25 : P3.10
c. P2.30 : P3.00
d. P2.51 : P3.31
29. What is the total cost of the ending work in process inventory in June?
a. P153,264
b. P154,800
c. P155,424
d. P156,960
30. Kim Manufacturing Company uses average costing method to value its inventories. The
following information pertains to operations for
the month of May:
Beginning work in process. May 1 16,000 units
Started in process during May 100,000 units
Completed and transferred out during May 92,000 units
Ending work in process, May 31 24,000 units
The beginning inventory was 60% complete for materials and 20% complete for conversion
costs. The ending inventory was 90% complete for materials and 40% complete for
conversion costs.
Costs pertaining to the month of May are as follows:
Beginning inventory costs are materials, P54,560: direct labor; P20,320; and manufacturing
overhead, P15,240.
Costs incurred during May are materials used, P468,000; direct labor, P182,880; and
manufacturing overhead, P391,160.
What is the equivalent unit cost of materials and conversion costs
for May?
a. P4.12 : P5.65
b. P4.50 : P5.83
c. P4.60 : P6.00
d. P5.02 : P6.20
31. Using the data in Number 30, the total cost of the units in the ending work in process
inventory at May 31, is:
a. P99,360
b. P153,168
c. P154,800
d. P156,960
Questions 32 through 35 are based on the following data:

The Mongol Company uses the average costing method in its three processing departments.
Direct materials are added in Departments 1 and 2. Direct materials in Department 2 are
placed immediately
on each unit as it is transferred in.
Below is a portion of October's cost of production report for Department 2:
Work process inventory, ending
Cost from prior department (8,900 x P23) P2,047.00
Direct materials (8,900 x 200% x P.03) 267.00
Direct labor (8,900 x 60% x P.28) 1,495.20
Manufacturing overhead (8,900 x 60% x P10) 534.00
During November the following activity occurred in Department 2:
Units transferred in 30,100

Costs transferred in P8,483.00
Costs added:
Direct materials P1,683.00
Direct labor P7,994.80
Manufacturing overhead (applied) P2,023.00
Units transferred out 29,000
Ending work in process inventory 75% complete
32. What is the transferred in unit cost?

a. P0.27
b. P0.25
c. P0.30
d. P0.20
33. What is the materials unit cost?

a. P0.05
b. P0.10
e. P0.08
d. P0.15
Continued
34. What is the direct labor unit cost?
a. P0.25
b. P0.26
c. P0.27
d. P0.28
35. What is the manufacturing overhead unit cost?

a. P0.07
b. P0.08
c. P0.09
d. P0.10
36. The following data for September were taken from the cost records of the Mixing
Department of Love Manufacturing Company, which uses average costing method:
Work in process, August 31:

(all materials, 50% converted) 1,000 units
Put into process during the month of September 10,000 units
Work in process, September 30:
(all materials, 60% converted) 1,400 units
Costs:
Work in process, August 31:
Materials P 24,000
Labor 15,000
Factory overhead 7,600
Put into process during September:
Materials 251,000
Labor 193,800
The total cost of the units completed and transferred was:
a. P576,000
b. P605,400
C. P640,400
d. P693,800
37. Anahaw Company's production cycle starts in the Mixing Department. The following
information is available for the month of April 2018?
Work-in-process, April 1 (50% complete) 10,000 Units

Started in April 210,000 Units
Work-in-process, April 30 (60% complete) 25,000 Units
Materials are added in the beginning of the process in the Mixing Department. Using the
weighted average equivalent units of production for the month of April 2018?
ethod, what are the
Materials : Conversion
a. 240,000 : 250,000
b. 255,000 : 255,000
C. 270,000 : 280,000
d. 280,000 : 270,000
38. The Wiring Department is the second stage of Acacia Company's production cycle. On
May 1, the beginning work-in process 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
Acacia's production cycle. On May 31, the ending work-in process contained 20,000 units
which were 80% complete as to conversion
costs. Material costs are added at the end of the process, using the weighted average
method, the equivalent units were:
a. 125,000 : 100,000
b. 105,000 : 105,000
c. 105,000 : 121,000
d. 125,000 : 121,000
39. The following information pertains to Lanao's First Department for the month of April:
All materials are added at the beginning of the process. Using the weighted average
method, the cost per equivalent unit for materials Is:
a. P0.59
b. P0.55
c. P0.45
d. P0.43
40. Information concerning Dept. B of Simon Co. follows:
Conversion costs were 20% complete as to the beginning work in process and 40%
complete as to the ending work in process. All materials are added at the end of the
process. Simon Co. uses the weighted average method.
The unit cost for conversion costs and for transferred-in cost rounded to the nearest centavo
are:
a. P0.44 and P0.48
d. P0.46 and P0.51
c. P0.48 and P0.51
d. P0.50 and P0.58
41. Reyna Company manufactures product X in a two-stage production cycle in Departments

A and B. Materials are added at the beginning of the process in Department B. Reyna uses
the weighted average method. conversion cost for department B were 50% complete as to
the 6,000 units in the beginning work-in-process and 75% complete as to the 8,000 units in
the ending work-in-process, 12,000 units were completed and transferred out of Department
B during February 2018. An analysis of the costs relating to work-in-process and production
activity in Department B for February 2018 is as follows:
The total cost per equivalent unit transferred out for February 2016 of product X, rounded to
the nearest centavo, was:
a. P2.75
b. P2.78
c. P2.82
d. P2.85
42. On April 1, 2018, the Hari Company had 6,000 units of work-in-process in Department B,
the second and last stage of their production cycle. The costs attached to these 6,000 units
were P12,000 of costs transferred in from Department A, P2,500 of material cost added in
department B and P2,000 of conversion cost added in Department B. Materials are added in
the beginning of the process in dspartment B. Conversion was 50% complete on April 1,
2018. During April 14,000 units were transferred in from Department A at a cost of 27,000;
and materials costs of P3,500 and conversion costs of P3,000 were added in Department B.
On April 30, 2018, Department B had 5,000 units of work-in-process 60% complete as to
conversion costs. The costs attached to these 5,000 units were P10,500 of costs transferred
in from Department A, P1,800 of material costs added in Department B and P800 of
conversion costs added in Department B.
Using the weighted average method, what are the unit costs?
Transferred in : Materials : Conversion cost
a. P1.95 : P.25 : P.27
b. P1.95 : P.30 : P.28
c. P1.80 : P.30 : P.27
d. P1.70 : P.25 : P.28
43. For the month of March, Payaso Inc. registered the following information:
Beginning work in process (70% complete) 40,000 units
Started in March 300,000 units
The cost of beginning work in process was P140,000 while the production costs for the
month registered at P1,172,000. Using the average method, what is the unit cost of
production for March?
a. P4.00
b. P3.86
c. P3.91
d. P4.69
44. Information for the month of May concerning Department A, the first stage of Pinay
Corporation's production cycle is as follows:
Material costs are added at the beginning of the process. The ending work-in-process is 50%
complete as to conversion costs. How would the total costs accounted for be distributed,
using the weighted average method?
Goods Completed : Work-in Process, End
a. P39,600 : P3,400
b. P39,600 : P4,400
c. P43,000 : 0
d. P44,000 : P3,400
45. Lucas Company adds materials in the beginning of the process in the Forming
Department, which is the first of two stages of its production cycle. Information concerning
the materials used in the Forming Department in October 2018 are as follows:
Using the weighted-average method, what was the materials cost of work-in-process at
October 31, 2018?
a. P3,060
b. P5,520
c. P6,000
d. P6,120
46. During March 2018 Binata Co.'s Department Y equivalent unit product costs, computed
under the weighted average method, were asfollows:
Materials 1
Conversion 3
Transferred-In 5
Materials are introduced at the end of the process in Department Y. There were 4,000 units
(40% complete as to conversion cost) in work-in-process at March 31, 2018. The total costs
assigned to the March 31, 2018, work-in-process inventory should be
a. P36,000
b. P28,800
c. P27,200
d. P24,800
Problems:
Problem 11-1 : Honey Corporation
Problem 11-2 : Stone Company
Problem 11-3 : Ace Company
Problem 11-4 : Tan Corporation
Problem 11-5 : Malakas Corporation
Problem 11-6 : Ka Louie Company
Problem 11-7 : Lavandera Company
Problem 11-8 : Orange Company
Problem 11-9 : Obama Corporation
Chapter 12
COST OF PRODUCTION REPORT : FIFO COSTING
MULTIPLE CHOICES - THEORETICAL
1. If a company reports two different unit costs for goods transferred to the next
department, it is reasonable to assume that:
a. FIFO costing method is used
b. an average costing method is used
c. errors must have occurred in recording costs
d. a LIFO costing method is used
2. In order to compute equivalent units of production using the FIFO method, work for the
period must be broken down to units:
a. started and completed during the period
b. completed during the period and units in ending inventory
c. completed from beginning inventory, started and completed during the month, and units
in ending inventory
d. started during the period and units transferred out during the period.
3. The FIFO method will produce the same cost of goods manufactured amount as the
average cost method when:
a. there is no beginning inventory
b. there is no ending inventory
c. beginning and ending inventories are each 50% complete
d. beginning and ending inventories are each 100% complete.
4. The FIFO method differs from the average cost method in that FIFO:
a. allocates costs based on whole units, but the average cost method uses equivalent units
b. considers the stage of completion of beginning work in process in computing equivalent
production, but the average cost method does not
c. does not consider the stage of completion of beginning work in process in computing
equivalent production, but the average cost method does
d. is applicable only to those companies using the FIFO costing method, but the average
method may be used with any costing method.
5. In computing the current period's manufacturing cost per equivalent unit, the FIFO
method of process costing considers current period costs
a. Only
b. Plus cost of beginning work in process inventory.
c. Less cost of beginning work in process inventory.
d. Plus cost of ending work in process inventory.
6. In Process 2, Material G is added when a batch is 60% complete. Ending work in process
unit, which are 50% complete, would be included in the computation of equivalent units for:
Conversion costs : Material G
a. Yes : No
b. No : Yes
c. No : No
d. Yes : Yes
7. A process costing system was used for a department that began operations in January
2018. Approximately the same number of physical units, at the same degree of completion,
was in work in process at the end of both January and February. Monthly conversion costs
are allocated between ending work in process and units completed. Compared to the FIFO
method, would the average method use the same or a greater number of equivalent units to
calculate the monthly
allocations?
Equivalent units for average method
Compared to FIFO
January : February
a. Same : Same
b. Greater number : Greater number
c. Greater number : Same
d. Same : Greater number
1. Sony Manufacturing Company uses a process cost system to manufacture laptop

computers. The following information summarizes operations relating to laptop computer
model SS88 during the quarter ending March 31, 2018:
Beginning work in process inventory was 50% complete for direct materials. Ending work in
process inventory was 75% complete for
direct materials.
What were the equivalent units of production under the FIFO method
with regard to materials for March?
a. 450
b. 500
C. 550
d. 600
2. Using the data in Number 1, what is the total value of material costs in ending work in
process inventory using the FIFO unit cost inventory valuation method?
a. P183,000
b. P194,000
c. P210,000
d. P216,000
3. The following information is given for the final producing department of the German
Company:
Beginning work in process inventory, Jan. 1 (40% complete as to labor) 1,000 units
Transferred in during month 30,000 units
Transferred out during month 27,000 units
Ending work in process (70% complete as to labor) 4,000 units
Labor cost in the beginning work in process P3,600
Labor costs incurred during month P238,140
What is the labor cost in the units transferred out of the department during the month?
a. P219,060
b. P219,300
c. P213,676
d. P213,390
4. The following information is given for the Assembling Department of the Danny Company,
a metal producer, for the month of June:
Beginning work in process inventory (1/3 complete as to overhead) 3,300 units
Transferred in during month 15,200 units
Transferred out during month 16,500 units
Ending work in process inventory (3/4 complete as to overhead) 2,000 units
Overhead cost incurred in beginning work in process P2,332
Overhead cost incurred during month P38,025
What is the overhead cost of the units transferred out of the department during the month?
a, P36,892 *note: it should be 36,982
b. P32,032
c. P34,650
d. P36,892
Questions 5 through 9 are on the following data:

Tom Manufacturing Company uses the FIFO costing method to account for their inventories.
The following information pertains to operations for the month of May 2018:
Beginning work in process inventory, May 1 16,000 units
Started in production during May 100,000 units
Completed production during May 92,000 units
Ending work in process inventory, May 31 24,000 units
The beginning inventory was 60% complete for materials and 20% complete for conversion
costs. The ending inventory was 90% complete for materials and 40% complete for
conversion costs.
Costs pertaining to the month of May are as follows:
• The beginning inventory costs are: materials, P54,560; direct labor, P20,320; and
overhead, P15,240.
• Costs incurred during May are: materials used, P468,000: direct labor, P182,880; and
overhead, P391,160.
5. What are the equivalent units of production for materials?

a. 97,600 units
b. 104,000 units
c. 107,200 units
d. 108,000 units
6. What are the equivalent units of production for conversion costs?

a. 85,600 units
b. 88,800 units
c. 95,200 units
d. 98,400 units
7. What is the equivalent unit cost of materials for May?

a. P4.12
b. P4.50
c. P4.60
d. P4.80
8. What is the equivalent unit conversion cost for May?

a. P5.65
b. P5.83
c. P6.00
d. P6.20
9. What is the total cost of units in the ending work in process inventory at May 31?
a. P153,168
b. P145,800
c. P155,328
d P156,960
Items 10 and 11 are based on the following information:

The following data has been gathered from the records of Gerry Manufacturing Company for
August 2018. The company uses the FIFO process costing method. Materials are added at
the beginning of pro-
cessing; overhead is applied on a direct labor basis. The units are transferred to a second
department for packaging.
Beginning work in process inventory (40% complete as to conversion costs) 5,000 units
Started in August 90,400 units
Ending work in process inventory (70% complete as to conversion cost) 4,000 units
Materials cost incurred in August P433,920
Conversion costs incurred in August P115,250
Beginning inventory cost totaled P24,875.

10. What is the cost of units transferred out to the Packaging Department in August?
a. P551,345
b. P522,720
c. P547,595
d. P526,470
11. What is the cost of August's ending work in process inventory?
a. P22,700
b. P19,200
c. P23,700
d. P22,000
Items 12 through 16 are based on the following:

Four Seasons Company is a contract manufacturer for the Mayon Dressing Company. Four
Seasons uses a FIFO method to account for its production of its salad dressing All materials
are added at the
start of the process. Mayon provides reusable vats to Four Seasons for the completed
product to be shipped to Mayon for bottling so Four Seasons incurs no packaging costs. April
2018 production and cost data for Four Seasons Company is as follows:
12. How many gallons of dressing ingredients were started in April?

a. 229,500
b. 220,500
c. 229,000
d. 230,500
13. What is the total cost of the completed beginning inventory?

a. P370,288
b. P419,410
c. P409,410
d. P375,280
14. What is the total cost of units completed during April?

a. P2,481,788
b. P2,814,800
c. P2,482,788
d. P2,841,780
15. What is the average unit cost per gallon of all goods completed during April?
a. P10.26
b. P10.25
c. P10.36
d. P10.64
16. What is the cost of April's ending work in process inventory?

a. P151, 105
b. P150,100
c. P153, 155
d. P151,200
Numbers 17 through 22 are based on the following data:
Rolex, Inc. is a manufacturer of high quality wrist watches. All watches go through an
identical manufacturing process. The process-costing system of the company has a single
direct-cost category
(direct materials) and a single indirect-cost category (conversion costs). Each watch passes
through two departments: The Assembly Department and the Testing Department. Direct
materials are added at the beginning of the process in Assembly. Conversion costs are
added evenly during the Assembly Department's process. When the Assembly Department
finishes work on each watch, it is immediately transferred to Testing.
Rolex uses the FIFO method of process costing. Data for the Assembly Department for April
2018 are:
17. What is the cobt per equivalent unit of direct materials?

a. P 98,400
b. P100,000
c. P 89,400
d. P190,400
18. What is the cost per equivalent unit of conversion costs?

a. P44,000
b. P43,000
e. P44,500
d. P43,500
19. What is the total cost of the completed units from the beginning work in process
inventory?
a. P2,632,000
b. P2,280,000
c. P 352,000
d. P2,532,000
20. What is the average unit cost of the units transferred out to the next department?
a. P141,244
b. P144,000
c. P114,244
d. P144,244
21. What is the cost of the units started and completed during April?
a. P10,080,000
b. P10,800,000
c. P 9,080,000
d. P10,050,000
22. What is the cost of the units in the ending work in process inventory?
a. P1,308,000
b. P1,000,000
c. P 308,000
d. P1,803,000
Items 23 through 27 are based on the following data:
The Wilkens Company makes a water treatment chemical in a single processing department.
Direct materials are added at the start of the process. Conversion costs are added evenly
during the process Wilkens uses the FIFO method of process costing. The following
information for July 2018 is available.
23. What is the cost per equivalent unit for direct materials?
a. P7.00
b. P8.00
c. P9.00
d. P7.50
24. What is the cost per equivalent unit for conversion costs?
a. P10.60
b. P10.80
c. P10.00
d. P10.50
25. What is the cost of units completed from the beginning work in process inventory?
a. P161,800
b. P130,000
c. P 31,800
d. P 91,800
26. What is the average unit cost of the units transferred out to the next department?
a. P17.18
b. P15.12
c. P17.00
d. P18.00
27. What is the cost of units in the ending work in process inventory?
a. P196,800
b. P112,000
c. P190,600
d. P169,800

Tide Chemicals Company manufactures an industrial solvent in two departments: mixing
and cooking. The question below focuses on the Cooking Department. During June 2018, 90
units (tons) of solvent were completed and transferred out from the Cooking Department.
Direct materials are added at the end of the process. Conversion costs are added evenly
during the process. Tide Chemicals uses the FIFO method of process costing. The following
information for June 2018 is available.
28. What is the cost per equivalent unit for the transferred in costs?
a. P1,070
b. P1,500
c. P1,700
d. P1,090
29. What is the cost per equivalent unit for materials and conversion costs?
a. P400 : P663
b. P450 : P650
c. P500 : P673
d. P550 : P663
30. What is the cost of the units completed (and transferred out) and the units in ending
work in process?
Units Completed : Ending WIP
a. P186,480 : P42,045
b. P106,650 : P42,045
c. P186,480 : P32,100
d. P180,480 : P45,450
Questions 31 through 36 are based on the following information:

Bokia, Inc. manufactures cellphones. It has two departments: Assembly Department and
Testing Department. Direct materials are added when the Testing Department process is
90% complete Conversion oasts are added evenly during the Testing Departments process.
As work in Assembly is completed, each unit is immediately transferred to Testing
Department. As each unit is completed in Testing Department, it is immediately transferred
to Finished Goods
Bokia, Inc. uses the FIFO method of process costing. Data for the Testing Department for
June 2018 are:
31. What is the cost per equivalent unit of materials and conversion cost?
Materials : Conversion Cost
a. P525 : P525
b. P500 : P465
c. P600 : P500
d. P525 : P465
32. What is the cost per equivalent unit of materials?

a. P1,850
b. P1,770
c. P1,970
d. P1,990
33. What is the cost per equivalent unit of conversion costs?

a. P850
b. P900
c. P950
d. P750
34. What is the total cost of completed units from beginning work in process?
a. P643,715
b. P640,715
c. P743,000
d. P643,000
35. What is the total cost of the units transferred out to finished goods?
a. P2,319,965
b. P2,319,000
c. P2,300,000
d. P2,450,000
36. What is the cost of the units in ending work in process inventory?
a. P171,000
b. P180,000
c. P190,000
d. P132,750
Questions 37 and 38 are based on the following information:

Omega Plastics has two processing department: Shaping Department and Assembly
Department. Consider the following June 2014 data for physical units in the Assembly
Department:
Beginning work in process 15,000

Transferred in from the Shaping Dept. 9,000
Ending work in process 5,000
Direct materials are added when the process in the Assembly Department is 80% complete.
Conversion costs are added evenly during the process. Omega Plastics uses the FIFO
method of process costing. The following additional information is available:
37. For each cost category, what is the percentage of completion of ending work in process
inventory?
Transferred in Costs : Direct Materials : Conversion Costs
a. 100% : 0% : 20%
b. 0 : 100% : 80%
c. 100% : 100% : 20%
d. 0% : 0% : 20%
38. What is the total cost of the units completed (transferred out) andthe units in ending
work in process?
Transferred out : Ending WIP
a. P1,080,000 : P150,800
b. P1,800,000 : P150,800
c. P1,080,000 : P168,000
d. P1,680,000 : P145,800
39. Orchids Company has a process cost system using the FIFO cost flow method. All
materials are introduced at the beginning of the process in Department One. The following
information is available for the month of January 2018:
Work in process, 1/1/18 (40% complete as to conversion costs) 500 Units

Started in January 2,000 Units
Transferred to Department Two during January 2,100 Units
Work in process, 1/31/18 (25% complete as to conversion costs) 400 Units
What are the equivalent units of production for the month of January 2018?
Materials : Conversion
a. 2,500 : 2,200
b. 2,500 : 1,900
c. 2,000 : 2,200
d. 2,000 : 2,000
40. Department II of Hope Manufacturing Company presents the following production data
for the month of May, 2018:
opening inventory 3/8 completed 4,000 units
Started in process 13,000 units
Transferred 9,000 units
Closing inventory, 1/2 completed 4,000 units
3/4 completed 4,000 units
What are the equivalent units of production for the month of May, 2018.
FIFO : AVERAGE
a. 12,500 units : 13,000 units
b. 17,000 units : 12,500 units
c. 12,500 units : 14,000 units *note: it should be 11,500 : 14,000 units
d. 15,000 units : 14,000 units
41. The Ilang-Ilang Corporation, engaged in a manufacturing business three different

situations. Stages of completion of the inventories apply to all cost elements.
(1) Started in process, 6,500 units transferred, 5,500 units: in process, 400 units 50%
completed and 600 units 25% completed.
(2) Beginning inventory, 6,250 units 40% completed; started in process, 25,000 units;
transferred, 26,250 units; in process at the end, 3,000 units 50% completed and 2,000 units
25% completed.
(3) Beginning inventory, 6,000 units 30% completed; started in process, 13,000 units; lost in
processing, 500 units from production started this period (loss was normal and occurred
throughout the production process); transferred, 14,000 units; in process at the end, 3,000
units 50% completed and 1,500 units 75% completed
What are the equivalent production of the three different situations under FIFO and average
costing?
FIFO AVERAGE
1:2:3 1:2:3
a. 5,850 : 25,750 : 14,825 5,850 : 28,250 : 16,625
b. 5,850 : 27,550 : 18,425 5,580 : 22,850 : 15,662
c. 8,550 : 20,575 : 15,428 5,508 : 28,025 : 16,265
d. 5,058 : 20,775 : 12,524 5,850 : 28,250 : 16,625
42. Mataba Company sells food processors and manufactures them in a single continuous
process at the end of august there were 200 units valued at P30,095, which consists of
P25,200 in materials cost and P4,895 in conversion cost. These were 100% complete as to
materials and 25% complete as to conversion cost. 1,200 units were added to production
during September, and these had materials costs of Þ168,000. Processors which have not
been completed at the end of September total 200 units and were 100% complete as to
materials and 50% complete as to conversion cost. Conversion cost during September were
P158,125. There were no units lost in process.
What are the equivalent units of production for September?
Materials : Convesion Cost
a. 1,400 : 1,350
b. 1,200 : 1,100
c. 1,200 : 1,150
d. 1,200 : 1,250
43. Samahan, Inc. manufactures a highly sensitive smoke alarm and uses the first-in, first-
out method for process costing and finished goods costing. In costing finished goods, the
unit cost for units completed from the work in process at the beginning of the period is kept
separate from the unit cost of those started and completed during the
period.
The total manufacturing costs for the month of June is P264,000 and 2,750 units are
completed during the month.
How would the total costs accounted for be distributed?

Work-in Process, End : Finished Goods
a. P33,000 : P92,400
b. P33,000 : P79,200
c. P32,200 : P92,400
d. P66,000 : P52,800
44. For the month of May, the Cutting Department of Damit Co had 80% complete as to the
beginning work in process and 50% complete as to the ending work in process. Related data
follow:
If the company were using FIFO method, the conversion cost of the work in process in the
Cutting Department at the end of May would amount to
a. P156,000
b. P254,000
c. P132,000
d. P176,000
Problems:
Problem 12-1 : Star Toys - First Department
Problem 12-2 : Star Toys – Subsequent Department
Problem 12-3 : Viagra Chemical Corporation
Problem 12-4 : Plata Company
Problem 12-5 : Ace Tool Company – Second Department
Problem 12-6 : Papaya Company
Problem 12-7 : Safety First Company
Problem 12-8 : Master Manufacturing Company
Chapter 13
COST OF PRODUCTION REPORT : ACCOUNTING FOR SPOILED UNITS &
INCREASE IN PRODUCTION
1. Units that do not meet production standards and usually discarded are:
a. Defective units.
b. Spoiled units,
c. Scrap units.
d. Added units.
2. Spoilage that is an inherent result of a particular production and arises even under
efficient operating conditions is:
a. Normal spoilage.
b. Abnormal spoilage.
c. Defective units.
d. Scrap units.
3. What is the method of accounting for spoilage wherein spoiled units are ignored in the
computation of equivalent units of productions?
a. FIFO method.
b. Average method.
c. Theory of neglect.
d. Separation method.
4. What is the equivalent production of lost units which are normally discovered at the end
of the process?
a. None.
b. 100%
c. 50%
d. 80%
5. Under the average method, the cost of spoiled units discovered at the end of the process
is to be absolved by:
a. All the good units.
b. The completed and transferred out units.
e. The units in process at the end.
d. None.
6. When spoiled units are discovered at the end of the process in the subsequent
department, to compute the cost of spoiled units, the number of spoiled units is multiplied
by:
a. The unit costs from prior department only.
b. The total unit costs from prior department and subsequent departments
c. The unit cost in the subsequent department.
d. The unit cost for materials in subsequent department.
7. If the spoilage is normal, using the FIFO costing method, the number of equivalent units
that production costs should be charged to would be based upon:
a. Spoiled units.
b. Units transferred out and spoiled units.
c. Units transferred out, beginning work in process, and units in ending work in process.
d. Units transferred out, beginning work in process, spoiled units, and units in ending work in
process.
8. When average costing method is used, the costs of the beginning work in process are:
a. kept separate from the costs for the current month
b. added to the costs of the current month
c. subtracted from the costs of the current month
d taken as a percentage of cost of the current month
9. When FIFO costing method is used, the costs of the beginning work in process are:
a. kept separate from the costs of the current period
b. added to current costs
c. subtracted from the current month
d. averaged with other costs to arrive at total cost.
10. When materials are added in the subsequent department and the volume of units
increased, the transferred in unit costs are:
a. increased
b. unchanged
c. decreased
d. not applicable
1. Materials are added at the start of the process in the first department of JG Manufacturing
Company. The following information is available for the month of January 2018:
Work in Process - Beginning (60% complete as to conversion costs) 30,000 units
Started in January 75,000 units
Transferred Out to Next Department 55,000 units
Normal Lost Units 15,000 units
Work in Process - Ending (50% complete as to conversion costs) 35,000 units
The costs of normal lost units are absorbed by the units transferred out to the next
department. Using the average method, what is the
equivalent unit for materials?
a. 90,000
b. 72,500
c. 90,500
d. 105,000
2. Using the data in Number 1, assuming the FIFO method is used what is the equivalent
unit for conversion costs?
a. 69,500
b. 84,500
c. 75,500
d. 87,500
3. Ping Products transferred 15,000 units to the department. An additional 5,000 units were
in the beginning inventory in the department. At the end of the month 12,000 units were
transferred to the next department, 6,000 units remained in work in process, 40% complete
as to conversion costs and the remaining units spoiled at the 75% stage of conversion.
Beginning inventory was 60% complete as to conversion costs and spoiled units were
considered normal.
What is the equivalent unit for conversion costs using the FIFO Costing method?
a. 14,400
b. 12,900
c. 13,900
d. 13,400
4. Using the data in Number 3, what is the equivalent unit for conversion costs under the
average method?
a. 15,900
b. 14,400
c. 16,400
d. 20,000
5. Jet Company manufactures a product that passes in four departments in a continuous

process. Department 3 had no beginning work in process inventory and transferred in
18,000 units from Department 2, each with an equivalent unit cost of P12.50. Within
Department 3, unit costs for direct materials, direct labor and manufacturing overhead
(applied) were P8.00, P9.75, and P4.00, respectively. Direct materials in Department 3 are
added at the beginning of the proces. Department 3 had 4,800 units in ending work in
process inventory which are 65% complete as to conversion costs.
If 620 units were lost in Department 3 at Jet's inspection point where conversion costs were
45% complete, what was the total costs of lost
units?
a. P11,325.22
b. P13,818.25
c. P16,546.25
d. P 8,796.25
6. Using the data in Number 5, if at Jet's Department 3 inspection point, which is at halfway
through Department 3's conversion process, 1,200 spoiled units were removed from
production. Normal lost units was 800 units. If total costs of lost units was P32,850, how
much of the amount should be allocated to ending work in process inventory?
a. P5,840.00
b. P7,320.00
c. P6,257.14
d. P -0-
7. Rose Company instituted a new process in July. During the month, 10,000 units were
started in Department 1. Of the units started, 1,000 were spoiled at the end of the process
which were considered normal in the operation of the company. 7,000 units were transferred
to Department 2, and 2,000 remained in work in process at July 31 which was 100%
complete as to material costs and 50% complete as to conversion costs. Material costs of
P30,000 and conversion costs of P45,000 were charged to Department 1 in July.
What were the total costs transferred out to Department 2?
a. P46,900
b. P53,600
c. P56,000
d. P57,120
8. The following production data were available for the month of May 2018 for the first
department of Tan Company.
Work in Process, May 1 (40% complete as to conversion costs) 40,000
Started in Process during the month 100,000
Transferred Out to Next Department 85,000
Normal Lost Units discoverd when units are 80% completed 10,000
Work in Process, May 31 (60% complete as to conversion costs) 45,000
If materials are added at the beginning of the process, using the average method, what is
the equivalent unit for materials?
a. 122,000
b. 112,000
c. 140,000
d. 120,000
9. Loren Company has the following production data

for the month of March, 2018:
Work in Process at March 1 10,000 units
Started during March 40,000 units
Transferred Out to Finished Goods 33,000 units
Work in Process at March 31 15,000 units
Abnormal Lost Units 2,000 units
Materials were added at the beginning of the process. As to conversion costs, the beginning
work in process was 70% completed and the ending work in process was 60% completed.
Lost units are de
tected at the end of the process. Using the average method, what is the equivalent unit for
March with respect to conversion costs?
a. 42,000
b. 44,000
c. 45,000
d. 46,000
10. Heaven Company adds materials at the start of production in the Forming Department.
Data related to production in May 2018 are as follows:
Work in Process, May 1 14,000 Units

Started in May 70,000 Units
Completed and Transferred Out in May 72,000 Units
Normal Lost Units 4,000
Work in Process, May 31 8,000
Materials in beginning work in process inventory P68,000
Cost of materials added during month P100,000
Assuming that lost units are ignored in computing equivalent production, what is the
equivalent unit of production for materials under the average method?
a. 80,000
b. 84,000
c. 88,000
d. 82,000
11. Using the data in number 10, what is the cost per unit for materials?
a. P2.00
b. P2.10
c. P2.20
d. P2.30
12. The following data pertain to labor used in the Boxing Department of the Sky Paper
Company during July:
Beginning work in process, 400 units, 50% complete
Started in production, 10,000 units
Transferred out to next department, 9,600 units
Ending work in process, 200 units 40% complete
Lost at the end of the process, 600 units
Labor costs in beginning work in process, P15,000
Cost of labor incurred during the month, P365,360
What are the equivalent units of production for labor for the month under the average
method?
a. 10,280
b. 9,680
c. 12,080
d. 10,520
13. Using the data in Number 12, what is the labor cost per unit of production?
a. P37.00
b. P39.30
c. P39.00
d. P37.50
14. Using the data in Number 12, what are the equivalent units for labor under the FIFO
method?
a. 10,080
b. 10,280
c. 10,500
d. 10,800

On january 2, 2018 beginning work in process inventory for the machining department of
the jack company was 3,000 units with transferred in costs from prior department of 90,000
during the month, 15,000 units were transferred into the machining department with
transferred in costs from prior department of P450,000. A total of 17,250 units transferred
out to the next department and 450 units
were in the ending work in process inventory. Some units were lost at the end of the process
as a normal part of the manufacturing process.
Assuming the company uses the average method of process costing and lost units are
included in the equivalent production computations.
15. How many units were lost?
a. 300
b. 400
c. 350
d. 450
16. What is the equivalent unit of production for transferred in costs from prior department
for the month?
a. 18,000
b. 17,350
c. 18,250
d. 17,500
17. What is the cost per equivalent unit for transferred in costs from prior department?
a. P30.00
b. P31.00
c. P30.50
d. P34.00
l
On March 1, 2018, the beginning work in process inventory for the Laminating Department
of the Best Company was 100 units. The transferred in costs from prior department for
these units were P19,350. During the month, 4,800 units with transferred in costs from prior
department of P124,800 were transferred into the Laminating Department, and 4,600 units
were completed and transferred to the next department. The ending work in process
inventory was 205 units, and 95 units were lost in production.
The company uses the average method of process costing. Lost units are ignored by the
company in equivalent production computations.
18. What is the equivalent unit of production for transferred in costs from prior department?
a. 4,805
b. 4,905
c. 4,800
d. 4,807
a. P30.00
b. P29.50
c. P31.50
d. P27.50
20. What is the transferred in cost from prior department to be included in the ending
inventory of work in process in the Laminating Department?
a. P6,150
b. P6,500
c. P6,450
d. P7,150
21. Kennedy Decorative Tray Company uses the average method and adds materials at the
start of production in the forming department. data related materials used in october 2018
are as follows:
What is the cost per equivalent unit of production for materials for the month?
a. P23.00
b. P28.00
c. P27.50
d. P23.50
22. Using the data in Number 21, what is the entry to record the costs related to the units of
abnormal loss (ignore labor overhead and transferred in costs)
a. Loss from Abnormal Spoilage 700
Work in Process - Forming Dept 700
b. Manufacturing Overhead Control 700
Work in Process - Forming Dept. 700
c. Loss from Abnormal Spoilage 850
d. Manufacturing Overhead Control 850
23. On October 1, 2018, the beginning work in process inventory for the Mixing Department
of Belo Beauty Products, a cosmetic producer. was 500 units with transferred in costs from
prior department of P33,000. During the month, 11,000 units with transferred in costs from
prior department of P165,000 were transferred into the Mixing Department. Because of the
addition of water to the solution, the number of units was increased by 5,000 units. A total
of 15,500 units were transferred to the next department and 1,000 units were in the ending
work in process inventory.
Belo uses the average method of process costing.
What is the equivalent unit for transferred in costs from prior department?
a. 16,500
b. 15,000
c. 17,500
d. 16,000
a. P12.50
b. P12.00
c. P13.50
d. P15.50
26. Using the data in Number 23, what is the amount of transferred in costs from prior
department in the ending work in process inventory?
a. P15,000
b. P13,000
c. P12,000
d. P11,400
26. The following information is given for the Coloring Department of the Bulacan Company
for the month of June 2018. The company uses the FIFO method of process costing.
Work in process inventory, June 1, 500 units, 100% complete materials
Transferred in during month, 2,000 units
Transferred out to next department during month, 2,200 units
Work in process inventory, June 30, 250 units, complete as to materials
Normal units lost at the end of the process, 50 units
Cost of materials in beginning work in process, P30,500
Materials added during the month, P153,000
What is the cost per equivalent unit of materials for the month?
a. P1,950
b. P1,500
c. P2,000
d. P2,050
27. Using the data in Number 26, what is the cost per unit of materials for the month?
a. P 78.46
b. P102.00
C. P 76.50
d. P 74.63
28. What is the material cost in the ending work in process inventory?
a. P19,125
b. P-0-
c. P19,615
d. P18,658
Questions 29 through 37 are based on the following information:

Consider the following data for April 2018 from Pink Manufacturing Company, which makes
silk pennants and uses the average process costing system. All direct materials are added at
the beginning of the process, and conversion costs are added evenly during the process.
Spoilage is detected upon inspection at the completion of the process. Spoiled units are
disposed of at zero net disposal value.
29. What is the cost per equivalent unit for materials and conversion costs?
a. P12.14440 : P29.60
b. P14.50556 : P29.60
c. P12.14440 : P39.50
d. P14.00546 : P30.50
30. What is the cost of the units completed and transferred out to the next department?
a. P385,990
b. P375,660
c. P379,874
d. P375,700
31. What is the cost of the units in ending work in process?

a. P42,040
b. P45,500
c. P42,049
d. P45,040
32. What is the cost assigned to abnormal lost units?

a. P2,087
b. P3,500
c. P2,050
d. P3,055
Assuming that Pink uses the FIFO process costing method instead of the average method:
33. What are the equivalent units for materials and conversion cost?
a. 10,150 : 9,250
b. 10,000 : 9,100
c. 11,150 : 9,250
d. 12,150 : 9,100
34. What are the cost per equivalent unit for materials and conversion costs (rounded)?
a. P11.94 : P30.00
b. P12.95 : P30.50
c. P15.58 : P30.55
d. P11.52 : P29.55
35. What is the cost of the units completed and transferred to next department?
a. P370,500
b. P368,944
c. P386,494
d. P365,960
36. What is the cost of units in ending work in process?

a. P41,880
b. P50,780
c. P51,080
d. P45,880

a. P2,097
b. P3,500
c. P2,650
d. P4,025

The cost data and production data for King Company for the month of May are as follows:
Cost Data:
Work in Process -- Beginning:
Materials P10,400
Cost added this month:
Materials P120,000
Production Data:
Work in process - beginning (40% complete) 7,500 units
Started in production - current month 80,000 units
Transferred out 72,500 units
Work in process-ending (70% complete) 13,000 units
Normal lost units 1,100 units
Abnormal lost units 900 units
All materials are added at the start of the process and the inspection point is at 75%
completion.
38. Under the FIFO method, what are the equivalent units for materials and conversion
costs?
a. 80,000 : 80,100
b. 78,000 : 78,600
c. 80,000 : 78,600
d. 78,000 : 80,100
39. Under the FIFO method, what is the cost assigned to units transferred out and units in
ending work in process inventory?
Transferred Out : Work in Process - Ending
a. P403,825 : P56,725
b. P404,650 : P55,900
c. P403,825 : P55,900
d. P404,650 : P55,725
40. Under the FIFO method, what is the cost assigned to abnormal lost units?
a. P4,050
b. P2,700
c. P1,350
d. P5,050
41. Under the average method, what are the equivalent units for materials and conversion
costs?
a. 87,500 : 83,100
b. 85,500 : 83,100
c. 87,500 : 81,600
d. 85,500 : 81,600
42. Under the average method, what are the costs assigned to units transferred out and
units in ending work in process inventory?
Transferred Out : Work in Process - Ending
a. P403,819 : P56,725
b. P399,616 : P56,725
c. P404,573 : P55,971
d. P399,616 : P19,374
43. Under the average method, what is the cost of abnormal lost units?
a. P2,715
b. P4,056
c. P5,500
d. P4,560
lItems 44 through 48 are based on the following data:

Toy King Manufacturing Company produces a plastic toy in a two-stage molding and
finishing . the company uses the weighted average method of process costing During June,
the following data were recorded for the Finishing Department.
Units of beginning work in process inventory 10,000
Percentage of completion of beginning inventory 25%
Cost of direct materials in beginning work in process PO
Units started 70,000
Units completed 50,000
Units in ending work in process inventory 20,000
Percentage of completion of ending units 95%
Soiled units 10,000
Costs added during current period:
Direct labor P635,600
Manufacturing overhead P616,000
Work in process, beginning:
Transferred In costs P82,900
Conversion costs P42,000
Costs of units transferred in during current period P647,500
Conversion costs are incurred evenly during the process. Direct mateials costs are incurred
when production is 90% complete. The inspection point is at 80% stage of production.
Normal spoilage is 10% of all good units that pass inspection.
44. What are the equivalent units of production for direct materials and
conversion costs?
a. 70,000 : 77,000
b. 50,000 : 69,000
c. 60,000 : 77,000
d. 70,000 : 75,000
46. What is the cost of normal lost units?

a. P157,990
b. P150,950
c. P155,990
d. P145,500
46. What is the cost of units completed and transferred out.

a. P1,877,350
b. P1,864,500
c. P1,787,350
d. P1,770,500
47. What is the cost assigned to units in ending work in process?

a. P734, 140
b. P750,150
c. P835, 140
d. P689,000

a. P67,710
b. P77,600
c. P87,610
d. P97,710
49. The Forming Department is the first of a two-stage production process. Spoilage is
identified when the units have completed the forming process. Cost of spoiled units are
assigned to units completed and transferred to the second department in the period
spoilage is identified. The following information concerns Forming's conversion costs in May
2018.
Using the weighted average method, what was Forming's conversion cost transferred to the
second production department?
a. P59,850
b. P64,125
c. P67,500
d. P71,250
50. Materials are added at the start of the process in Jasmin company's cutting department,
the first stage of the production cycle. The following information is available for the month
of March 2018.
Work-in-process, March 1 (60% complete as to conversion costs) 60,000 Units
Started in March 150,000 Units
Transferred to the next department 110,000 Units
Lost in production 30,000 Units
Work-in-process, March 31 (50% complete as to conversion costs) 70,000 Units
Under Jasmin's cost accounting system, the costs incurred on the lost units are absorbed by
the remaining good units. Using the First in, First out method, what are the equivalent units
for the materials unit cost calculation?
a. 120,000
b. 145,000
c. 180,000
d. 210,000
51. Dhalia Company adds materials at the beginning of the process in Department A.
Information concerning the materials used in April 2018 production is as follows:
Work-in-process at April 10,000 Units
Started during April 50,000 Units
Completed and transferred to next department during April 36,000 Unit's
Normal spoilage incurred 3,000 Units
Abnormal spoilage incurred 5,000 Unit's
Work-in-process at April 30 16,000 Units
Under Dhalia's cost accounting system, costs of normal spoilage are treated as part of the
costs of good units produced. However, the costs of abnormal spoilage are charged to
factory overhead. Using the weighted average method, what are the equivalent units for the
materials unit cost calculation for the month of April?
a. 47,000
b. 52,000
c. 55,000
d. 57,000
52. Materials are added at the start of the process in Arce Company's Blending Department,
the first stage of the production cycle The following information is available for the month of
July, 2018
Work-in-process, July 1 (60% complete as to conversion costs) 60,000 units
Started in July 150,000 units
Transferred to the next department 110,000 units
Lost in production 30,000 units
Work-in-process, July 31 (50% complete as to conversion costs) 70,000 units
Under Arce's cost accounting system, the costs incurred on the lost units are absorbed by
the remaining good units. Using the weighted average method, what are the equivalent
units for the materials unit cost calculation?
a. 120,000
b. 145,000
c. 180,000
d. 210,000
53. Matalino, Inc. instituted a new process in October 2018. During October, 10,000 units
were started in Department A. Of the units started, 1,000 were lost in the process, 7,000
were transferred to Department B and 2,000 remained work-in-process at October 31, 2018.
The work-in-process at October 31, 2018 was 100% complete as to material costs and 50%
complete as to conversion costs. Material costs of P27,000 and conversion costs of P40,000
were charged to Department A in October. What were the total costs transferred to
Department B?
a. P46,900
b. P53,600
c. P56,000
d. P57,120
54. Miguel Company uses process cost system with average costing to account for the
production of its only product. The product is manufactured in two departments. Units are
started in Assembling Department, and then transferred to the Finishing Department, where
they are completed. Units are inspected at the end of the production process in the
Assembling Department, and the cost of abnormal lost is charged to Factory Overhead
Control account. Data related to June operations in the Assembling Department are:
Quantity:
Units in beginning inventory (60% materials, 35% labor, and 25% overhead) 1,000
Units started in process this period 9,000
Units transferred to the Finishing Department this period 8,000
Units in ending inventory (100% materials, 75% labor, and 50% overhead) 1,500
What is the total cost transferred to the Finishing Department?

a. P56,752
b. P59,600
c. P59,452
d. P58,000 or less
55. Datu Chemical Industries, Inc. produces a product through a continuous process in
different departments. Each departmenthas an independent cost accountant who prepares
cost of production report. You have been assigned as costaccountant for Department A.
Production data of Department A for the month of July, 2018 were as follows:
Work in process, July 1 (70% completed) 14,000 units
Started in process 70,000 units
Work in process, July 31 (60% completed) 12,000 units
Lost units (normal) at end of process 2,000 units
In this department, costs are applied as follows:

Materials - added at the start.
Labor and overhead - evenly applied
Department costs incurred in July were:
Materials P56,000
Labor 17,350
Overhead 13,880
Work in process, July 1 8,000
What is the cost of?
Units transferred : Work in process July 31

a. P82,290 : P 9,600
b. P81,890 : P 9,600
c. P72,000 : P12,840
d. P82,390 : P12,840
56. The Classmate Company manufactures a single product in a continuous process in two
departments. Cost and production data for the finishing department, the last department for
the month of April, 2018 are shown below:
Costs:
Cost from preceding department P135,000
Work in process, April 1 18,000
Materials -
Labor 85,800
Quantity:
Units in process, April 1(All materials, 50% converted) 4,000
Units received from preceding department 30,000
Units in process, April 30 (All materials, 60% converted) 6,000
Loss during the process 3,000
In the Finishing Department, what is the total cost transferred to finished goods?
a. P250,000
b. P286,000
c. P238,000
d. P210,000
57. Adonis Manufacturing Company makes a single product in two departments. The
production data for Department 2 for May 2018 follows:
Quantities:
In process, May 1, (40% completed) 4,000 units
Received from Department 1 30,000 units
Completed and transferred 25,000 units
In process, May 31, (60% completed) 6,000 units
Production Costs: May 1 : May 31
Received from Department 1 P16,300 : P89,100
Materials 3,800 : 67,500
Conversion cost 1,940 : 81,000
Materials are added at the start of the process, and losses normally occur during the early
stage of the operation.
Using the Average Costing Method, what is the cost of the ending work in process inventory?
a. P44,640
b. P45,460
c. P45,600
d. P46,000
Numbers 58 to 60 are based on the following information :

Air Force Inc, manufactures their product in two departments in a continuous process.
Production data for the month of October 2018 are as follows:
Beginning work in process, 40% completed 500 units
Received from preceding department 2,000 units
Normal spoilage 200 units
Abnormal spoilage 300 units
Units completed and transferred out 1,700 units
Ending work in process, 1/3 completed 300 units
Conversion costs in beginning inventory P610
Current period conversion costs P3,990
All spoilage occurs at the end of the process.

58. What is the conversion cost per equivalent unit?
FIFO Method : Average Method
a. P1.90 : P1.73
b. P2.19 : P2.00
c. P2.00 : P1.90
d. P1.90 : P2.00
59. What is the conversion cost of normal spoilage?

a. P438 : P400
b. P380 : P346
c. P400 : P380
d. P380 : P400
60. What is the conversion cost of abnormal spoilage?

a. P570 : P519
b. P657 : P600
c. P570 : P600
d. P600 : P570
Use the following data in answering Numbers 61 to 63

The Cooking Department of Red Crab, Inc., uses a process-costing system. Direct materials
are added at the beginning of the cooking process, Conversion costs are added evenly
during the cooking process. Consider the following data for the Cooking Department for
January
Red Crab uses the FIFO method of process costing. Inspection occurs when production is
100% complete, normal spoilage is 11% of good units completed during the period.
61. What is the total cost of the units completed and transferred-out?
a. P1,632,000
b. P1,972,000
c. P2,186,720
d. P2,228,000
62. What is the total cost of the units in ending work in process?
a. P444,000
b. P685,280
c. P658, 720
d. P300,000
63. What is the cost of abnormal spoilage?

a. P256,000
b. P214,720
c. P 41,280
d. P 41,000
Question 64 and 65 are based on the following information:

A company employs a process costing system for its two-department manufacturing
operation using the first in, first-out (FIFO)inventory method. when units are completed in
departmemt 1 they are transferred to department 2 for completion. Inspection takes place
in Department 2 immediately before the direct materials are added when the process is
70% complete with respect to conversion. The specific identification method is used to
account for lost units.
The number of defective units (that is, those failing inspection) is usually below the normal
tolerance limit of 4% of units inspected Defective units have minimal value, and the
company sells them without any further processing. Generally, the amount collected equals,
or slightly exceeds, the transportation cost. A summary of the manufacturing activity for
Department 2, in units for the current month, is presented below.
64. The equivalent units for direct materials for the current month would be:
a. 175,000 units
b. 181,500 units
c. 195,000 units
d. 200,000 units
65. The units that failed inspection during the current month would be classified as:
a. abnormal spoilage
b. normal scrap
c. normal rework units
d. normal waste
66 to 67 are based on the following data:

DXR Company employs process cost system. A unit of product passes through two
departments
: Assembly and Finishing before it is complete. Information regarding Assembly Department
follow:
BWIP, Aug. 1 4,000 units
Spoiled units 3,000
Started in Production 26,000
Transferred out 24,000
Raw materials are added at the beginning of processing in the Assembly Department
without changing the number of units being processed. Work-in-process on August 1 was
90% complete as to conversion while 80% converted on August 31. In the Assembly
Department, inspection takes place when the units are 75% converted. The company
usually experienced a 5% loss based on the completed units.
Cost data for the month of August follow:
Using Weighted Average Costing: Assuming that the allocation of cost of normal lost units is
based on EUP.
66. What is the cost of units transferred-out?

a. P331,200
b. P331,400
c. P343,684
d. P343,860
67. What is the cost of units of ending work-in-process?

a. P37,376
b. P37,500
c. P36,200
d. P37,400
Using FIFO Costing: Assuming that the allocation of the cost of normal lost units is based on
actual units.
68. What is the cost of units transferred out?

a. P349,136
b. P258,067
c. P339,267
d. P368,069
69. What is the cost of units of ending work-in-process?

a. P33,850
b. P32,310
c P31,580
d. P33,580
Problems:
Problem 13-1 : Avenson Appliance Company
Problem 13-2 : Lim Company
Problem 13-3 : Crown Manufacturing Company
Problem 13-4 : Narra Company
Problem 13-5 : Chico Company
Problem 13-6 : Molave Company
Problem 13-7 : Cooking Department of Figaro Company
Problem 13-8 : Malakas Company
Problem 13-9 : Maganda Company
Problem 13-10 : Super Company
Problem 13-11 : NIDO Company
Chapter 14
ACCOUNTING FOR JOINT PRODUCTS AND BY-PRODUCTS
MULTIPLE CHOICES – THEORETICAL
1. Joint Costs are:

a. Indivisible
b. Present throughout the production process of joint products.
c. Common costs.
d. A collection of direct materials, direct labor, and manufacturing
overhead costs that serve as the primary base for establishing a sales value for joint
products.
2. For purposes of allocating joint costs to joint products, the relative

sales value at split-off point method could be used in which of the following situations?
No Cost Beyond Split-off Cost Beyond Split-off
a. Yes Yes
b. Yes No
c. Yes No
d. No No
3. Which one of the following characteristics is not applicable to joint

products?
a. The processing of one product incidentally leads to the processing
of one or more products."
b. A split-off point is always present.
c. The product doesn't significantly vary in value.
d. None of the above.
4. The allocation of joint costs to individual products is useful primarily for purposes of:
a. Determining whether to produce one of the joint products.
b. Determining the best market value.
c. Inventory costing.
d. Deciding whether to sell at the split-off point.
5. All of the following are methods of allocating joint prod

except the:
a. Sales value at split-off point.
b. Net realizable value method.
c. Physical measure method.
d. Net income method.
6. For purposes of allocating joint costs to joint products, the relative sales value at split-off
point is equal to:
a. Sales price less a normal profit margin at point of sale.
b. Sales price at point of sale reduced by cost to complete after split off.
c. Total sales value less joint costs at point of split-off.
d. Separable product cost plus a normal profit margin.
7. The method used for the allocation of joint costs to products is important:
a. because profits will be affected when ending inventories change from the beginning of
the period.
b. only in the minds of accountants.
c. because of its validity for justifying prices before regulatory authorities is unquestioned.
d. because profit margins differ when the relative sales value method is used
8. Which of the following statement best describe a by-product?

a. A product that usually produces a small amount of revenue compared to the main product
revenue.
b. A product that does not bear any portion of the joint costs.
c. A product that is produced from material that would be scrap
d. A product that has a lower unit selling price than the main product.
9. In a joint production process, a by-product is also described as:

a. a simultaneously produced product of relatively low value
b. a form of main product with controllable production proportions
c. waste
d. products of low value recovered at the end of the production process.
10. Which method of accounting for by-products allocates a portion of joint costs to the by-
product?
a. Net realizable value method.
b. Reversal cost method.
c. Both a and b
11. In the reversal cost method, the manufacturing cost of the main product is reduced by:
a. The actual revenue from the by-products.
b. The estimated replacement costs of the by-products.
c. The estimated market values of the by-products.
12. If by-products are considered to be of relatively minor importance, which by-product

method is most appropriate?
a. Net by-product revenue should be treated as a deduction from cost of goods sold of the
main product.
b. The reversal cost method.
c. The net realizable value method.
d. No method above is appropriate.
13. Costs to be incurred after the split-off point are most useful for:
a. adjusting inequities in the joint cost allocation procedure
b. determining the levels of joint production
c. assessing the desirability of further processing
d. setting the mix of output products
Questions I through 3 are based on the following data

The following information relates to the costs and production for the First Department of the
Golf Manufacturing Company for the month of June 2018
Product Units Produced

Red 10.000 kilos, sales price of P1.20 per kilo with additional
processing costs.
Blue 10,000 kilos, sales price of P2 per kilo with additional
processing costs of P.20 per kilo after separation,
The total manufacturing costs applicable to Red and Blue in this department were P21,000.
1. What is the amount of joint costs to be allocated to each kilo of each

product using the Physical Units (kilos)?
a. P1.05
b. P2.00
c. P1.50
d. P2.50
2. What is the amount of joint costs to be allocated to each kilo of a product using the
Relative Sales Value at Split-Off Point method
Red Blue
A.P.79 per kilo P1.31 per kilo
b. P.98 per kilo P1.31 per kilo
C. P.79 per kilo P1.95 per kilo
D. P.98 per kilo P1.95 per kilo
3. What is the amount of joint costs to be allocated to each kilo product using the Adjusted
Sales Value (net realizable sales method?
Red Blue
a. P.84 per kilo P1.26 per kilo
b. P.84 per kilo P1.50 per kilo
C. P.95 per kilo P1.26 per kilo
D. P.95 per kilo P1.50 per kilo
4. Alpha Company manufactures Product A and Product B from a joint process. Joint costs
are allocated on the basis of the sales value at split-off point. It costs P4,560 of processing
500 units of Product A and 1,000 units of Product B to the split-off point. The sales value at
split-off point is P10 per unit for Product A and P14 for Product B. Product B requires an
additional processing after split-off at a cost of P2 per unit before it can be sold.
What is Alpha's cost to produce 1,000 units of Product B?

a. P5,040
b. P5,360
c. P4,360
d. P4.860
5. Bravo Company manufactures Products A and B from a joint process that also yields a by-
product, X. Bravo accounts for the revenues from its by-product sales as a deduction from
the cost of goods sold of its main products. Additional information is as follows:
A B X Total
Units produced 15,000 9,000 6,000 30,000
Joint costs P264,000
Sales value at split-off P290,000 P150,000 P100,000 P540.000
Assuming that joint costs are allocated using the sales value at split off point method, what
is the joint cost allocated to Product B?
a. P86,591
b. P80,950
c. P95,590
d. P90,951
6. Beta Company manufactures Products S and T from a joint process. The sales value at
split-off point was P50,000 for 6,000 unita S and P50,000 for 2,000 units of Product T.
Assuming that the portion of the total joint cost properly allocate to Product S using sales
value at split-off point method was P30.00 what is the total joint cost?
a. P60,000
b. P40,000
c. P42,500
d. P75,000
7. Leo Company manufactures three main products, X, Y and Z, from a joint process. Joint
costs are allocated on the basis of the adjusted sales value method (net realizable value
method).
Additional data for June production activity follows:
Assuming that the 10,000 units of Product Z were processed 1 and sold for P87.000. What
was Leo's gross profit on this sale?
a. P39,000
b. P75,000
c. P21,000
d. P28,500
8. Oro Company manufactures Product X and Y using a joint process. The joint costs are
P10,000. Product X and Y can be sold at split-off for P12,000 and P8,000 respectively. After
split-off, Product X is processed further at a cost of P5,000 and sold for P21,000, whereas
Product Y is sold without further processing.
If the company uses the relative sales value method for allocating joint costs, what is the
joint cost allocated to Product X?
a. P4,000
b. P5,000
c. P6,000
d. P6,667
9. Libra, Inc., manufactures products R, S, and T from a joint process.

Additional information is as follows:
Assuming that joint costs are allocated using the sales value at splitoff method, what were
the joint costs allocated to Product S?
a. P 5,000
b. P 6,000
c. P30,000
d. P10,000
10. Taurus Company manufactures two products, Product

M. The production process is such that both product processed. At the end of the process,
Product L is sold unit, but Product M must be processed at a further cost unit before it can
be sold at P15 per unit. In June, the total amounted to P96,000, while 5,000 units of Product
L and 12.000 of Product M were produced. There were no beginning inyo At the end of June,
there were 1,500 units of Product L and 2 units of Product M on hand.
Using the net realizable method (adjusted sales value), what is the cost of the ending
inventory of Product M?
a. P25,120
b. P24.240
c. P 9.600
d. P23,420
11. Aries Manufacturing Company manufactures two joint products

Product One sells at P30 per unit, while Product Two sells at per unit. The company uses the
net realizable value method for allocating joint costs. For the month of May, 2018, the
product activities were as follows:
What was the joint cost allocated to Product One?!

a. P22,000
b. P33.000
c. P27,500
d. P23,000
12. Plata Manufacturing Company, which began operations in 2010,

produces main product and by-product. The following information is available pertaining
Plata accounts for the by-product at the time of production. What are Plata's 2018 cost of
sales for main product and by-product:
Main Product By-product
a. P105,000 P25,000
b. P115,000 0
c. P108,000 P37,000
d. P100,000 0
13. In Department Two of Peter Company, a by-product is removed. The material is further
processed and then sold. The company uses the reversal cost method (normal net profit) to
account for the by-product. Data for December 2018 follows:
Number of by-product removed, 6,000 kilos

Estimated sales price of by-product, P3 per kilo
Estimated manufacturing cost after separation, P.80 per kilo
Estimated selling and administrative expenses, 20% of sales price.
Estimated normal net profit, 10 percent of sales price.
What is the value assigned to the by-product and removed from the work in process at the
point of separation?
a. P7,800
b. P8,800
c. P9,500
d. P7,500
14. In Department Three of the Gins Company, a portion of the in of the materials
(a by-product) is removed, further processed, and sold.The company uses the reversal cost
method to account for the by-prod June follow:
Amount of by-product removed, 2 000 units.
Estimated sales price of by-product after further processing, P1.20/unit
Estimated processing cost after separation, P.30 per unit.
Estimated selling expenses, 10 percent of sales price.
Estimated normal profit margin. 5 percent of sales price.
What is the total cost of the by-product?

a. P1,440
b. P2,040
c. P3,400
d. P2,400
15. Using the data in Number 14, what is the gain (loss) on sale of by
product if all the units are sold at P1.50?
a. P 360
b. P 960
c. P(360)
d. P(960)
16. Cancer Tea Company produces tea bags. As part of the product process, the tea leaves
are separated from the stalks and stems. tea leaves are sold as the main product, while the
stalks and s are sold as the by-product. During May, the company processed 2 boxes of tea
bags at a unit cost of P0.75. Beginning inves consisted of 2,000 boxes at a unit cost of P0.70
per box. During May 20,000 boxes were sold for P1.75 each. The company also sold units of
stalks and stems at P850. Selling expenses amounted P12,000. The net revenue from by-
product sales is deducted production costs.
What is the net income of Cancer for the month of May?

a. P20,922
b. P 8,922
c. P 8,150
d. P 8,704
17. Gemini Company uses the net realizable method to account for its product. The
information below relates to Gemini's main product and by-product for the current period:
Actual sales revenue of the main product (16,000 units x P3 per unit) equals P48,000 and
the by-product (3,500 units x P1.50 per unit), P5,250. Total production costs equal P40,000.
Additional by-product processing costs (not included in total production estimates) are P300.
The estimated marketing and administrative expenses for the main product and for the by-
product are P4,200 and P800 respectively.
What is Gemini's net income?
a. P15.120
b. P15,420
c. P15,720
d. P14,870
18. Pieces Company manufactures joint products, D and E, and a by

product, F. Costs are assigned to the joint products using the net realizable value method,
which considers further processing costs in subsequent operations. For allocating cost to the
by-product, the reversal cost method is used. Total manufacturing costs for 10,000 units
were P172,000 during the quarter. Production data are presented below:
What is the gross profit from the sale of Product D?
a. P100,000
b. P 70,000
c. P 80,000
d. P 98,000
19. Yellow Bell Manufacturing Company manufactures one mail

and two by-products. Data for July are:
Total joint costs before separation is P75,000. Profit allowed for p product A is 15% of sales
and for By-product B is 20% of sales
What is the net income from the sales of the Main Product?
a. P49,200
b. P51,200
c. P53,200
d. P94,200
20. Using the data in Number 19, what is the gross profit for the two by
Products?
By-product A By-product B
A. P1,800 P1,400
B. P1,500 P1,400
C. P1,800 P1,600
D. P3,300 P2,500
21. Color Products Co. manufactures two products - Whites and Browne The Browns are a
by-product from the regular process. During year, 10,000 Whites were sold at P8 each. The
total production was P5 per unit of whites, and selling costs totaled P20,000. are no
beginning inventories, but ending inventories amour 1,000 units. From the sale of browns,
the company received PIA which was recorded as additional revenue from sales.
What is the net income for the year?

a. P17,000
b. P18,000
c. P19,000
d. P27,000 *

Miguel Company buys Material X for P0.80 per unit. At the end of processing in Department
One, Material X split into Products Red, White and Blue. Product Red is sold at split-off point
without further processing. Products White and Blue require further processing before they
can be sold; Product E is processed in Department Two; and Product Blue is processed in
department Three. The following is a summary of cost and other related data for the year
ended July 31, 2018
There were no inventories on hand at August 1, 2017, and there was no Material X on hand
at July 31, 2018. All units on hand on July 31. 2018 was completed as to processing. There
was no manufacturing overhead variance. Miguel Company uses the net realizable value
method (adjusted sales value) to allocate joint costs.
22. What is the sales value of Product Red for the year ended July 31, 2018 to be used in
allocating joint costs?
a. P67,500
b. P45,000
c. P22,500
d. P30,000
23. What is the total joint cost to be allocated for the year ended July 31.
2018?
a. P144,000
b. P150,000
c. P180,000
d. P165,000
24. What is the cost of Product White sold for the 2018?
a. P135,000
b. P144,000
c. P147,000
d. P 99,000
25. What is the cost of ending inventory for Product Red?

a. P18,000
b. P27,000
c. P22,500
d. P54,900
26. In making frozen hash browns and potato chips, Mike Products Inc.
generates potato skins as a by-product. It sells the potato skins to restaurants for use as
appetizers. The processing and disposal costs associated with the sale of the product are
P.10 per kilo of potato skins. During April 2018, Mike Products produced and sold 90.000
kilos of potato skins for P11,825. In addition, the joint costs for hasa browns and potato
chips was P30.000. In April. 80% of all join production was sold for P80,000. Other operating
expenses for Apa were P3,800.
Assuming that the net realizable value of the by-product is subtra from the joint cost of the
main products, how much is the net inc for the period?
a. P55,025
b. P48,850
c. P55,250
d. P61,025
27. Stella Corporation manufactures products Rand S from a joint process. Additional
information is as follows:
Assuming that joint costs are allocated on the basis of relative-salesvalue at split-off, what
was the sales value at split-off for Product S?
a. P 72,000
b. P 82,000
C. P 98,000
d. P100,000
28. Sisa Company manufacturers Product J and Product K from a joint

process. For Product J, 4,000 units were produced having a sales value at split-off of
P15,000. If Product J were processed further, the additional costs would be P3,000 and the
sales value would be P20,000. For Product K, 2,000 units were produced having a sales
value at split-off of P10,000. If Product K were processed further, the additional costs would
be P1,000 and the sales value would be P12,000. Using the relative sales value at split-off
approach, the portion of the total joint product costs allocated to Product J was P9,000. What
was the total joint product costs?
a. P14,400
b. P15,000
c. P18,400
d. P19,000
29. Bataan Co. produces main products JJ and MM. Th

yields by-product BB. Net realizable value of by-product tracted from joint production cost of
JJ and MM. The following information pertains to production in July 2018 at a joint cost of
P54,00
If Bataan uses the net realizable value method for allocating joint cost, how much of the
joint cost should be allocated to product dd.
a. P18,800
b. P20,000
c. P26,667
d. P27,342
30. Korina Company manufactures products S and T from a Jom

cess. The sales value at split-off was P50,000 for 6,000 units uct S and P25,000 for 2,000
units of Product T. Assuming that portion of the total joint costs properly allocated to Product
S using the relative-sales-value at split-off approach was P30,000,what were the total joint
costs?
a. P40,000
b. P42,500
c. P45,000
d. P60,000
31. It costs Visaya Corp. P1,400,000 to process a main material to produce three-chemicals:
# 111, # 777 and #999. This joint cost is allocated to the product lines based on the
relative market values of the products produced. Additional data are summarized below:
The product line that will have the least per unit contribution margin (after accounting for
share in joint and additional processing costs) is:
a. # 111 at P( 3.00)
b. # 777 at P 17.60
c. # 111 at P 13.00
d. # 111 at P(10.48)
32. Abel Corp. manufactures a product that yields the by-product, "Yum." The only costs
associated with Yum are selling costs of P. 10 for each unit sold. Abel accounts for sales of
Yum by deducting Yum's separable costs from Yum's sales, and then deducting this net
amount from the major product's cost of goods sold. Yum's sales were 100,000 units at P1
each. If Abel changes its method of accounting for Yum's sales by showing the net amount
as additional sales revenue, then Abel's gross margin would:
a. Increase by P 90,000
b. Increase by P100,000
c. Increase by P110,000
d. Be unaffected
33. A company produces two joint products, A and B. For the month of March, the joint
production costs were P120,000.Further processing costs beyond split-off point required to
make the product ketable form and other related data follow:
The company uses the net realizable value method for allocating joint product costs. For the
month of March, the joint costs allocated to A amounted to
a. P66,000
b. P72,000
c. P60,000
d. P80,000
34. Kamagong Inc. produces two joint products. PEI and VEL. The joint production costs for
March 2018 were P15,000. During March 2010 further processing costs beyond the split-off
point, needed to convert the products into salable form were P8,000 and P12,000 for ou
units of PL and 400 units VEL, respectively. PEL sells for 120 unit and VEL sells for P50 per
unit. Assuming that Kamagong is the net realizable value method for allocating joint
products, what were the joint costs all allocated to product PEL for 2018?
a. P 5,000
b. P 6,000
c. P 9,000
d. P10,000
35. Tomasa Inc, manufactures products X. Y and Z from a joint process.

Joint product costs were P60,000. Additional information is as follows:
What is the total costs allocated to product X?

Physical Relative Measure
Measure Sales Values
a. P30,000 P28,000
b. P29,000 P27,000
c. P30,000 P21,000
d. P39,000 P33,000
36. Camille Company manufactures products W, X, Y and Z from a joint process. Additional
information is as follows:
Assuming that total joint costs of P160 relative-sales value at split off apn allocated to each
product?
W X Y Z
a. P40,000 P40,000 P40,000 P40,000
b. P53,333 P44,000 P35,000 P26,000
c. P60,000 P46,667 P33,333 P20,000
d. P64,000 P48,000 P32,000 P16,000
37. Dennis Mfg. Co. manufactures two joint products and it uses the
realizable value method for allocating joint costs. Product A sells i P30 while Product B sells
for P60. Joint costs for June, 2018 were:
Materials P30,000
Direct labor 15,000
Further processing costs after the split-off point in order to finish the products into their final
form amounted to P24,000 for Product A and P36,000 for Product B. The total units produced
during the month were 2,000 for Product A and 1,000 for Product B.
The amount of joint costs allocated to Product A was:
a. P33,000
b. P27,500
c. P22,000
d. P32,000
38. Kasoy Manufacturing Company manufactures two products, AA and BB. Initially, they are
processed from the same materials and then, after split-off, they are further processed
separately. Additional information is as follows:
Using the relative-sales-value approach, what are the assigned join costs of AA and BB
respectively?
a. P3,000 and P3,300
b. P3,960 and P2,640
c. P4,400 and P2,200
d. P4,560 and P2,040
39. Adan Inc. purchases its major raw materials from Eva Co. and pro
cesses them up to split-off point, where two products (AA and CC) are obtained. The
products are then sold to an independent company that markets and distributes them to
retail outlets. For the month just ended the following data were made available:
The cost of purchasing 25,000 units of raw materials and processing them up to the split-off
point to yield an equal number of production of AA and CC of 15,000 units each amounted
to P37,500. There were no beginning inventories but there were 500 units of AA at the end
of the month. Using the sales value at split-off method the approximate weighted cost
proportions (may be rounded) of AA and CC were:
a. AA, 29% and CC, 71%
b. AA, 33% and CC, 67%
c. AA, 49% and CC, 51%
d. AA, 50% and CC, 50%
40. Vivien Company manufactures products N, P and R from a joint process. The following
information is available:
Assuming that joint product costs are allocated using the relative sales-value at split-off
point approach, what was the sales at split-off point for products N and P?
Product N Product P
a. P 66,000 P84,000
b. P 80,000 P70,000
C. P 98,000 P84,000
d. P100,000 P50,000
41. Luzon Company manufactures three products, R, S, and Tin

process. For every ten kilos of raw materials input, the output kilos of R, three kilos of S, and
two kilos of T. During August, 50.000 kilos of raw materials costing P120.000 woul 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 salable, further processing which does not re. quire additional raw
materials was done at the following costs:
What are the unit cost of Product R, S and T?
R S T
a. 7.12 P 8.00 P10.00
b. P8.00 P7.12 P8.00
c. P10.20 P 8.00 P10.00
d. P25.32 P7.12 P10.00
42. Mindanao producers manufacture three joint products, JKA, JKB

and JKC and a by-product JJD, all in a single process. Results for July were as follows:
The revenue from the by-product is credited to the sales account Process costs are
apportioned on a relative sales value approach. What was the cost per kilogram of JKA for
the month?
a. P5.72
b. P5.50
c. P5.61
d. P5.20
43.Payaso Inc. produces chemicals Koo and Lam. The processing also yields a by-product,
Wiz, another chemical. The joint costs of processing is reduced by the net realizable value of
Wiz. For the month of March, the joint costs were registered at P3,840,000. Below are
additional data:
Assuming that the company uses the net realizable value method for allocating joint costs,
the allocated costs to Koo would amount to:
a. P2, 160,000
b. P1,800,000
c. P2,208,000
d. P2,700,000
44. Aguilar Sweets Factory manufactures a coconut candy is sold for P5.00 a box. The
manufacturing process also r by-product, Soloc. Without further processing, Soloc sells per
pack; with further processing, it sells for P3.00 per manufacturing costs up to
Assuming that the by-product, Soloc, is further processed and the transferred to the
stockroom at net realizable value with a com sponding reduction of Coco's manufacturing
costs, the journal en would be:
a. By-product inventory - Soloc 45,000
Work in process - Coco 45,000
B. By-product inventory - Soloc 135,000
Raw materials 30,000
Direct labor 22,500
C. Work in process - Soloc 6,750
d. Work in process - Soloc 60,000
Raw materials 30,000
Direct labor 22,500
45. ARAMG Paper Mfg. Co., which started operations in 2018, manufactures paper from
wood pulp. The company grades its products and classified them into Products A, B and C. In
processing the chipped woods, a fatty soap is produced, extracted, and refined into a
byproduct identified as Product X. The following information related to AMG's operations for
2018 are obtained from the company's records:
The ending inventory on December 31, 2018 would:
Method A Method B
a. P13,698 P13,765
b. P13,115 P13,698
c. P11,105 P13,698
d. P11,105 P13,115
46. Cooper Company manufactures products MM, RR, SS and product CC classified as a by-
product and sold at a lower price. Sales include that for the product CC, totalled P49,200
while product amounted to P99,538. Selling expenses amounted to P2.460. The following
information concerning the company's operations for are obtained from the company's
records:
Compute the ending inventory (at lower of cost or market) at De cember 31, 2018 based on
the following methods:
Cost apportioned on a Income recognition in the period

unit cost per kilo basis of by-product production
a. P44,838 P53, 275.15
b. P44,838 P52,842.32
c. P54,793 P56,159.00
d. P56,159 P55,159.08
47. Makiling Sawmill, Inc., purchases logs from independent contractors and processes the
logs into two joint products, two fours of Narra A and four-by-eight of Yakal B. In processing
the products, sawdust emerges and classified as by-product. packaged sawdust can be sold
for P10 per kilo. Packaging co the sawdust is P0.50 per kilo and sales commission is 105 of
price. The by-product net revenue serves to reduce joint pro costs for joint products. Joint
products are assigned joint a on board feet. Data follows:
What is the cost assigned to Narra A?
a. P61,000
b. P62,000
c. P63,000
d. P62,130
Use the following information in answering Numbers 48 to 51: Miguel Tuason is the owner
and operator of MT Bottling, a bulk soft drink producer. A single production process yields
two bulk soft drinks: Rain Dew (the main product) and Resi-Dew (the by-product). Both
products are fully processed at the split off point, and there are no separable costs. For July
2018, the cost of the soft-drink operations is P120,000. Production and sales data are as
follows:
Assuming by-product is recognized when produced:
48. What is the gross margin for MT Bottling?

a. P67,200
b. P71,200
c. P70,200
d. P70,000
49. What are the inventory costs reported on the balance sheet on July 31, 2018, for Rain
Dew and Resi-Dew?
Rain Dew Resi-Dew
a. P23,200 P1,200
b. P23,200 P4,000
c. P22,300 P1,200
d. P25,200 P4,000
50. What is the gross margin for MT Bottling?

a. P66,800
b. P64,000
c. P60,000
d. P65,000
51. What are the inventory costs reported on July 31, 2018, for Rain Den
and Resi-Dew?
Rain Dew Resi-Dew
a. P24,000 0
b. P23,200 P1,200
c. P24,000 P1,200
d. P23,200 0
Use the following data for Numbers 52-55: JMG Company buys Article X for P.80 per unit. At
the end of processing in Department 1 Article X split into Products D, E, and F. Product D is
sold at split-off point with no further processing. E and F require further processing before
they can be sold. E is processed in Department 2; and F is processed in Department 3. the
following is a summary of costs and other data for the fiscal year ended July 31, 2018:
52. What is the sales value of Product D at split off point?
a. P45,000
b. P30,000
C. P67,500
d. P22,500
53. What is the cost of Product E sold for the year ended July 31, 2018?
a. P147,000
b. P 99,000
C. P144,000
d. P135,000
54. What is the cost of the inventory of Product D on July 31, 2018?
a. P27,000
b. P18,000
c. P22,500
d. P54,000
55. What is the cost of the inventory of Product F on July 31, 2018?
a. P33,500
b. P 65,250
c. P42,750
d. P90,000
Question 56 and 57 are based on the following data: JGG Company produces three products:
Product A, B and C from the same materials. Joint costs for this production run are P32,500.
Data for the three products are:
56. Using the sales value at split-off, what is the amount of joint cost allocated to Product A?
a. P11,225
b. P10,525
c. P 8,225
d. P 9,525
57. Using the net realizable value at split-off, what is the allocated in cost to Product C?
a. P15,605
b. P14,711
c. P15, 750
d. P14.500
Use the following information in answering numbers 58 - 61:

The J&J Chemical Company produces a product known as "VITAMIX from which a by-products
results. This by-product can be sold at P4.14 per unit. The manufacturing costs of the main
product and by-product up to the point of separation for the three months ended March 31,
2018 follows:
Materials P50,000
Labor 40.000
Overhead 30,000
The units produced were 15,000 units for the main product and 900 units for the by-product.
During the period 12.000 units of the "VITAMIX We sold at P16 per unit, while the company
was able to sell 600 units on by-product. Selling and administrative expenses related to the
product amounted to P18,000. Disposal cost per unit of the by-prod P1.75.
58. If the by-product is recorded at net realizable value, what is the unit cost VITAMIX", if the
net realizable value of the by-product is deducted from the manufacturing costs of
"VITAMIX"?
a. P 7.00
b. P7.85
c. P8.75
d. P8.50
59. If the by-product is recognized when sold, what is the cost of the inventory of "VITAMIX"?
a. P24,000
B. P25,000
C. P 24,500
d. P 25,500
60. If the net realizable value of the by-product is deducted from the
cost of goods sold of "VITAMIX", what is the gross profit?
a. P 90,500
b. P 95,700
c. P 97,500
d. P87,500
61. If the net realizable value of the by-product is treated as other in come, what is the net
profit?
a. P79,500
b. P75,900
c. P89,600
d. P85, 700
Problems:
Problem 14-1 : Bulacan Chemicals
Problem 14-2 : Milan Company
Problem 14-3 : Venice Company
Problem 14-4 : Cola Bottling Company
Problem 14-5 : Pilipinas Lumber Company
Problem 14-6 : Royce Chocolates
Problem 14-7 : Butcher Buy a 200-Kilo Pig
Problem 14-8 : Prince Corporation
Problem 14-9 : Rizal Manufacturing Corporation
Problem 14-10 : Orange Company
Problem 14-11 : Finishing Department of the Macho Manufacturing Company
Chapter 15
STANDARD COSTING : SETTING STANDARDS & ANALYZING VARIANCES
MULTIPLE CHOICE – THEORETICAL
1. The advantages of standard costs include all of the following er

a. Management by exception may be used.
b. Management planning is facilitated.
c. They may simplify the costing of inventories.
d. Management must use a static budget.
2. The type of standard that is intended to represent challenging vet attainable results is:
a. Theoretical standard.
b. Flexible budget standard.
c. Controllable cost standard.
d. Normal standard.
3. Standard costs are used for all of the following except:

a. Income determination.
b. Controlling costs.
c. Measuring efficiencies.
d. Establishing budgets.
4.The labor efficiency variance is computed as:

a. The difference between standard and actual rates, multiplied by standard hours
b. The difference between standard and actual hours, multiplied by standard rate.
C. The difference between standard and actual rates, multiplied by actual hours.
d. A percentage of the labor time variance.
5. The purpose of standard costing is to:

a. Allocate cost with more accuracy.
b. Eliminate the need for subjective decisions by management.
c. Determine the break even production level.
d. Control costs.
6. Which of the following is correct about overhead variances?

a. The controllable variance generally pertains to fixed overhead costs.
b. The volume variance pertains solely to variable overhead costs.
c. Standard hours actually worked are used in each variance.
d. Budgeted overhead costs are based on the flexible overhead budget.
7. The formula to compute the total overhead variance is:

a. Actual overhead less overhead applied.
b. Overhead budgeted less overhead applied.
c. Actual overhead less overhead budgeted.
d. No correct answer given.
8. In computing variances from standard costa, the difference between actual and standard
price multiplied by actual quantity purchased yields a:
a. Price variance.
b. Volume variance.
c. Mix variance.
d. Yield variançe.
9. What type of direct materials variances for price and quantity will arise if the actual
number of units of materials used was less than standard units allowed but actual cost
exceeds standard cost?
Quantity : Price
a. Unfavorable : Favorable
b. Favorable : Favorable
c. Favorable : Unfavorable
d. Unfavorable : Unfavorable
10. In analyzing manufacturing overhead variances, the volume variance is the difference
between the:
a. Actual amount spent for overhead items during the period and the amount applied during
the period.
b. Variable efficiency variance and fixed efficiency variance.
c. Amount shown in the flexible budget and the amount shown in the master budget.
d. Budget allowance based on standard hours allowed for actual production for the period
and the amount of applied factory overhead during the period.
11. Which of the following is the most probable reason a company would experience an
unfavorable direct labor rate variance and a favorable direct labor efficiency variance?
a. The mix of workers assigned to the particular job was heavily weighed towards the use of
higher paid experienced individuals.
b. The mix of workers assigned to the particular job was heavily weighted towards the use of
new, relatively low paid, unskilled workers.
c. Because of the production schedule, workers from other production areas were assigned
to assist this particular process.
d. Defective materials caused more direct labor to be used in order to produce a standard
unit.
12. A debit balance in the direct labor efficiency variance account indicates that:
a. Standard direct labor hours exceed actual direct labor hours.
b. Actual direct labor hours exceed standard direct labor hours.
c. Standard rate and standard direct labor exceed actual rate and actual direct labor hours.
d. Actual rate and actual direct labor hours exceed standard rate and standard direct labor
hours.
MULTIPLE CHOICES – COMPUTATIONAL
1. Information about Malate Company direct material costs is as follows:

Standard unit price P3.60
Actual quantity purchased 1,600
Standard quantity allowed for actual production1,450
Materials purchase price variance - unfavorable P240
What was the actual purchase price per unit, rounded to the nearest centavos?
a. P3.06
b. P3.75
C. P3.11
d. P3.45
2. Data for Sunday Company's direct materials costs for June is as

follows:
For the month of June, Sunday's direct materials price variance was:
a. P2,800 unfavorable.
b. P2.800 favorable.
c. P6,000 favorable.
d. P6,000 unfavorable.
3. Monday, Inc., uses a standard cost system to account for its only kilos at P5.10 per
product. The materials standard per unit was 4 kilos kilo. Production data for April were as
follows:
Materials used 7,800
Cost of material used 40,950
Number of finished units produced 2,000
kilos P40,950
What is the materials quantity variance for April?

a. P1,020 favorable.
b. P1,050 favorable.
c. P1,170 unfavorable.
4. Lolo, Inc., uses a standard costing system in manufacturing a certain shirt. Each unit of
finished product contains 2 meters of direct materials. However, a 20% direct material
spoilage calculated on input quantities occurs during the manufacturing process. The cost of
direct material is P30 per meter. The standard direct material cost per unit of finished
product is:
a. P48.50
b. P60.00
c. P72.50
d. P75.00
5. Information about Mamala Company's direct material costs for the

month of June 2018 was as follows:
For June 2018, what is the direct materials quantity variance:
b. P3,400 unfavorable.
6. Tuesday, Inc. which uses standard cost system, had 5,000 units of material X in its
inventory on June 1, 2018. These materials was hased in May for P12.00 per unit and carried
at a standard cost P10.00. The following information pertains to raw material X for the
month of June 2018:
The materials purchase price variance for Raw Material X for June was:
7. Data about direct labor of Friday Company is given below:

What was Friday's actual and standard direct labor rate?
Actual Direct Labor Rate Standard Direct Labor Rate
a. P2.60 P3.54
b. P3.80 P4.00
c. P4.00 P3.80
d. P5.80 P5.80
8. Information on Tan Company's direct labor costs is as follow

What were the actual hours worked, rounded to the nearest hour?
a. 11,914
b. 10,714
c. 11, 120
d. 11,200
9. Each unit of Product O requires two direct labor hours. Employee

benefits costs are treated as direct labor costs. Data on direct labor are as follows:
The standard direct labor cost per unit of Product O is:
a. P20
b. P10
c. P12
d. P22
10. The direct labor standards for producing a unit of a product are two
hours at P10 per hour. Budgeted production was 1.000 units. Actual production was 900
units and direct labor cost was P10,000 for 2,000 direct labor hours. The direct labor
efficiency variance was:
a. P1,000 favorable
b. P2,000 unfavorable
c. P1,000 unfavorable
d. P2,000 favorable
11. The following direct labor information pertains to the manufacture of Product S:
What is the standard direct labor cost per unit of Product S?
a. P30
b. P24
c. P15
d. P12
12. The following information pertains to Gold Company's direct labor for June 2018:
What was Gold Company's total actual direct labor cost for June 2018?
a. P117,600
b. P134,000
c. P134,400
d. P118,000
13. Silver Company presents the following information for the month of May 2018:
What is the standard prime cost per unit?
a. P8.01
b. P5.19
c. P8.94
d. P9.82
14. Mike, Inc., uses a standard cost system. Overhead cost information for product WK for
the month of May is as follows:
What is the overall overhead variance?

15. Dear Company had total under-applied overhead of P15,000.

Additional information is as follows:
What is the total actual overhead?
a. P50,000
b. P57,000
c. P80,000
d. P87,000
16. Jose Company uses standard costing. The standard cost of its product is as follows:
During March, Jose produced 26,000 units. Jose used 53,500 direct labor hours in March at a
cost of P433,350. Actual manufacturing overhead for the month was P250,000 fixed and
P325,000 variable. What is the manufacturing overhead controllable variance for March?
a. P 9,000 unfavorable
b. P13,000 unfavorable *
C. P 9,000 favorable
d. P13,000 favorable
17. Using the data in Number 16 for Jose Company. The manufacturing
overhead volume variance for March is:
a. P12,000 unfavorable
c. P12,000 favorable
d. P10,000 favorable
18. The following data pertains to Love Company's 2018 manufacturing operations:
Love's 2018 variable overhead controllable variance is:
a. P51,500 favorable
c. P20,000 favorable
d. P52,000 unfavorable
19. Sweet Products Co. charges manufacturing overhead into production at the rate of P10
per direct labor hour, based on a standard production of 15,000 direct labor hours for
15,000 units: 60% of manufacturing overhead costs are variable. Production data for April
and May are:
For April and May, the manufacturing overhead controllable variance are:
a. P8,100 (U) and P700 (F) respectively.
b. P8,100 (F) and P900 (F) respectively.
c. P700 (U) and P1,200 (U) respectively.
d. P1,400 (F) and P700 (F) respectively.
20. Using the data in Number 19, the overhead volume variance for the
month of May is:
a. P12,000 (U)
b. P12,000 (F)
c. P 0
d. P14,000 (U)
21. MCG Company uses a standard cost system that carries materials at
actual price until they are transferred to the Work in Process account. project A, 500 units of
X were used at a cost of P10 per unit. Standard
What is the proper journal entry?
a. Work in process P4,950
Direct materials price variance 500
Direct materials quantity variance P 450
Materials 5,000
b. Work in process P5,950
Direct materials price variance P500
Direct materials quantity variance 400
Materials 5,000
c. Work in process P4,050
Direct materials price variance 500
Direct materials quantity variance 450
Materials P5,000
d. Work in process P5,000
Materials P5,000
22. If a project required 50 hours to complete at a cost of P10 per hour, but should have
taken only 45 hours at a cost of P12 per hour, what is the proper journal entry to record the
costs?
a. Work in process P540
Labor efficiency variance 60
Labor price variance 100
Payroll payable 500
b. Wages expense P440
Payroll payable P500
c. Work in process P460
Labor price variance 100
Payroll payable 500
d. Work in process P500
Payroll payable 500
23. Alpha company would have applied 32,000 of fixed factory overhead if capacity usage
had equaled the master budget. Given thatamount, 2,000 standard hours (the normal
volume) were allowed for the actual output, that actual fixed factory overhead equalled the
budgeted amount, and that overhead was applied at a rate of P15 per hour, what is the
journal entry to close the fixed factory overhead accounts?
a. Applied factory overhead (fixed) P30,000
Overhead volume variance 2,500
Factory overhead control (fixed) P32,500
b. Factory overhead control (fixed) P30,000
Overhead volume variance2,500
Applied factory overhead (fixed) P32,500
c. Work in process P30,000
Overhead price variance 2,500
Applied factory overhead (fixed) P32,500
d. Cost of goods sold P32,500 *
Factory overhead control (fixed) P32,500
24. Bravo Company paid janitors P5 per hour to clean the production area. 530 hours were
worked by the janitors. The company initially set its standard cost of janitorial work at P4.50
per hour. Assuming that this is the only variable overhead variance, what is the journal entry
to recognize the variance that occurred?
a. Applied factory overhead (variable) P2,385
Overhead budget variance 265
Factory overhead control (variable) P2,650
b. Applied factor overhead (variable) P2,650
Variance summary P 265
Factory overhead control (variable) 2,385
c. Applied factory overhead (variable) P2,385
Overhead efficiency variance 265
Factory overhead control (variable) P2,650
d. Factory overhead control (variable) P2,385
Overhead budget variance 265
Applied factory overhead (variable) P2,650
25. Matt Company uses a standard cost system. Information for raw materials for Product
RBI for the month of October is as follows:
Standard unit price P1.60
Actual purchase price per unit P1.55
Actual quantity purchased 2,000 units
Actual quantity used 1,900 units
Standard quantity allowed for actual production 1,800 units
What is the materials purchase price variance?

a. P 90 favorable
b. P 90 unfavorable
c. P100 favorable
d. P100 unfavorable
26. Information on Material company's direct material costs is as follows:

Actual units of direct material used 20,000
Actual direct-material costs P40,000
Standard price per unit of direct materials P 2.10
Direct-material quantity variance-favorable P 3,000
What was material's direct-material price variance?

a. P1,000 favorable
c. P2,000 favorable
27. During March 2018 Younger Company's direct-materials costs for the manufacture of
product T were as follows:
Actual unit purchase price P 6.50
Standard quantity allowed for actual production 2,100
Quantity purchased and used for actual production 2,300
Standard unit price P 6.25
Younger's materials usage variance for March 2016 was:
b. P1,250 favorable
d. P1,300 favorable
28. Information on Rex Co.'s direct material costs for May 2018 is as follows.
Actual quantity of direct materials purchased and used 30,000 kls.
Actual cost of direct materials P 84,000
Unfavorable direct materials usage variance P 3,000
Standard quantity of direct materials allowed for May production 29,000 kls.
For the month of May, what was Rex's direct materials price variance?
a. P2,800 favorable
d. P6,000 favorable
29. RTW Company uses a standard costing system in connection with the manufacture of a
"one size fits all' article of clothing. Each unit of finished product contains 2 meters of direct
material. However, a 20% direct material spoilage calculated on input quantities occurs
during the manufacturing process. The cost of the direct material is P3 per meter. The
standard direct material coat per unit of finished product is:
a. P4.80
b. P6.00
c. P7.20
d. P7.50
30. The following processing standards have been set for TMT Company's clerical workers:
Number of hours per 1,000 papers processed 150

Normal number of papers processed per year 1,500,000
Wage rate per 1,000 papers P600
Standard variable cost of processing 1,500,000 papers P900,000
Fixed costs per year P150,000
The following information pertains to the 1,200,000 papers that were processed during
2018:
Total cost P915,000
Labor cost P760,000
Labor hours 190,000
For 2018, TMT's labor rate variance would be:

b. P32,000 favorable
d. P0
31. The following direct labor information pertains to the manufacture of product MM:
Time required to make one unit 2 direct labor hours
Number of direct workers 50
Number of productive hours per week, per worker 40
Weekly wages per worker P500
Workers' benefits treated as direct labor costs 20% of wages
What is the standard direct labor cost per unit of product MM?
a. P30
b. P24
c. P15
d. P12
32. In connection with a standard cost system being developed by Sarsi Company, the
following information is being considered with regard to standard hours allowed for output of
one unit of product:
Average historical performance for the past three years 1.85 hrs.
Production level to satisfy average consumer demand over a seasonal time span 1.60 hrs.
Engineering estimates based on attainable performance 1.50 hrs.
Engineering estimates based on ideal performance 1.25 hrs.
To measure controllable production inefficiencies, what is the best basis for Sarsi to use in
establishing standard hours allowed?
a. 1.25
b. 1.50
c. 1.60
d. 1.85
33. Mahal Company had total underapplied overhead of P15,000. Additional information is
as follows:
Variable overhead:
Applied based on standard direct labor hours allowed P42,000
Budgeted based on standard direct-labor hours 38,000
Fixed overhead:
Applied based on standard direct-labor hours allowed 30,000
Budgeted based on standard direct-labor hours 27,000
What is the actual total overhead?
a. P50,000
b. P57,000
C. P80,000
d. P87,000
34. Golf Company uses a standard cost system. Overhead cost information for Product CO
for the month of October is as follows:
Total overhead cost incurred P12,600
Fixed overhead budgeted P 3,300
Total standard overhead rate per direct labor hour P4.00
Variable overhead rate per direct labor hours P 3.00
Standard hours allowed for actual production 3,500
What is the overall (or net) overhead variance?
a. P1,200 favorable
c. P1,400 favorable
35. Information on Pool Company's overhead costs is as follows:

Standard applied overhead P80,000
Budgeted overhead based on standard direct-labor hours allowed P84,000
Budgeted overhead based on actual direct-labor hours allowed P83,000
Actual overhead P86,000
What is the total overhead variance
b. P3,000 favorable
c. P4,000 favorable
36. M Valdez, a department manager, exercises control over the department's cost.
Following are selected information relating to the department for July:
Variable factory overhead
Budgeted based on standard hours allowed P80,000
Actual 85,000
Fixed factory overhead
Budgeted 25,000
Actual 27,000
The department's unfavorable spending variance for July was:
a. P7,000
b. P5,000
c. P2,000
d. P0
37. El Mondo Company uses a standard cost system and prepared the following budget at
normal capacity for the month of January 2018:
Direct-labor hours 24,000
Variable factory overhead P 48,000
Fixed factory overhead P108,000
Total factory overhead per direct-labor hour Р6.50
Actual data for January 2018 were as follows:
Direct-labor hours worked 22,000
Total factory overhead P147,000
Standard direct-labor hours allowed for capacity attained 21,000
Using the two-way analysis of overhead variances what is the budget (controllable) variance
for January 2018?
a. P 3,000 favorable
b. P 5,000 favorable
c. P 9,000 favorable
38. GMA Company's budgeted fixed factory overhead costs are P50,000 per month plus a
variable factory overhead rate of P4 per direct labor hour. The standard direct labor hours
allowed for October production were 18,000. An analysis of the factory overhead indicates
that, in October, GMA had an unfavorable budget (controllable) variance of P1,000 and a
favorable volume variance of P500. GMA uges & two-way analysis of overhead variances.
The actual and applied factory overhead in October are:
Actual F/O : Applied F/O
a. P121,000 : P121,000
b. P122,000 : P122,500
c. P122,500 : P123,000
d. P123,000 : P122,500
39. The following were among Goodnight Company's 2018 costs:

Normal spoilage P5,000
Freight out 10,000
Excess of actual manufacturing costs over standard costs 20,000
Standard manufacturing costs 100,000
Actual prime manufacturing costs 80,000
Goodnight's 2018 actual manufacturing overhead was:
a. P 40,000
b. P 45,000
c. P 55,000
d. P120,000
40. The data below relates to the Month of April 2018 for Marilyn, Inc., which uses a
standard cost system:
Actual total direct labor P43,400
Actual hours used 14,000
Standard hours allowed for good output 15,000
Direct labor rate variance-debit P 1,400
Actual total overhead P32,000
Budgeted fixed costs P 9,000
"Normal" activity in hours 12,000
Total overhead application rate per standard direct-labor hour P 2.25
Using 2-way analysis compute the budget variance and the volume variance for the month
of March.
Budget Variance : Volume Variance
a. P900 (U) : P2,250 (U)
b. P500 (U) : P2,250 (F)
c. P500 (F) : P2,000 (U)
d. P800 (F) : P2,000 (F)
41. Below were reported as the budgeted and actual amounts for the year just ended for the
P&P Consulting Co.
The firm had two types of costs - professional labor and support costs. The support costs
were allocated to individual jobs using actual professional labor hours. The indirect cost rate
per professional labor hour amounted to
a. P 96.00
b. P100.00
c. P116.00
d. P120.00
42. In trying to improve the productivity of the company. Japan Company instituted a labor
bonus plan. Effectively. it pays employees 75% of the time saved in production when
production exceeds the
standard level. For a more consistent performance, the bonus is computed on the basis of
production for four-week period,
Each employee works 37 hours per week. The standard production per hour was established
at 3 units of product. Each employee is paid at the rate of P24 per hour Below are the data
on four employees for Unit 1 for the month of March
The employee who had inconsistent performance (who sometimes performed below
standard) but got a bonus was:
a. Rudy at 465 units or P126 bonus
b. Rudy at 465 units or P168 bonus
c. Vic at 486 units or P252 bonus
d. Vic at 486 units or P432 bonus
43. Micro Processing Services Inc, provides computer processing services in the University of
Students. Below are relevant data as set by the firm:
Number of pages per hour 20
Variable cost per hour P 30.00
Fixed cost per month P10,000.00
The owner-manager estimated that the firm should operate 500 hours per month. For the
month of March, 12,000 pages were generated in 450 hours. Actual variable overhead sum
up to P13,200 while fixed overhead matched the estimated amount.
The total standard cost for March was:
a. P30,000
b. P25,000
c. P27,500
d. P31,500
44. Best Electronics, at normal operating capacity, operated at 600,000 direct labor hours
with a standard labor rate of P20. Variable factory overhead is applied at the rate of P12 per
direct labor hour. Four units of device should be completed in an hour. Last year, 1,350,000
units of devices were assembled using 300,000 direct labor hours. All labor hours were paid
at standard rate. Actual overhead for the year were recorded at P3,738,000 for variable
overhead and P3 million for fixed overhead.
The total labor and overhead costs saved by producing at more than standard rate
amounted to:
a. P1,200,000
b. P450,000
C. P750,000
d. P 500,000
45. Assume price variances are recorded at the time of purchase. What is the journal entry
to record a direct materials price variance if materials are purchased at P50 per unit for
P6,500 and their standard unit price is P40 per unit?
a. Materials P6,500
Accounts payable P6,500
b. Materials P5,200
Materials price variance 1,300
Accounts payable P6,500
c. Materials P5,200
Work in process 1,300
Cash P6,500
d. Finished goods P6,500
Materials price variance 1,300
Cash P6,500
Problems:
Problem 15-1 : Opal Company
Problem 15-2 : Pearl Products Company
Problem 15-3 : Ace Company : Cooking Department and Finishing Department
Problem 15-4 : King Corporation
Problem 15-5 : Queen Company
Problem 15-6 : Sexy Jenna Company
Problem 15-7 : Mars Corporation
Problem 15-8 : Macho Company makes a product called Temptation
Problem 15-9 : Golf Company – Standard Costing Accounting System
Problem 15-10 : Holy Manufacturing Company
Problem 15-11 : Venus Corporation
Chapter 16
JUST-IN-TIME MANUFACTURING SYSTEM
MULTIPLE CHOICE - THEORETICAL
1. Under just in time manufacturing:

a. Raw materials are received just in time for use in production.
b. Subassembly parts are completed just in time for use in assembling finished goods.
c. Finished goods are completed just in time to be sold.
d. All of the above.
2. The primary objective of just-in-time manufacturing is to:

a. Accumulate overhead in activity cost pools.
b. Eliminate or reduce all manufacturing inventories.
c. Identify relevant activity cost driver.
d. Identity value-added activities.
3. One of the requirements for JIT system to be successful is:

a. Cyclical production.
b. Adequate inventory stock.
c. Coupling it with job order costing.
d. High quality and balanced work loads.
4. All of the following are terms used to describe the JIT effort to reduce inventories of work
in process and raw materials, except:
a. Backflush costing.
b. Stockless production
c. Lean production.
d. Quality production.
5. Advantages that result from reducing raw materials inventory include all of the following
except:
a. A decreased possibility of not being able to produce a unit when required
b. A need for less storage space.
c. A reduced risk of obsolescence.
d. A reduced risk of damaged materials.
6. The JIT production ideal is a batch size of:

a. Zero
b. Ten
c. One
d. One hundred
7. The objective of reducing inventory to zero is possible if all of the following conditions are
present, except:
a. low or insignificant setup costs
b. minimum lead times
c. long setup times
d. balanced and level work loads.
8. The continuing reduction of inventories is achieved by all of the following steps, except:
a. Once the problem is removed, the inventory level is increased until another problem is
discovered.
b. Inventories are reduced until a problem is discovered.
c. Once the problem is defined the inventory level is increased to
keep the system operating smoothly.
d. The problem is analyzed and practical ways are identified to reduce it.
9. In a JIT system, velocity is inversely related to:

a. throughout time
b. Backflushing
c. acceleration
d. zero inventory production
10. The cost accounting system that would be most apt to use a single inventory account
entitled Materials and In Process (MIP) account would be
a. Process costing
b. Job order costing
c. Backflushing costing
d. Standard costing
1. Clara Company has material cost in the June 1 Materials and in Process (MIP) Inventory
account of P10,000. Materials received during June amounts to P205,000 and material cost
in the June 30 Materials and In process account amounts to P12,500. The amount to be
backflushed from Materials and in process account to Finished Goods Inventory account at
the end of June would be:
a. P215,000
b. P202,500
c. P207,500
d. P217.500
2. The Love Company seeks to streamline the costing system at its Manila plant. It will use a
backflush costing system with three trigger points:
Purchase of raw materials Completion of finished goods Sale of finished goods
Assume no materials variances. The balance of MIP Inventory account at the end of April
2018 is:
a. P 30,000
b. P880,000
c. P850,000
d. P 0
3. The Maganda Manufacturing Company uses Materials and Inn process (MIP) inventory
account. At the end of each month, all inven are counted, their conversion costs
components are estimated inventory account balances are adjusted accordingly. Raw
material cost is backflushed from MIP account to Finished Goods accou The following data is
for the month of August:
The amount of direct materials and conversion costs to be backflushed to finished goods
are:
a. P676,800 and P4,800 respectively.
b. P680,000 and P4,800 respectively.
c. P676,800 and P5,300 respectively.
d. P680,000 and P5,300 respectively.
4. The Action Corporation manufactures electrical meters. For May, there were no beginning
inventories of raw materials and no beginning and ending work in process. Action uses a JIT
manufacturing system and backflush costing with three trigger points for making entries in
the accounting system:
Purchase of raw materials - debited to Materials and In process account Completion of
finished goods - debited to Finished Goods Inventory account Sale of finished goods
Action's May standard cost per meter are direct materials, P25 and conversion costs, P20.
The following data apply to May manufacturing:
The balances of Materials and In Process and Finished Goods inventory accounts at the end
of May are:
a. P25,000 and P945,000 respectively.
b. P550,000 and P45,000 respectively.
c. P25,000 and P45,000 respectively.
d. P550,000 and P945,000 respectively.
5. The Malakas Company produces telephones. For June, there were no beginning inventory
of raw materials and no beginning and ending work in process. Malakas uses a JIT
manufacturing system and backflush costing with two trigger points for making entries in its
accounting system:
The balances of Materials and in Process Inventory and Cost of Goods Sold accounts at the
end of June are:
a. P308,000 and P7,872,000 respectively.
b. P5,300,000 and P7,872,000 respectively.
c. P308,000 and P4,992,000 respectively.
d. P4,992,000 and P2,880,000 respectively.
6. The Hudy Manufacturing Company uses a Materials and In P. (MIP) inventory account and
expensed all conversion costs + cost of goods sold account. At the end of each month, all
inven are counted, their conversion cost components are estimated inventory account
balances are adjusted accordingly. Raw matami cost is backflushed from MIP to finished
Goods. The following information is for the month of April.
What is the amount of materials used to be backflushed from MIP to finished goods?
a. P365,000
b. P368,600
C. P367,000
d. P365,400
7. The Chico Manufacturing Company produces only for customer order

and most work is shipped within thirty-six hours after the receipt of an order. Chico uses a
Materials and In Process MIP) inventory account and expensed all conversion costs to the
cost of goods sold account. Work is shipped immediately upon completion, so there is no
finished goods inventory account. At the end of each month, inventory is counted, its
conversion cost component is estimated, and the MIP account balance is adjusted
accordingly. Raw material cost is backflushed from MIP to Cost of Goods sold. The following
information is for the month of May:
What is the amount of raw materials used to be backflushed from MIP to cost of goods sold?
a. P246,000
b. P246,200
c. P247,000
d. P245,000
Use the following data in answering Numbers 8 and 9.

Jose Tuazon general manager of a highly automated coffee production plant in Bulacan has
provided the following information for transactions that occurred during October. The
production plant uses a JIT costing system.
8. What is the overapplied or underapplied conversion costs for the
month?
a. P305,000 over-applied
b. P195,000 under-applied
c. P105,000 over-applied
d. P105,000 under-applied
9. Assuming no adjustment has been made for overapplied or underapplied conversion cost,
what is the balance of the cost of goods, sold account on October 31?
a. P1,300,000
b. P1,495,000
c. P1,600,000
d. P1,195,000
10. Basilio Company has a cycle time of 3 days, uses a Materials a Process (MIP) account,
and charges all conversion costs to c. Goods Sold. At the end of each month, all inventories
are ca their conversion costs components are estimated, and invent account balances are
adjusted. Raw material cost is backflushed from MIP to Finished Goods. The following
information is for June:
What is the balance of cost of goods sold on June?

a. P561,000
b. P561,250
c. P563,750
d. P562,500
11. If Edsa Company has material cost of P10,000 in the June 1 MIP inventory account, and
P12,500 in the June 30 MIP inventory account and the amount of raw materials used
backflushed from MIP inventory account on June 30 is P202,500. what is the amount of raw
materials purchased on credit for the month of June?
a. P205,000
b. P200,000
c. P225,000
d. P202,000
Problems:
Problem 16-1 : Santa Rosa Company
Problem 16-2 : Gigabytes Company assembles hand-held computers
Problem 16-3 : Gigabytes uses only two trigger points
Problem 16-4 : Marshall Corporation
Problem 16-5 : Second trigger point for Marshall
Problem 16-6 : Same facts as in Problem 16-4 except now there are only two trigger points
Problem 16-7 : Mapayapa Company

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Chapter 8

ACTIVITY-BASED COSTING (ABC)

5. Examples of activities at the batch level of cost include:

6. Compared to an ABC system, a traditional costing system reports:

7. Any activity that causes resources to be consumed is called:

8. Activity based costing:

9. Examples of activities at the product level of costs include:

10. Example of batch level activity drivers include

4. Power Company manufactures a line of high-end exercise equipment of commercial

5. Believing that traditional conting system provides misleading information, Sweet

The company sets selling prices at cost plus a 20% markup.

Items 13 and 14 are based on the following data:

Total manufacturing overhead total P1,105,000

What is the total overhead costs assigned to Job. RST?

Numbers 22 and 23 are based on the following data:

1. A company produces stereo speakers for automobile manufacturers. The automobile

2. Scrap materials consists of:

3. The sale of scrap from a manufacturing process is recorded as a (n):

5. Waste materials consists of

7. A manufacturing process normally results in defective units equal to 1% of production.

Materials requisitioned from stores:

Items 3 and 4 are based on the following data:

3. The journal entry to record above information would be:

Items 13 and 14 are based on the following data:

Direct costs of reworking 10 units:

Question 17 and 18 are based on the following information:

Use the following data for Question 19 and 20:

1.In process cost system, costs ure assigned only:

2. Indicate which of the following statement is not correct.

3. in making the journal entry to record raw material costs.

5. A cost of production report

6. The restatement of incomplete units in terms of completed units is called

7. Purchased materials are added in the second department of a three-department process;

9. An equivalent unit of material or conversion cost is equal to:

10. Which statement is correct?

5. What is the equivalent production for labor during the month?

7. What is the labor cost in the ending work process?

8. What is the number of units in the ending work in process?

9. What is the equivalent production for overhead during the month?

10. What is the overhead cost in the units transferred out?

Use the following data in answering items 12 to 15

14. What is the number of uncompleted units on hand?

16. Direct materials equivalent units of production for Department 1 are:

18. Belows the quantity schedule for Department 2 of Tuason Company:

19. The production data for Department 2 are as follows:

What is the total costs of completed units transferred out to Department 2

If Department 1 transferred 32,000 units to Department 2, what is the total cost to be

What is the amount of total costs accounted for?

24. National Electroniccs manufactures microchips in large quantities. Each microchip

29. Department CC has the following April lproduction information:

Beginning work in process 24,000 units

On October 1, the inventories of Process C and Finished Goods were:

The inventories on October 31 were:

The conversion cost per equivalent unit for October is:

Questions 31 and 32 are based on the following information

MULTIPLE CHOICES – THEORETICAL

1. A cost of production report

2. A characteristic of a process costing system is that.

3. Indicate which of the following statements is not correct.

4. In a process cost system, costs are assigned only:

5. An equivalent unit production of material or conversion cost is equal to:

6. An item that does not appear on a cost of production report is:

7. Transferred in costs as used in a process cost accounting system are: