The following information has been taken from the cost records of Cotton On Company for the year

just ended:

Raw Material used in production P 326,000

Total manufacturing costs charged to production during the year
(includes direct materials, direct labor and overhead
which is equal to 60% of direct labor costs) 686,000
Cost of goods available for sale 826,000
Selling and administrative expenses 250,000
Inventories: Beginning Ending
Raw materials P 75,000 P 85,000
Work in process 80,000 30,000
Finished goods 90,000 110,000

1. The materials, labor and overhead component of total manufacturing costs is:
A. P326,000, P225,000, P135,000
B. P316,000, P216,000, P154,000
C. P326,000. P216,000, P144,000
D. P326,000, P144,000, P216,000

2. Assuming the rate of mark-up is 40% of costs, the net income for the period is:
A. P36,400

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B. P466,000

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C. P286,400

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D. P261,400

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The following data are available about the X Company:

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rs e 2016 2017 2018
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P 100,000 ? P 120,000
Ending Materials 150,000 ? 110,000
Inventory
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Beginning WIP Inventory 300,000 ? 180,000

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Ending WIP Inventory 240,000 ? 210,000

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Direct Labor P200,000

Manufacturing Overhead 400,000
Materials Purchases 300,000
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3. The cost goods of goods manufactured in 2017 is

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A. P900,000
B. P930,000
C. P990,000
D. P980,000
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The balance sheet of Joyful Manufacturing Company showed the following balances on December 21. 2017.
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Finished Goods P1,500,000

Work in Process P 1,200,000
Raw Materials P2,000,000
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During the 1st quarter of 2018, prime costs amounted to P13,680,000 while conversion costs amounted to P7,920,000.
The average direct labor rate was P38.50 and overhead was applied at P30.80 per direct labor hour. Purchases of raw
materials were P10,000,000 while cost of goods manufactured were P17,400,000. The company continued its policy
to maintain a gross profit rate of 30%. At the end of the quarter, cost of sales amounted to P16,800,000.

4. The change in inventories for the first quarter of 2018 is:

Work in process inventory Finished goods inventory
a. No change No change
b. Increase of P200,000 Decrease of P600,000
c. Decrease of P200,000 Increase of P600,000
d. Increase of P5,400,000 Increase of P2,100,000
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 Below are the balances and information taken from the records of Bull company for the last quarter of the current
year:

Inventories: October 1
Raw materials P 134,000
Work in process 354,000
Finished goods 594,600
Manufacturing overhead 4,200,000 Dr
4,600,000 Cr
Cost of good sold 10,800,000

Supplementary data:
 During the quarter, purchases of raw materials totaled P1,093,400 while physical count of raw materials revealed
that P250,000 were unused.
 39,800 direct labor hours were utilized distributed as follows:
25,000 hours worked on regular time at regular rate of P42.50 per hour. 14,000 hours worked at regular rate plus
10% special night premium, 800 hours worked on overtime at regular rate plus 30% overtime premium.
 Overhead is charged to production at 80% of direct labor costs.
 Actual overhead incurred was P1,420,000 including indirect materials of P12,000 but excluding a special night
and overtime premium. Overhead variance is consider insignificant.

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 At the end of the year, records show that work in process increased by P80,000 while Finished Goods decrease

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by P150,000.

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5. The total factory cost for the quarter amount to:
a. P4,147,560 c. P4,376,100

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b. P4,022,100 d. P4,010,100
rs e
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6. The cost of goods manufactured amount to:
a. P3,942,100 c. P3,930,000
b. P4,090,100 d.P3,880,900
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aC s

7. The over/under applied overhead variance is: ___________

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Manok na Pula industries electricity costs and machine hours over a nine-month period follow: (Relevant range is
from 2,000 to 5,000 machine hours)

Month Machine hours Cost

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April 2100 P 9,750

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May 3400 14,300

June 5800 21,640
July 4900 19,550
August 2500 11,150
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September 3000 12,900

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October 2400 10,800

November 1800 8,440
December 4800 22,000
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8. Using high-low method, how much is the annual fixed costs? _______
9. Using high-low method, how much is the electricity costs if the actual machine hours used is 2,800? ________

Assume that 50,000 units are put into production for Job 501 and the total cost of production was P15,000,000. At the
completion of the production, only 47,000 units were good. The remaining units were spoiled and had a salvage value of P70
each. Management consider spoilage to be inherent in nature to the general production process and includes normal spoilage
in the predetermined factory overhead application rate.
10. When accounting for the spoilage of Job 501, how much is the amount of cost to be removed from the work in process
inventory?
a. P375,000 c. P612,500
b. P900,000 d. P497,500

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 Dian Company’s Job 501 for the manufacturing of 2,200 coats was completed during October at the following unit costs:

Direct materials P 200

Direct labor 180
Factory overhead (includes an allowance of P10
for spoiled work) 180

Final inspection of Job 501 disclosed 200 spoiled coats which were sold to a jobber for P60,000.

11. Assume that spoiled loss is attributable to exacting specification of job 501 during October, what would be the unit cost of
the good coats produced on Job 501?
a. P580 c. P560
b. P575 d. P550

Lulu Apparel completed 3,600 expensive bags during the 1st quarter of the current year. The following costs per unit presented
below:

Direct materials P 200

Direct Labor 180
Factory overhead, included P10
Allowance for spoilage 180

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Final inspection revealed that 600 bags were spoiled which were sold as export overrun at 40% of production costs. The good

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units were delivered and billed the customer at 20% gross profit.

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12. If the spoilage is common to all jobs, the amount billed to the customer is:
a. P2,310,000 c. P1,680,000

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b. P2,100,000 d. P2,520,000
rs e
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13. If the spoilage is attributable to the exacting specifications of the job, the amount billed to customer is:
a. P2,310,000 c. P1,680,000
b. P2,100,000 d. P2,520,000
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Surefire company manufactures matches per the design and specification of its customers, and accordingly uses the job order
aC s

cost system. In March 2010, it finished 50,000 pieces for a customer at a cost of P0.50 per unit of direct materials, and P0.40
vi y re

per unit for direct labor. Factory overhead is applied at 100% of direct labor. The production incurred 500 defective units due to
an error in the specification made by the customer and that had to be reworked at a cost of .10 per unit, in addition to the
predetermined factory overhead. Surefire company did not include the cost of rework as part of the predetermined factory
overhead rate.
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14. If the customer is billed at 30% above cost, the billing price is:
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a. P84,630 c. P85,565
b. P84,500 d. P84,730

PROCESS COSTING:
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Steps to be guided:
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1. Total Units To Account (TUTA) = Total Units As Accounted (TUAA)

2. Establish Equivalent Units of Production (EUP)
Note: EUP is computed using TUAA
3. Establish Total Cost To Account (TCTA) - Beginning cost and Cost added
sh

4. Compute the COST PER EUP

Under Weighed Average: = Cost of Beginning inventory + Current cost (cost added)
EUP per cost element
Under FIFO = Current Cost (cost added)
EUP per cost element
5. Assignment of cost – Total Cost As Accounted (TCAA)
Note: TCTA = TCAA . If not, due to rounding off of Cost per EUP

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 Light Beer Brewery Company uses weighted average in accumulating cost in its two department, Brewing and Canning.
Ingredients are brewed in the first department then transferred to the Canning Department where the brew is put into cans and
cases. Spoilage in Brewing Department is considered continuous.

Brewing Department: (Materials are added at the start of the process)

Work in process, beginning(40% complete as to conversion 4,000
Started in process 36,000
Units transferred out 28,000
Work in process, end (50% complete as to conversion) 6,000
Cost in beginning inventories:
Materials – P60,000 ; Conversion Cost – P21,600
Cost added during the period:
Materials- P484,000 ; Conversion Cost- P191,200

Questions:
15. EUP for Materials and Conversion Cost: ____________
16. Cost per EUP of Conversion Cost: ____________
17. Total Cost per EUP: __________
18. Cost allocated to Finished and Transferred: _____________
19. Cost allocated to WIP, end: _____________

Kaya ko to manufactures small tables in its Processing Department and uses FIFO method of costing. Direct materials are added
at the start of the production process while conversion cost are incurred evenly throughout the process.Inspection occurs at 75%

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completion. Spoiled units generally constitute 5% of the good units. Data for December are as follows:

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WIP, beginning (60% complete as to conversion) 10,000 units

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Started 40,000 units
Completed and transferred out 38,400 units

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WIP, end (75% complete as to conversion)rs e 8,000 units
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Beginning cost: Direct Materials – P50,000 ; Conversion Cost – P30,000
Cost added during the period: Direct Materials – P100,000 ; Conversion Cost – P139,740

Questions:
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20. EUP for Materials and Conversion Cost: ____________

21. Cost per EUP of Materials: ____________
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22. Total Cost per EUP: __________

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23. Cost allocated to Finished and Transferred: _____________

24. Cost allocated to WIP, end: _____________
25. How much is the period cost? ___________
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Milford Company uses a standard cost accounting system in its glass division. The standard cost of making one glass windshield
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is:

Direct Materials (60 lbs. @ P1/lb) P 60

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Direct labor (3 hr @ P10/hr) 30

Manufacturing overhead (3 hr. @ 8/hr) 24
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Total standard unit cost P 114

The current current variable manufacturing overhead rate is P3 per labor hour and the budgeted fixed manufacturing is P2,700.
During July, the division produced 165 windshields compared to normal capacity of 180 windshield. The actual production cost
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was:

Direct materials (9,000 lbs) P 10,800

Direct labor (500 hrs) 4,000
Manufacturing overhead (50% fixed) 5,200
Total Actual Cost P 20,000

26. What is the material price usage variance?

a. P1,800 favorable
b. P1,800 unfavorable
c. P1,980 favorable
d. P1,980 unfavorable
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 27. What is the material usage variance?
a. P900 debit
b. P900 credit
c. P 1,080 debit
d. P1,080 credit

28. What is the labor efficiency variance?

a. P40 favorable
b. P40 unfavorable
c. P50 favorable
d. P50 unfavorable

29. What is the labor rate variance?

a. P990 favorable
b. P990 unfavorable
c. P1,000 favorable
d. P1,000 unfavorable

30. How much is the overhead spending variance?

a. P1,100 favorable
b. P1,100 unfavorable
c. P1,115 favorable

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d. P1,115 unfavorable

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31. How much is the fixed overhead volume variance?

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a. P125 overapplied
b. P125 underapplied

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c. P225 overapplied
d. P225 underapplied
rs e
ou urc
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aC s
vi y re
ed d
ar stu
is
Th
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