No. 125 Brgy.

San Sebastian
Lipa City, Batangas, Philippines
Mobile : 0927 283 8234
Telephone : (043) 723 8412
Gmail : icarecpareview@gmail.com

COST ACCOUNTING
Job Order Costing, Joint and By-Product Costing

Problem 1:
Davao Company employs normal costing for its production. The following data are
provided during the current year:
Net purchases of raw materials during the P1,000,000
year
Total labor cost during the year 1,600,000
Depreciation of factory assets during the 200,000
year
Utilities on the factory during the year 600,000

Beginning Ending
Raw materials inventory P400,000 P600,000
Work in process inventory 1,000,000 400,000
Finished goods inventory 1,200,000 600,000

 The entity uses a single account for its direct material and indirect materials.
Indirect material used is one-fourth of the total direct material used.
 The indirect labor cost ⅛ of the total labor costs.
 The overhead application rate is 80% of direct labor costs.
 Any over or under application of overhead is considered material.

1. What is the total manufacturing cost during the current year?

A. P3,120,000
B. P3,000,000
C. P3,280,000
D. P3,480,000

2. What is the cost of goods manufactured during the current year?

A. P4,080,000
B. P3,720,000
C. P3,880,000
D. P3,600,000

3. What is the over or under application of overhead?

A. P120,000 over application
B. P280,000 under application
C. P80,000 under application
D. P320,000 over application

Problem 2:
Camembert Company uses the job-order costing system and applies overhead on the
basis of machine hours. The budgeted manufacturing overhead costs is P1,680,000
based on a budgeted activity level of 112,000 machine hours for the year 2017.
Summarized data for jobs 113, 115, 116, 117 and 118 are presented below:
Work in Process December 2017
Job No. As of 11/30/2017 Direct materials Direct labor Machine hours
113 P121,800 2,100 6,300 420
115 77,000 5,600 16,000 1,400

1|P a g e RFERRER/RLACO/ATANG/PDEJESUS
 No. 125 Brgy. San Sebastian
Lipa City, Batangas, Philippines
Mobile : 0927 283 8234
Telephone : (043) 723 8412
Gmail : icarecpareview@gmail.com

116 35,840 37,380 1,960

117 53,060 28,000 3,500
118 36,400 23,520 1,120

The actual manufacturing overhead costs incurred by the entity for 2017 were as follows:
January to November December
Indirect material P 175,000 P 12,600
Indirect labor 483,000 42,000
Other manufacturing overhead paid 343,000 30,800
Depreciation of factory plant assets 539,000 49,000
Total P1,540,000 P134,400

Camembert incurred P1,183,000 direct labor costs for the 11-month period ended
November 30 and used 102,200 machine hours for the same period. Jobs 113, 115 and
116 were completed during December. However, only jobs 113 and 116 were delivered
to customers as of December 31, 2017.

1. How much is the over- or under-applied overhead for 2017?

a. P15,400 over
b. P7,000 over
c. P15,400 under
d. P7,000 under

2. How much is the Finished Goods Inventory as of December 31, 2017?

a. P100,000
b. P135,000
c. P119,600
d. P98,600

Problem 3:
Deanne Corp. manufactures surgical instruments to the exacting specification of
customers. During August 2020, Job 234 for the production of 40,500 units were
completed at the following costs per unit:
Direct material P120
Direct labor 40
Factory overhead 160
applied

Final inspection of Job 234 disclosed 900 defective units and 450 spoiled units. The
defective units were reworked at a total cost of P108,000, and the spoiled units were sold
for P27,000.

1. What is the cost of good units produced on Job 234?

A. P13,095,000
B. P13,041,000
C. P12,960,000
D. P12,879,000

2. What is the unit cost of the good units produced on Job 234?
A. P320
B. P326.29
C. P325.62

2|P a g e RFERRER/RLACO/ATANG/PDEJESUS
 No. 125 Brgy. San Sebastian
Lipa City, Batangas, Philippines
Mobile : 0927 283 8234
Telephone : (043) 723 8412
Gmail : icarecpareview@gmail.com

D. P322.67

3. If the cost associated with rework and spoiled are considered as normal to
production. What is the cost of good units of Job 234?
A. P12,960,000
B. P12,816,000
C. P12,528,000
D. P12,987,000

4. If the cost associated with rework and spoiled are considered as normal to
production. What is the unit cost of good units of Job 234?
A. P320
B. P326.29
C. P325.62
D. P322.67

Problem 4:
Escargot Company produces two main products and a by-product out of a joint process.
The ratio of output quantifies to input quantities of direct material used in the joint process
remains consistent from month to month. Escargot has employed the physical-volume
method to allocate joint production costs to the two main products. The net realizable
value of the by-product is used to reduce the joint production costs before the joint costs
are allocated to the main products. Data regarding Escargot’s operations for the current
month are presented in the chart below. During the month, Escargot incurred joint
production costs of P2,520,000. The main products are not marketable at the split-off
point and, thus, have to be processed further.
First Main Product Second Main Product By-product
Monthly output in pounds 90,000 150,000 60,000
Selling price per pound P30 P14 P2
Separable process costs P540,000 P660,000

1. The amount of joint cost that Escargot would allocate to the Second Main
Product by using the physical-volume to allocate joint production costs would be
a. P1,260,000
b. P1,575,000
c. P1,500,000
d. P1,200,000

2. Assuming that the net realizable value of the by-product is recognized as part of
other income upon sale and the joint costs are allocated on the basis of
theoretical net realizable value, how much is the joint cost to be allocated to the
First Main Product?
a. P1,440,000
b. P1,417,500
c. P1,350,000
d. P1,512,000

3|P a g e RFERRER/RLACO/ATANG/PDEJESUS