FELIPE, JUMAICA S.

BSBA OM-3D

INDIVIDUAL ACTIVITY

Activity No. 10: MULTIPLE CHOICE QUESTIONS

Instructions: Select the letter of your answer and write it on the space provided. Kindly provide
your solution(s).

For the year 2011, the gross margin of Jumbo Co. was P 96,000; the cost of goods manufactured
was P 340,000; the beginning inventories of work in process and finished goods were P 28,000
and P 45,000, respectively; and the ending inventories of work in process and finished goods
were P 38,000 and P 52,000, respectively.

B 1. The sales of Jumbo Co. for 2011, must have been:

a. P 419,000 b. P 429,000
c. P 434,000 d. P 436,000

Solution:
Cost of Goods Manufactured  P 340,000
Finished Goods, Beginning  45,000
Total Goods available for Sale  385,000
Finished Goods, ending  (52,000)
Cost of Goods Sold  P333,000

Sales P429,000
COG’s P333,000
Gross profit P96,000

The following information was taken from Jeric Company’s accounting records for the year
ended December 31, 2011.

Increase in raw materials inventory P 15,000

Decrease in finished goods inventory P 35,000
Raw materials purchased P 430,000
Direct labor payroll P 200,000
Factory overhead P 300,000

A 2. There was no work-in-process inventory at the beginning or end of the year. Jeric’s 2011
costs of goods sold is:

a. P 950,000 b. P 965,000
c. P 975,000 d. P 995,000

Items 3 to 5 are based on the following information pertaining to Glenn Company’s

manufacturing operations.

Inventories 3/1/11 3/31/11

Direct materials P 36,000 P 30,000
Work-in-process P 18,000 P 12,000
Finished goods P 54,000 P 72,000

Additional information for the month of March 2012

Direct materials purchased P 84,000

Direct labor payroll P 60,000
Direct labor rate per hour P 7.50
Factory overhead rate/direct labor hour P 10.00

C 3. For the month of March 2011, prime cost was:

a. P 90,000 b. P 120,000
c. P 144,000 d. P 150,000

Solution:
Prime Cost = DM + DL
= Direct materials purchased P 84,000
= Direct labor payroll P 60,000
P 144,00

D 4. For the month of March 2011, conversion cost was:

a. P 90,000 b. P 140,000
c. P 144,000 d. P 170,000

B 5. For the month of March 2011, cost of goods manufactured was:

a. P 218,000 b. P 224,000
c. P 230,000 d. P 236,000