AE 222 COST ACCOUNTING AND CONTROL

CHAPTER 5- JOB ORDER COSTING SYSTEM

QUIZ 7

Direction: Give what is required on each item. Answer honestly. Any form of cheating will not be
tolerated. Show your solutions and mark your final answers. You can write your answers on a clean
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2E CHAPTER 5- QUIZ 7 PERMEJO, JOHN JOSEPH R. and don’t forget to write a body of a
letter. Good luck!

Problem 1. The ARIELLA ARIDA COMPANY uses a job order cost system. The inventories on
October 1:
Finished Goods (Job Order No. 1000) P5,000
Work in Process (Job Order No. 1001) P445
Direct Materials P2,000

Purchases of direct materials, 30,000 pieces @ P1.40 per piece. Following are the additional costs
incurred during the month:

Job Order Nos. Direct Materials Direct Labor Cost Direct Labor Hours
1001 P4,100 P1,375 1,300
1002 P9,150 P7,250 3,700
1003 P11,275 P14,325 8,200
1004 P3,225 P2,800 1,500
1005 P6,500 P6,100 3,200
1006 P2,750 P1,650 980

Manufacturing overhead costs are charged to jobs on the basis of P1.50 per direct labor hour used. The
actual manufacturing overhead cost for the month totaled P30,350. During October, Job Order Nos.
1001, 1002, 1004, and 1005 were completed. Jobs 1001 and 1002 were shipped out and the customers
were billed for P9,000 for Job No. 1001 and P20,000 for 1002.

Required:
a. The cost of goods manufactured amounted to: P55,495
Solution:
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b. The work in process on October 31 amounted to: P43,770

Solution:

c. The finished goods on October 31 amounted to: P30,675

Solution:

d. The cost of goods sold amounted to: P29,820

Solution:

e. The gross profit (loss) for Job Order No. 1001 amounted to: P1,130
Solution:
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f. The gross profit (loss) for Job Order No. 1002 amounted to: (P1,950)
Solution:

g. The direct materials on October 31 amounted to: P7,000

Solution:

Problem 2. The following account balances and other information for MJ LASTIMOSA COMPANY
pertain to November operations:

Account Balances
November 1 November 30
Finished Goods P70,000 P60,000
Work in Process P50,000 ?
Direct Materials P10,000 P25,000
Accounts Payable ? P15,000
Accrued Payroll P10,000 P20,000
Accumulated Depreciation- Factory Equipment P80,000 P90,000

Other information:
a. Direct materials purchased on account during November, P50,000.
b. MJ LASTIMOSA COMPANY applies factory overhead at a predetermined rate of P3 per
direct labor hour.
c. During November, direct labor employees worked 25,000 hours at a rate of P4 per hour.
d. Jobs 385, 386, and 387 were still in process at the end of November. A total of P5,000 of
direct materials has been charged to these three jobs. To date, 5,000 direct labor hours have
been worked on these jobs.
e. The accrued payroll account is used for factory employees only. Assuming no payroll
deductions, payment to factory employees during the month totaled P140,000.
f. Factory overhead was underapplied by P5,000.
g. Payments on account totaled P55,000.

Required:
Determine the following:
 AE 222 COST ACCOUNTING AND CONTROL

a. Direct materials charged to operations P35,000

Solution:

b. Factory overhead applied during the month P75,000

Solution:

c. Ending inventory of Work in Process P40,000

Solution:

d. Cost of good manufactured P220,000

Solution:

e. Cost of goods sold before over-under applied P230,000

Solution:

f. Prime costs incurred for the month P135,000

Solution:
 AE 222 COST ACCOUNTING AND CONTROL

g. Conversion costs incurred for the month P175,000

Solution:

h. Accounts payable, November 1 P20,000

Solution:

Problem 3. MAXINE MEDINA CERAMICS produces custom-made floor tiles. During April 2019,
the following information was obtained relating to operations and production:

1. Direct material purchased on account, P92,000.

2. Direct materials issued to jobs, P81,900.
3. Direct labor hours incurred, 1,700. All direct factory employees were paid P15 per hour.
4. Actual factory overhead costs incurred for the month totaled P34,350. This overhead
consisted of P9,000 of factory supervisor’s salaries, P10,750 of depreciation charges,
P3,600 of insurance, P6,250 of indirect material, and P4,750 of utilities. Salaries, insurance,
and utilities were paid in cash, and indirect material was taken from supplies inventory.
5. Overhead is applied to production at the rate of P20 per direct labor hour.

Beginning balances of RMI and WIPI were P2,150 and P11,200, respectively. Ending WIPI was
P2,350.

Required:
a. Prepare journal entries for transactions 1-5.
1. Raw Materials Inventory 92,000
Accounts Payable 92,000
2. Work in Process Inventory 81,900
Raw Materials Inventory 81,900
3. Work in Process inventory 25,500
Cash 25,500
4. Factory Overhead 34,350
Cash 17,350
Accumulated Depreciation 10,750
Supplies Inventory 6,750
5. Work in Process Inventory 34,000
Factory Overhead 34,000
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b. Determine the balance of RMI at the end of the month. P12,250

Solution:

c. Determine the cost of goods manufactured during April. P150,250

Solution:

Problem 4. RACHEL PETERS DESIGNS began operations in May 1, 2019. Its WIPI account on
May 31 appeared as follows:

Work in Process Inventory

Direct Material P277,200 ?? Cost of Completed Jobs
Direct Labor 192,000
Applied Overhead 211,200

The company applies overhead on the basis of direct labor cost. Only one job was still in process on
May 31. That job had P66,300 in direct material and P46,800 in direct labor cost assigned to it.

Required:
a. What was the predetermined overhead application rate? 110% of Direct Labor Cost
Solution:

b. What was the balance in WIPI at the end of May? P164,580

Solution:
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c. What was the cost of jobs completed in May? P515,820

Solution:

Problem 5. GAZINI GANADOS METAL FABRICATORS accumulated fairly large quantities of

metal shavings and trimmings from the products it manufactures. At least once a month, the scrap metal
is sold to a local smelter for reprocessing. This month’s scrap sales on account total P28,000.

Required:
Prepare journal entry to record the sale of the scrap.
a. The scrap sales are viewed as additional revenue.
Accounts Receivable 28,000
Scrap Sales 28,000

b. The scrap sales are viewed as a reduction of the cost of goods sold during the period.
Accounts Receivable 28,000
Cost of Goods Sold 28,000
c. The scrap sales are viewed as a reduction of factory overhead.
Accounts Receivable 28,000
Factory Overhead 28,000

d. The scrap sales are traceable to individual jobs and viewed as a reduction in the cost of
materials used on the jobs.
Accounts Receivable 28,000
Work in Process- Direct Materials 28,000

“FALL SEVEN TIMES, STAND UP EIGHT.”

Prepared by:

JOHN JOSEPH R. PERMEJO

Part-time Lecturer
johnjosephpermejo05@gmail.com