Job Order Costing

1. Mangga, Inc. employs a job order cost system. Its manufacturing activities in
July, 2011, its first month of operations, are summarized as follows:

Job numbers
201 202 203 204
Direct materials P 7,000 P 5,800 P 11,600 P 5,000
Direct labor cost P 6,600 P 6,000 P 8,400 P 2,400
Direct labor hours 1,100 1,000 1,400 400
Units produced 200 100 1,000 300

Manufacturing overhead is applied at a rate of P 2 per direct labor hour to

variable overhead, P 3 per hour for fixed overhead.

Jobs 201, 202, and 203 were done in July.

What is the cost of completed jobs?

a. P 62,900 c. P 72,900
b. P 62,500 d. P 65,900
` Direct materials 24,400
Direct labor 21,000
Applied factory overhead (5 x 3,500) 17,500
Total cost of completed jobs 62,900

2. Baby Company’s beginning and ending inventories for the month of November
are:
November 1 November 30
Direct materials P 67,000 P 62,000
Work-in-process 145,000 171,000
Finished goods 85,000 78,000

Production data for the month of November as follows:

Direct labor P 200,000
Actual factory overhead 132,000
Direct materials purchased 163,000
Transportation-in 4,000
Purchase returns and allowances 2,000

Direct materials, beg. 67,000

Purchased materials 163,000
PRA (2,000)
 Freight – in 4,000
Direct materials, end (62,000)
Direct materials used 170,000
Direct labor 200,000
Prime Cost 370,000

Baby uses one factory overhead control account and charges factory overhead
to production at 70% of direct labor cost. The company does not formally
recognize over/under applied overhead until year-end.

Baby Company’s prime cost for November is

a. P 370,000 c. P 363,000
b. P 168,000 d. P 170,000

3. Baby Company’s cost of goods sold for November is:

a. P 484,000 c. P 502,000
b. P 491,000 d. P 476,000

Direct materials used 170,000

Direct labor cost 200,000
Applied factory overhead (200T x 70%) 140,000
Total manufacturing cost 510,000
WIP, beg. 145,000
WIP, end (171,000)
COGM 484,000
FG, beg. 85,000
FG, end (78,000)
COGS 491,000

4. Baby Company’ net charges to factory overhead control for the month of
November is:
a. P 8,000 debit, overapplied
b. P 8,000 debit, underapplied
c. P 8,000 credit, overapplied
d. P 8,000 credit, underapplied

Applied FOH 140,000

Actual FOH 132,000
Overapplied 8,000

Applied factory overhead 140,000

Factory overhead control 132,000
Overapplied 8,000
5. The Papaya Company uses a job order cost system. The following data were
obtained from the company’s cost records as of June 30. No jobs were in
process at the beginning of June, all costs listed being incurred during the month.

Job order No. Direct materials Direct labor hours Direct labor costs
1001 P 4,320 1,300 P1,600
1002 9,150 3,700 7,250
1003 11,275 8,200 14,325
1004 3,225 1,500 2,800
1005 6,500 3,200 6,100
1006 2,750 980 1,650

Manufacturing overhead costs are charged to jobs on the basis of P 1.50 per
direct labor hours. The actual manufacturing overhead cost for the month totaled
P 30,350. During June, Job orders 1001,1002,1004 and 1005 were completed.
Jobs 1001 and 1002 were shipped out and the customers were billed P 9,000 for
Job 1001 and P 20,000 for Job 1002.

The cost of goods manufactured would be:

a. P 55,500 c. P 56,495
b. P 55,495 d. P 57,500
Direct materials (4,320 + 9,150 + 3,225 + 6,500) 23,195
Direct labor cost (1,600 + 7,250 + 2,800 + 6,100) 17,750
Applied FOH (1,300 + 3,700 + 1,500 + 3,200) x 1.50 14,550
Total manufacturing cost 55,495

6. Last month, Sago Company placed P60,000 of materials into production. The
Printing Department used 8,000 labor hours at P 5.60 per hour and the Binding
Department used 4,600 hours at P 6.00 per hour. Factory overhead is applied at
a rate of P 6.00 per labor hour in the Printing Department and P 8.00 per labor
hour in the Binding Department. Sago’s inventory accounts show the following
balances:
Beginning Ending
Finished goods P 22,000 P 17,000
Work in process 15,000 17,600
Materials 20,000 18,000

What is the cost of goods sold at normal costing?

a. P 219,600
b. P 214,600
c. P 108,000
d. P 217,200
Direct materials used 60,000
 Direct labor (8,000 x 5.60) + (4,600 x 6) 72,400
Applied FOH (8,000 x 6) + (4,600 x 8) 84,800
Manufacturing cost 217,200
WIP, beg. 15,000
WIP, end (17,600)
COGM 214,600
FG, beg. 22,000
FG, end (17,000)
COGS 219,600

7. Banaba Company provided the inventory balances and the manufacturing cost
data for the month of January. Under Banaba’s cost system, any over or under
applied overhead is closed to the cost of goods sold account at the end of the
calendar year.

Inventories: January 1 December 31

Direct materials P 30,000 P 40,000
Work in process 15,000 20,000
Finished goods 65,000 50,000

Month of January
Factory overhead applied P 150,000
Cost of goods manufactured 515,000
Direct materials used 190,900
Actual factory overhead 144,000

What is the cost of goods sold at actual costing?

a. P 509,000 c. P 524,000
b. P 530,000 d. P 536,000

COGM 515,000
FG, beg. 65,000
FG, end (50,000)
COGS 530,000
Overapplied (6,000)
Actual COS 524,000
8. The Handyman Corp. manufactures specialized precision tools for the electronics
industry. It receives various jobs orders. For the month of April, it started to work
on two orders, East and West. The total materials cost for both orders were
estimated at P 80,000 of which 60% applies to East and 40% to West. Direct
labor hours were estimated at 700 for East and 400 for West. The labor rate
amounted to P 18 per hour. Variable overhead varies at the rate of P 10 per
hour.
By the end of April, 75% of the required materials were issued to production
amounting to P 90,000. Also, the two orders were all 50% completed with respect
to labor and overhead. Labor hours for the month were charged 360 to East and
180 to West. Variable overhead equated to the hourly rate given.
The total actual cost for East Order for the month of April is:
a. P 64,080
b. P 45,800
c. P 52,350
d. P 67,600

Materials (90,000 x 60%) 54,000

Labor (360 hrs x 18) 6,480 x 50% = 3,240
FOH (10 x 360) 3,600 x 50% = 1,800

9. The following information relates to Job. No. 2468, which being carried out by
Matibay Company to meet customer’s order.
Department A Department B
Direct materials consumed P 5,000 P 3,000
Direct labor hours employed 400 200
Direct labor rate per hour P4 P5
Production overhead per direct labor hours P 4 P4
Administrative and other overhead 20% of full production cost
Profit mark up 25% of selling price

What is the selling price to the customer for Job 2468?

a. P 16,250
b. P 20,800
c. P 17,333
d. P 19,810

Direct materials (5,000 + 3,000) 8,000

Direct labor (400 x 4) + (200 x 5) 2,600
FOH (400 + 200) 4 2,400
 Total manufacturing cost 13,000
Admin and overhead (13T x 20%) 2,600
Total 15,600/75% = 20,800

Sales 100% 17,333.33

COS 75% 13,000
Profit 25%

10. Acacia Craft manufactures to customer job order costing system. For the month
just ended, it registered the following data:

Beginning work in process (5 partially completed jobs) P 300,000

Orders completed (18) 2,400,000
Orders shipped (14) 2,000,000
Materials requisitioned for the month 1,700,000
Direct labor cost 800,000
Overhead rate 150% of direct labor cost

The ending work in process inventory was:

a. P 1,600,000
b. P 1,400,000
c. P 300,000
d. P 700,000

Materials 1,700,000
Direct labor 800,000
FOH (150% x 800,000) 1,200,000
Total 3,700,000
WIP, beg. 300,000
Total place in process 4,000,000
WIP end (1,600,000)
COGM 2,400,000

11. Orange Company uses job order costing system and applies factory overhead to
production orders on the basis of direct labor cost. The overhead rates for 2011
are 200% for Dept. A and 50% for Dept. B. Job 123 started and completed during
2011, was charged with the following costs:

Dept. A Dept. B
Direct materials P 25,000 P 5,000
Direct labor ? 30,000
Factory overhead 40,000 ?

The total manufacturing cost associated with Job 123 should be:
 a. P 135,000
b. P 180,000
c. P 195,000
d. P 240,000

Direct materials (25,000 + 5,000) 30,000

Direct labor (20,000 + 30,000) 50,000
FOH (40,000) + (30,000 x 50%) 55,000
Manufacturing cost 135,000

FOH = 200% DLC

40,000= 200% (DLC)
DLC = 40,000/2
DLC = 20,000

12. A manufacturing company had actual manufacturing overhead costing of P

500,000 and predetermined overhead rate of P 3.00 per machine hour. Company
worked 200,000 machine hours during the period. Total overhead of the
company is:
a. P 100,000 overapplied
b. P 100,000 underapplied
c. P 500,000 underapplied
d. None of the above

Actual overhead 500,000

Applied FOH (3 x 200,000) 600,000
Overapplied 100,000

13. During the year ended 2014, Woodworks Company incurred actual overhead of
P 700,000 and P 150,000 direct labor hours. Predetermined overhead rate per
direct labor hour was P6.00. How much is the total applied overhead for the
year?
a. P 200,000
b. P 700,000
c. P 900,000
d. None of the above

150,000 direct labor hours x 6 = 900,000

14. Sprint Company provided the following information for the month of July 2015:
Factory overhead incurred P 340,600
Applied factory overhead
Cost of goods sold P 217,000
Ending work in process inventory 62,000
Ending finished goods inventory 31,000
P 310,000
 At what amount should the cost of goods sold be adjusted for the under- or
overapplied factory overhead?
a. P 21,420 debit
b. P 21,420 credit
c. P 30,600 debit
d. P 30,600 credit

Actual 340,600
Applied 310,000
Variance 30,600

COS 217,600/310,000 x 30,600 = 21,420

15. What is the best accumulation procedure to use when many batches, each
differing as to product specifications, are produced?
a. Job order
b. Process
c. Actual
d. Standard

16. In a normal cost system, a debit to Work in Process Inventory would not be made
for
a. Actual overhead
b. Applied overhead
c. Actual direct material
d. Actual direct labor

17. A credit to Work in Process Inventory represents

a. Work is still in process
b. Raw material put into production
c. The application of overhead to production
d. The transfer of completed items to finished goods inventory

18. A journal entry includes a debit to Work in Process Inventory and a credit to Raw
Material Inventory. The explanation for this would be that:
a. Indirect material was placed into production
b. Raw material was purchased on account
c. Direct material was placed into production
d. Direct labor was used for production

19. Debit to Cost of Goods Sold typically represent the

a. Transfer of completed items to Finished Goods Inventory
b. Costs of items sold
 c. Selling price of items sold
d. The cost of goods manufactured

20. A service organization would be most likely to use a predetermined overhead

rate based on:
a. Machine hours
b. Standard material cost
c. Direct labor
d. Number of complaints

21. A good description of “cost of goods manufactured” is the recorded cost of the:
a. Units completed during this period.
b. Units started and completed during the period.
c. Work done on all units during this period.
d. Work done this period on units completed this period.

22. In a job order costing system, the incurrence of indirect labor costs would usually
be recorded as a debit to:
a. Manufacturing overhead
b. Finished goods
c. Work in Process
d. Cost of goods sold

Dacosta Company had only one job in process on May 1. The job had been charged
with P 1,800 of direct materials, P 6,966 of direct labor, and P 9,936 of manufacturing
overhead costs. The company assigns overhead costs to jobs using the predetermined
overhead rate of P 18.40 per direct labor-hour. During May, the activity was recorded:
Raw materials (all direct materials):
Beginning balance: P 8,500
Purchased during the month 38,000
Used in production 39,300
Ending raw materials 7,200
Labor:
Direct labor hours worked during the month 1,900
Direct labor cost incurred 24,150
Actual manufacturing overhead costs incurred 33,300
Inventories:
Raw materials, May 30 ?
 Work in process, May 30 P 16,937

Work in process inventory on May 30 contains P 3,741 of direct labor cost. Raw
materials consists solely of items that are classified as direct materials.
23. The balance of raw materials inventory account on May 30 was:
a. P 1,300
b. P 7,200
c. P 29,500
d. P 30,800

24. The cost of goods manufactured for May was:

a. P 97,110
b. P 98,770
c. P 100,535
d. P 110,600

Direct materials used 39,300

Direct labor cost 24,150
Applied FOH (18.40 x 1,900) 34,960
Manufacturing cost 98,410
WIP, beg. 18,702
WIP, end (16,937)
COGM 100,175

25. The entry to dispose of the underapplied or overapplied overhead costs for the
month would include a:
a. Credit of P 5,336 to Manufacturing Overhead
b. Credit of P 1,660 to Manufacturing Overhead
c. Debit of P 5,336 to Manufacturing Overhead
d. Debit of P 1,660 to Manufacturing Overhead

Actual factory overhead 33,300

Applied FOH 34,960
Variance 1,660 overapplied

Warriors Company begins operations on July 1, information from job cost sheets shows
the following:

Manufacturing Costs Assigned

Job No. July August September
100 P 12,000 P 8,800
 101 9,800 9,700 P 12,000
102 6,000
103 11,800 6,000
104 5,800 7,000

Job 102 was completed in July. Job 100 was completed in August, and Jobs 101 and
103 were completed in September. Each job was sold for 50% above its cost in the
month following completion.

26. Compute the balance in Work in Process inventory at the end of July.

a. P 21,800
b. P 27,800
c. P 20,800
d. P 12,000

Jobs not completed:

Job 100 12,000
Job 101 9,800
Total 21,800

27. Which of the following costs is not a product cost?

a. Wages paid to workers for rework on defective products.
b. Wages paid to truck loaders who load finished goods onto outgoing
delivery trucks.
c. Fringe benefits paid to factory workers.
d. Wages paid to workers for idle time due to machine breakdown in a
production department.

28. Schneider, Inc. had the following information relating to 20x7.

Budgeted factory overhead 74,800,000

Actual factory overhead 78,300,000
Applied factory overhead 76,500,000
Estimated labor hours 44,000

If Schneider, Inc. decides to use the actual results from 20x7 to determine the
20x8 overhead rate, what will the 20x8 overhead rate be?
a. P 1,650
b. P 1,700
 c. P 1,738
d. P 1,740

Predetermined rate = 74,800/44,000 = 1,700

76,500,000 = 1,700 (x)
X = 45,000 direct labor hours
78,300,000 /45,000 = 1,740
29. Avery uses a predetermined factory overhead rate based on direct labor hours.
For the month of October, Avery’s budgeted overhead was P 300,000 based on
a budgeted volume of 100,000 direct labor hours. Actual overhead amounted to
P 325,000 with actual direct labor hours totaling P 110,000.

How much was the overapplied or underapplied overhead?

a. P 30,000 overapplied
b. P 30,000 underapplied
c. P 5,000 overapplied
d. P 5,000 underapplied

300,000/100,000 = 3 x 110,000 = 330,000 – 325,000 = 5,000 overapplied

30. The Work in Process account of the Malinta Company which uses a job order
cost system follows:

Work in Process
Debit: Credit:
April 1 balance P 25,000 Finished goods P 124,500
Direct materials 50,000
Direct labor 40,000
Applied overhead 30,000

Overhead is applied to production at a predetermined rate, based on direct labor

cost. The work in process on April 30 represents the cost of Job 456, which has
been charged with direct labor cost of P 3,000 and Job. 789, which has been
charged with applied overhead of P 2,400.
The cost of direct materials charged to Job 456 and Job 789 amounted to:
a. P 8,700
b. P 7,600
c. P 4,500
d. P 4,200

Goods placed in process (25,000 + 50,000 + 40,000 + 30,000) 145,000

Cost of goods manufactured 124,500
Work in process, end 20,500
Job 456
Labor 3,000
FOH (3,000 x 30,000/40,000) 2,250 5,250

Job 789
Applied FOH 2,400
Labor (2,400/75%) 3,200 5,600
Materials of Job 456 and 789 9,650

(no answer from the choices)