Exercise 2 - Job Order Costing.

Multiple Choice.

1. 1Maganda Company manufactures pipes and uses a job order costing system. During May, the following
jobs were started (no other jobs were in the process) and the following costs were incurred:

Job X Job Y Job Z Total

Materials P10,000 P20,000 P15,000 P45,000
Direct Labor 5,000 4,000 2,500 11,500
P15,000 P24,000 P17,500 56,500
In addition, estimated overhead of P300,000 and direct labor costs of P150,000 were estimated to be
incurred during the year. Actual overhead of P24,000 was incurred in May; overhead is applied on the
basis of direct labor costs. If only Job X and Job Z were completed during the month, the journal entry to
record the initiation of all jobs would be:
a. Work-in-process P79,500
Material P45,000
Wages payable 11,500
Applied Factory Overhead 23,000
b. Work-in-process P80,500
Direct Materials P45,000
Direct Labor 11,500
Factory Overhead 24,000

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c. Work-in-process P80,500
Direct Materials
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Direct Labor 11,500
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Applied Factory Overhead 24,000
d. Direct Labor o. P11,500
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Direct Materials 45,000

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Work-in-process 56,500

2. Malakas Company is a manufacturing concern using the perpetual inventory system. The
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following materials inventory account data is provided:

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Beginning balance P275,000

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Other debits to the account 825,000

Excess of ending inventory over beginning inventory 55,000

How much is the cost of materials issued to production?

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a. P770,000 b. P1,045,000 c. P1,100,000 d. P1,155,000

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3. The books of Chico Manufacturing Co. showed the following data for the month of October
2018:
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Opening and closing inventories:

October 1 October 31
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Raw Materials P16,000 P17,200

Work-In-Process 16,000 24,000
Finished Goods 28,000 36,000
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Direct Labor Cost, P32,000

Factory Overhead, 75% of direct labor cost.
Cost of goods sold, P112,500

What is the cost of materials purchased during the month?

a. P87,200 b. P73,200 c. P72,000 d. P71,200

4. Durian Company has the following data on April 30, 2018;

April manufacturing overhead P30,101.80
Decrease in ending inventories:
Materials P2,430.00
Goods in Process 590.00

Increase in ending inventory:

Finished Goods P1,320.40

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 Exercise 2 - Job Order Costing.
Multiple Choice.

The manufacturing overhead amounts to 50% of the direct labor, and the direct labor and
manufacturing combined equal 50% of the total cost of manufacturing. All materials are
purchased F.O.B shipping point.

What is the cost of goods manufactured?

a. P180,61.80 b. P181,200.80 c. P182,300.00 d. P183,200.80

5. Mangga, Inc. employs a job order cost system. Its manufacturing activities in July, 2018, its first
month of operation, are summarized as follows:

JOB NUMBERS
201 202 203 204
Direct Materials P7,000 P5,800 P11,600 P5,000
Direct Labor Cost P6,600 6,000 8,400 P2,400
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 P2 per direct labor hour to variable overhead, P3

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per hour for fixed overhead. Jobs 201, 202 and 203 were completed in July. What is the cost of
the completed jobs?
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a. P62,900 b. P62,500 c. P72,900 d. P65,900

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6. The Atis Corporation manufactures one product and accounts for cost by a job-order cost
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system. You have obtained the following information for the year ended December 31, 2018
from the Corporation’s book and records:
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Total manufacturing cost added during 2018

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based on actual direct materials, actual direct labor and

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applied factory overhead on actual direct labor cost P1,000,000

Cost of goods manufactured based on actual direct materials and

direct labor and applied factory overhead 970,000
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Applied factory overhead to work in process based on direct labor cost 75%
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Applied factory overhead for the year, based on total manufacturing cost 27%

Beginning work in process inventory was 80% of ending work in process inventory. What is the
cost of direct materials used for year ended December 31, 2018?
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a. P370,000 b. P970,000 c. P990,000 d. P970,500

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7. 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
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listed being incurred during the month.

Job Order No. Direct Materials Direct Labor Hours Direct Labor Cost
1001 P4,320 P1,300 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 P1.50 per direct labor hour.
The actual manufacturing overhead cost for the month totalled P30.350. During June, Job Order
Numbers 1001, 1002, 1004 and 1005 were completed. Jobs 1001 and 1002 were shipped out
and the customers were billed P9,000 for Job 1001 and P20,000 for Job 1002.

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 Exercise 2 - Job Order Costing.
Multiple Choice.

The cost of goods manufactured would be:

a. P55,000 b. P55,495 c. P56,495 d. P57,500

8. The Apple Manufacturing Company manufactures a product exclusively to customer order,

employing a job order cost system. On August 1, 2018, its work in process inventory (5 partially
completed jobs) had a cost of P3,000. During August, no additional orders were put into
production abd 18 orders were completed (total cost, P24,000) of which 14 (cost P20,000) were
shipped.

Material requisition in August totalled P17,000 and direct labor cost were P8,000, at the
beginning of the year, 2018, a pre-determined overhead rate of 150% of expected direct labor
cost was established.

The August 31, 2018 work in process inventory is:

a. P4,000 b. P14,000 c. P16,000 d. P20,000

9. Job No. 210 has, at the end of the second week in February, an accumulated total cost P4,200. In
the third week, P1,000 of direct materials were used on the Job, together with P10 of indirect
materials. Twenty (20) hours of direct labor services were applied to the job at a cost of P5 per

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hour. Manufacturing overhead was applied at the basis of P2.50 per direct labor hour for fixed

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overhead and P2 per hour for variable overhead. Job No. 210 was the only job completed during

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the third week. The total cost of Job Order No. 210 is:
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a. P5,390 b. P5,360 c. P5,350 d. P5,400
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10. Peanuts Corporation uses a job-order cost system and has two production departments, M and
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A, budgeted manufacturing costs for 2018 are as follows:

Department M Department A
Direct Materials P700,000 P100,000
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Direct Labor 200,000 800,000

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Manufacturing Overhead 600,000 400,000

The actual material and labor costs charged to Job No. 432 during 2018 were as follows:
P25,000
Direct Material
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Direct Labor:
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Department M P8,000
Department A 12,000 20,000
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Peanuts Corporation applied manufacturing overhead to production orders on the basis of direct-labor
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cost using departmental rates predetermined at the beginning of the year based on the annual budget.
The total manufacturing cost associated with Job No. 432 for 2018 should be:
a. P50,000 b. P55,000 c. P65,000 d. P75,000
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11. Banana Corporation has a job order cost system. The following debits (credits) appeared in the
ledger account work-in-process for the month of March 2018:
March 1, Balance P12,000
31, Direct Materials 40,000
31, Direct Labor 30,000
31, Factory Overhead 27,000
31, To Finished Goods (100,000)

Banana applied overhead to production at a predetermined rate at 90% based on the direct
labor cost. Job No. 232, the only job still in process at the end of March 2018, has been charged
with factory overhead of P2,250. What was the amount of direct materials charged to Job No.
232?
a. P2,250 b. P2,500 c. P4,250 d. P9,000

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 Exercise 2 - Job Order Costing.
Multiple Choice.

12. The work-in-process account of the Matamis Company which uses a job order cost system
follows:
Work-In-Process

Debit Credit
April 1 Balance P25,000 Finished Goods P125,450
Direct Materials 50,000
Direct Labor 40,000
Fac. Overhead Applied 30,000

Overhead is applied to production at a predetermined rate, based on direct labor cost. The work-
in-process at April 30 represents the cost of Job No. 456, which has been charged with direct
labor cost of P3,000 and Job No. 789, which has been charged with applied overhead of P2,400.
The cost of direct materials charged to Job No. 456 and Job No. 789 amounted to:
a. P8,700 b. P7,600 c. P4,500 d. P4,200

13. The following data were taken from the records of Sampaloc Company:
08/31/18 09/30/18
Inventories:

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Raw Materials P? P50,000
Work-in-Process P80,000 95,000

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Finished Goods P60,000 78,000
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Raw Materials Purchases, P46,600

Factory Overhead, 75% of direct labor cost, P63,000.
Selling and Administrative Expenses, 12.5% of sales, P25,000
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Net income for September 2018, P25,000

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What is the cost of raw materials inventory on August 31, 2018?

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a. P30,000 b. P40,000 c. P46,000 d. P50,000

14. Macopa Corporation manufactures rattan furniture sets for export and uses the job order cost
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system in accounting for its costs. You obtained from the corporation’s books and records the
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following information for the year ended December 31, 2018:

--- The work in process inventory on January 1 was 20% less than the work in process inventory
on December 31.
--- The total manufacturing costs added during 2018 was P900,000 based on actual direct
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materials and direct labor but with manufacturing overhead applied on actual direct labor pesos.
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--- The manufacturing overhead applied to process was 72% of the direct labor pesos, and it was
equal to 25% of the total manufacturing costs.
--- The cost of goods manufactured, also based on actual direct materials, actual direct labor and
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applied manufacturing overhead, was P850,000. The cost direct materials used and the work in
process inventory on December 31, 2018 are:
Direct Materials Used WIP Inventory, 12/31/2018
a. P1,075,000 P200,000
b. P362,500 P250,000
c. P312,500 P250,000
d. P1,100,000 P275,000

15. The Grapes Company uses a job order cost accounting system. Overhead is applied to production
at a predetermined rate based on direct labor cost. The following postings appear in the ledger
accounts of the company for the month of September, 2018:
Debit
Work-in-process, September 1. P30,000
Direct Materials 60,000
Factory Overhead 40,000

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 Exercise 2 - Job Order Costing.
Multiple Choice.

Direct Labor 50,000

On September 30, 2018, finished goods completed, from work-in-process cost P160,000.
Job No. 327 was the only job not completed in September, and it has been charged P4,600 for
factory overhead. Direct materials is charged to Job No. 327 was:
a. P10,350 b. P14,650 c. P9,650 d. P25,000

*******************The End***************

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