WESLEYAN UNIVERSITY PHILIPPINES

Cabanatuan City
COLLEGE OF BUSINESS AND ACCOUNTANCY
ACCOUNTING 7
REMEDIAL EXAMINATION (Summer 2015-2016)
Name:
Year and Block:

Score:
Date:

/30

Lahat ng bagay, pinaghihirapan. Di matamis ang tagumpay kapag

walang paghihirap na naranasan.
I.

THEORIES ( 10 points)

Direction: Choose and write the capital letter of the correct answer.
1.
a.
b.
c.
d.

When job order costing is used, the primary focal point of cost accumulation is the
department.
supervisor.
item.
job.

2.
a.
b.
c.
d.

In a normal cost system, a debit to Work in Process Inventory would not be made for
actual overhead.
applied overhead.
actual direct material.
actual direct labor.

3. In a job order costing system, the dollar amount of the entry that debits Finished Goods
Inventory and credits Work in Process Inventory is the sum of the costs charged to all jobs
a. started in process during the period.
b. in process during the period.
c. completed and sold during the period.
d. completed during the period.
4. 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.

5. The journal entry to apply overhead to production includes a credit to Manufacturing

Overhead control and a debit to
a. Finished Goods Inventory.
b. Work in Process Inventory.
c. Cost of Goods Sold.
d. Raw Material Inventory.
6. Underapplied overhead resulting from unanticipated and immaterial price increases for
overhead items should be written off by
a. decreasing Cost of Goods Sold.
b. increasing Cost of Goods Sold.
c. decreasing Cost of Goods Sold, Work in Process Inventory, and Finished Goods
Inventory.
d. increasing Cost of Goods Sold, Work in Process Inventory, and Finished Goods
Inventory.
7.
a.
b.
c.
d.

Debits to Cost of Goods Sold typically represent the

transfer of completed items to Finished Goods Inventory.
costs of items sold.
selling price of items sold.
the cost of goods manufactured.

8. What is the best cost accumulation procedure to use when many batches, each differing as to
product specifications, are produced?
a. job order
b. process
c. actual
d. Standard
9.
a.
b.
c.
d.

Which of the following could not be used in job order costing?

standards
an average cost per unit for all jobs
normal costing
overhead allocation based on the job's direct labor hours

10. Total manufacturing costs for the year plus beginning Work in Process Inventory cost equals
a. cost of goods manufactured in the year.
b. ending Work in Process Inventory.
c. total manufacturing costs to account for.
d. cost of goods available for sale.

II.

PROBLEMS
Problem 1. The following data are for Potras Company:

Finished goods inventory...............

Work in process inventory.............
Raw materials inventory................

Beginni
ng
$30,000
$20,000
$21,000

Purchases of raw materials.........................

Factory depreciation...................................
Other factory costs.....................................
Direct labor................................................
Indirect labor..............................................
Selling expense..........................................
Underapplied or overapplied overhead......

Ending
$40,000
$13,000
$26,000

$71,000
$5,000
$10,000
$27,000
$6,000
$12,000
$0

1.The cost of raw materials used in production was:

2.The cost of goods manufactured was:
3.The cost of goods sold was:
Problem 2. The Bus Company uses a job-order costing system. The following information was recorded
for September:
Job Number
1
2
3
4

September 1 Inventory
$1,000
$1,400
$500
$750

Cost Added During September

Direct Materials
Direct Labor
$300
$200
$250
$300
$1,500
$150
$4,000
$400

The direct labor wage rate is $10 per hour. Overhead is applied at the rate of $5 per direct labor-hour. Jobs
1, 2, and 3 have been completed and transferred to finished goods. Job 2 has been delivered to the
customer.
4.The ending Work in Process inventory is:

5.The Cost of Goods Manufactured for September is:

Problem 3. Talplacido Inc., manufactures furniture sets for export and uses the job order costing system
in accounting for its costs. The following information are obtained from the accounting books and
records for the year ended December 31, 2015.
The work in process on January 1 was 20% less than the work in process on December 31.
The total manufacturing costs added during 2015 was P1,800,000 based on actual direct
materials and direct labor but with manufacturing overhead applied on actual labor pesos.
The manufacturing overhead applied to process was 72% of 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
applied manufacturing overhead was P1,700,000.
Questions:
1. What would be the Beginning Work in process as of January 1, 2015?
2. What would be the Ending Work in process as of December 31, 2015?
Problem 4. Company has the following balances as of the year ended December 31, 2010
Direct Materials Inventory
WIP Inventory
Finished Goods Inventory
Underapplied Factory Department Overhead
Cost of Goods Sold

30,000 Dr.
69,000 Dr.
99,000 Dr.
8,000 Dr.
149,000 Dr.

Additional information is as follows:

Cost of direct materials purchased during 2010
Cost of direct materials requisitioned in 2010
Cost of goods completed during 2010
Factory overhead applied (120% of direct labor)

82,000
74,000
204,000
96,000

Required:
a. Compute beginning direct materials inventory.
b. Compute beginning WIP inventory.
c. Compute beginning finished goods inventory.
d. Compute actual factory overhead incurred

Problem 5. LAST NA TO Company has two service departments and three producing departments. For a
number of years, the company has allocated the overhead cost of the service departments to the producing
departments on the basis of annual sales pesos which lead serious inequities. The auditor recommended that
maintenance and engineering service hours be used as a better service cost allocation basis. The following data
was available:
Service Departments
Maintenance
Engineering
Maintenance Hours
Engineering hours
400
Overhead Costs
P12,000
50,000

Producing Departments
Dept A
Dept B
400
800
800
54,000

Dept C
200
400
80,000

200
400
90,000

Required:
a) Using direct method, how much maintenance cost would be allocated to the Engineering
Department?
b) Using direct method, how much maintenance cost would be allocated to the Department C?
c) Under the step method, what amount of Maintenance Departments cost is allocated to
Engineering Department?
d) If the maintenance Departments total cost to be allocated is P24,000, what portion of the
Maintenance Departments costs is allocated to Dept A under reciprocal method?
Problem 6. Warriors Inc. is employing normal costing for its job orders. The overhead is applied using
predetermined overhead rates. The following information relates to the Warriors Inc. for the year ended
December 31, 2015.
Job No. 101
Job in process, January 1, 2015
Direct materials
40,000
Labor
60,000
Factory overhead
30,000
Cost added during 2015:
Materials
20,000
Labor
100,000
Factory overhead
?

Job No. 102

Job No. 103

30,000
40,000
20,000

0
0
0

10,000
200,000
?

100,000
400,000
?

Additional Information:
1. Actual overhead for the year 2015 amounted to P350,000.
2. Jobs No. 101 and 102 were completed and transferred to finished goods during the year 2015.
3. Job No. 101 was sold during the year 2015.
4. The gross profit rate is 20% based on cost.

Required: Based on the foregoing, determine the following:

a) Total manufacturing cost

_____________________

b) Cost of goods manufactured

_____________________

c) Cost of goods sold

_____________________

d) Ending work in process

_____________________

e) Ending finished goods

Prepared by:

JELWIN DL. BAUTISTA, CPA

Subject Instructor

Reviewed by:

PROF. KATHLEEN ROSE L. YALUNG, CPA, MBA

Program Head, BSA & BSAT

Approved by:

DR. MARIA VICTORIA C. MONES

Dean, College of Business and Accountancy

_____________________