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1. The books of Matulungin Manufacturing Co.

showed the following data for the month of October 2014:

Opening and closing inventories:
Raw Materials .
Work-in Process .
Finished Goods
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.
b.
c.
d.

Oct. 1
P16,000
16,000
28,000

Oct. 31
P17,200
24,000
36,000

P87,200
P73,200
P72,000
P71,200

2. Border Company has the following data on April 30, 2014:

April manufacturing overhead ..
P30,101.80
Decrease in ending inventories:
Materials ..
2,430.00
Goods in Process .
590.00
Increase in ending inventory:
Finished Goods
1,320.40
The manufacturing overhead amounts to 50% of 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. P180,610.80
b. P181,200.80
c. P182,300.80
d. P183,200.80
3. Trackside Co. employs a job order cost system. Its manufacturing activities in July 2014, 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
P6,000
P 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 for variable overhead, P3 per hour for fixed overhead.
Jobs 201, 202, and 203 were completed in July.
What is the cost of the completed jobs?
a.
b.
c.
d.

P62,900
P62,500
P72,900
P65,900

4. The Helper Corporation manufactures one product and accounts for cost by a job-order cost system. You have obtained the following information for the year ended
December 31, 2014 from the corporations books and records:
Total manufacturing cost added during 1997
based on actual direct materials, actual
direct labor and 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
Applied factory overhead to work in process based on direct labor cost
75%
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, 2014?
a. P370,000
b. P970,000
c. P990,000
d. P970,500
5. The company uses a job order cost system. The following data were obtained from the companys 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 Cost
1001
P 4,320
1,300
P 1,600
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 month totaled P30,350. During
June, Job Order Nos. 1001, 1002, 1004 and 1005 were completed. Jobs 1001 and 1002 were shipped out and the costumers were billed P9,000 for Job 1001 and
P20,000 for Job 1002.
The cost of goods manufactured would be:
a.
b.
c.
d.

P55,500
P55,495
P56,495
P57,500

6. The Glen Manufacturing Company manufactures a product exclusively to customer order, employing a job order cost system.
On August 1, 2014, its work in process inventory (5 partially completed jobs) had a cost of P3,000.
During August, no additional orders were put into production and 18 orders were completed (total cost, P24,000) of which 14 (cost P20,000) were shipped.
Material requisition in August totaled P17,000 and direct labor cost were P8,000. At the beginning of the year, 2014, a predetermined overhead rate of 150% of expected
direct labor cost was established.
The August 31, 2014 work in process inventory is:
a.
b.
c.
d.

P 4,000
P14,000
P16,000
P20,000

7. Job No. 210 has, at the end of the second week in February, an accumulated total cost of P4,200. In the third week, P1,000 of direct materials were used on 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 hour.
Manufacturing overhead was applied at the basis of P2.50 per direct labor hour for fixed overhead and P2 per hour for variable overhead.
Job No. 210 was the only job completed during the third week.
The total cost of Job Order No. 210 is:
a.
b.
c.
d.

P5,390
P5,360
P5,350
P5,400

8. Tillman Company uses a job-order cost system and has two production departments, M and A, Budgeted manufacturing costs for 1997 are as follows:
Department Department
M
A
Direct materials ..
P700,000
P100,000
Direct labor
200,000
800,000
Manufacturing Overhead
600, 000
400,000
The actual material and labor costs charged to Job No. 432 during 1980 were as follows:
Direct material .
P25,000
Direct labor:
Department M ..
P 8,000
Department A
12,000 20,000
Tillman applies manufacturing overhead to production orders on the basis of direct-labor 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 1980 should be:
March 1, balance ..
P 12,000
31, direct materials
40,000
31, direct labor ....
30,000
31, direct overhead ...
27,000
31, to finished goods .
( 100,000 )
Worrel applies 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 1997,
has been charged with factory overhead of P2,250. What was the amount of direct materials charged to Job no. 232?
a.
b.
c.
d.

P2,250
P2,500
P4,250
P9,000

9. The work-in-Process account of the Malinta Company which uses a job order cost system follows:
Work-In-Process
____________________________________________________________________________________
April 1 Balance
Direct Materials
Direct Labor .
Fac. Overhead Applied

P25,000
50,000
40,000
30,000

Finished Goals .

P125,450

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 applied overhead of P2,400.
The cost of direct materials charged to Job No. 456 and Job No. 789 amounted to:
a.
b.
c.
d.

P.8,700
P7,600
P4,500
P4,200

10. The following data were taken from the records of Charming Company:
08/31/14
Inventories:
Raw materials ..
Work in process ..
Finished goods .
Raw materials purchases, P46,000.
Factory overhead, 75% of direct labor cost, P63,000.
Selling and administrative expenses, 12.5% of sales, P25,000
Net income for September 1997, P25,000.
What is the cost of raw materials inventory on August 31, 2014?
a.
b.
c.
d.

09/30/14

P
?
80,000
60,000

P50,000
95,000
78,000

P30,000
P40,000
P46,000
P50,000

11. Mayon Corporation manufactures rattan furniture sets for export and uses the job order cost system in accounting for its costs. You obtained from the corporations
books and records the following information for the year ended December 31, 1997:
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 1997 was P900,000 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 the direct labor pesos, and it was equal to 25% of the total manufacturing costs.
The costs of the goods manufactured, also based on actual direct materials actual direct labor and applied manufacturing overhead was P850,000.
The cost of direct materials used and the work in process inventory on December 31, 1997 are:
Direct materials Used
P1,075,000
P 362,500
P 312,500
P1,100,000

a.
b.
c.
d.

WIP inventory, 12/31/97

P200,000
P250,000
P250,000
P275,000

12. The Diamond 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 1997:
Debit
Work in process, Sept. 1 ..
P30,000
Direct materials ..
60,000
Factory overhead ..
40,000
Direct labor .
50,000
On September 30, 1997, finished goods completed, from work in process cost P160,000.
Job No. 327 was the only job completed in September, and it has been charged P4,600 for factory overhead.
Direct materials charged to Job No. 327 was:
a.
b.
c.
d.

P10,350
P14,650
P 9,650
P25,000

13. Variety Factory uses a job order cost system. Per company records, the total charges to work-in-process in March 1997 were as follows:
Direct materials .
P125,000
Direct labor ..
122,000
Overhead 75% of direct labor cost.
No jobs were in process at the beginning of the month. During the month, work-in-process in the amount of P310,500 was charged to finished goods. On March 31, 1997
the only job order remaining was Job No. 100 with a direct labor cost of P10,000
The cost of direct materials charged to Job No. 100 was:
a.
b.
c.
d.

P20,500
P14,875
P10,500
P15,000

14. Marilag Company had the following inventories:

April 1
Direct materials ...
P 36,000
Work in process ...
18,000
Finished goods ..
54,000
The following information were available for April 1997:
Direct labor
Direct labor rate per hour
Overhead rate per direct labor hour
Cost of goods manufactured .
What is the prime cost during April 1997?
a.
b.
c.
d.

April 30
P45,000
26,000
72,000
P 60,000
P7.50
10.00
153,650

P81,650
P80,000
P90,000
P96,000

15. Worley Company has underapplied overhead of P45,000 for the year ended December 31, 1997. Before disposition of the underapplied overhead, selected
December 31, 1997 balances from Worleys accounting records are as follows:

Sales
P1,200,000
Cost of goods sold ....
720,000
Inventories:
Direct materials .
36,000
Work in process .
54,000
Finished goods
90,000
Under Worleys cost accounting system, over- or underapplied overhead is allocated to appropriate inventories and cost of goods sold based on year-end balances. In his
1997 income statement, Worley should report cost of goods sold of
a.
b.
c.
d.

P682,500
P684,000
P756,000
P757,500

16. Blackwood uses a job order cost system and applies factory overhead to production order on the basis of direct-labor cost. The overhead rates for 1997 are 200% for
Department A and 50% for Department B. Job 123, started and completed during 1997, was charged with the following costs:
Department
A
B
Direct materials .
P25,000
P 5,000
Direct labor ........
?
30,000
Factor overhead ...
40,000
?
The total manufacturing cost associated with Job 123 should be
a.
b.
c.
d.

P135,000
P180,000
P195,000
P240,000

17. Birk Co. uses a job order cost system. The following debits (credit) appeared in Birks work-in-process account for the month of April 1997:
April
Description
Amount
1
Balance
P 4,000
30
Direct materials
24,000
30
Direct labor
16,000
30
Factory Overhead
12,800
30
To finished goods
( 48,000 )
Birk applies overhead to production at a predetermined rate of direct labor costs. Job No. 5, the only job still in process on April 30, 1995 has been charged with direct
labor of P2,000. What was the amount of direct materials charged to Job No. 5?
a.
b.
c.
d.

P 3,000
P 5,200
P 8,800
P24,000

18. National Marketing Corp. uses a job-order cost system. It has three production departments, X, Y and Z. The manufacturing budget cost for 1997 is as follows:
Dept. X
Dept. Y
Dept. Z
Direct Materials
P600,000.00
P400,000.00
P200,000.00
Direct Labor
200,000.00
500,000.00
400,000.00
Mfg. Overhead
600,000.00
100,000.00
200,000.00
For Job No. 01-90 completed in 1997, direct material cost was P75,000.00; direct labor, Dept. X, P40,000.00, Dept. Y, P100,000.00, Dept. Z, P200,000.00. The
corporation applies manufacturing overhead to each job on the basis of direct labor cost using department rates predetermined at the beginning of the year based on
manufacturing budget cost.
The total manufacturing cost of Job No. 01-90 is:
a. P235,000
b. P310,000
c. P280,000
d. P150,000
19. RV Crafts manufactures to customer order using the job order cost 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. P1,600,000
b. P1,400,000
c. P 300,000
d. P 700,000
20. The accounting records for 1997 of Wagner Music Co. showed the following:
Increase in raw materials inventory .
Decrease in finished goods inventory .
Raw material purchased ..
Direct labor payroll ..
Factory overhead ..
Freight-out .
The cost of raw materials used for the period amounted to:
a. P1,245,000
b. P1,290,000
c. P1,335,000

P 45,000
150,000
1,290,000
600,000
900,000
135,000

d. P1,380,000
TRUE/FALSE
21.
Inventoriable costs are reported as an asset when incurred and expensed
on the income statement when the product is sold.
22.

Cost of goods sold refers to the products brought to completion, whether

they were started before or during the current accounting period.

MULTIPLE CHOICE
23.
For a manufacturing company, direct labor costs may be included in
a.
direct materials inventory only.
b.
merchandise inventory only.
c.
both work-in-process inventory and finished goods inventory.
d.
direct materials inventory, work-in-process inventory, and
finished goods inventory accounts.
24.

25.

For a manufacturing company, indirect manufacturing costs may be included

in
a.
direct materials inventory only.
b.
merchandise inventory only.
c.
both work-in-process inventory and finished goods inventory.
d.
direct materials inventory, work-in-process inventory, and finished
goods inventory accounts.
For a manufacturing-sector company, the cost of factory insurance is
classified as a
a.
direct material cost.
b.
direct manufacturing labor cost.
c.
manufacturing overhead cost.
d.
period cost.

26.

For a printing company, the cost of paper is classified as a

a.
direct material cost.
b.
direct manufacturing labor cost.
c.
manufacturing overhead cost.
d.
period cost.

27.

Wages paid to machine operators on an assembly line are classified as a

a.
direct material cost.
b.
direct manufacturing labor cost.
c.
manufacturing overhead cost.
d.
period cost.

33.
Costs that are initially recorded as assets and expensed when sold are
referred to as
a.
period costs.
b.
inventoriable costs.
c.
variable costs.
d.
fixed costs.
34.

For merchandising companies, inventoriable costs include

a.
the cost of the goods themselves.
b.
incoming freight costs.
c.
insurance costs for the goods.
d.
all of the above.

35.

For manufacturing firms, inventoriable costs include

a.
plant supervisor salaries.
b.
research and development costs.
c.
costs of dealing with customers after the sale.
d.
distribution costs.

36.

A plant manufactures several different products. The wages of the plant

supervisor can be classified as a(n)
a.
direct cost.
b.
inventoriable cost.
c.
variable cost.
d.
period cost.

37.

The cost of inventory reported on the balance sheet may include all of the
following EXCEPT
a.
customer-service costs.
b.
wages of the plant supervisor.
c.
depreciation of the factory equipment.
d.
the cost of parts used in the manufacturing process.

38.

For a computer manufacturer, period costs include the cost of

a.
the keyboard.
b.
labor used for assembly and packaging.
c.
distribution.
d.
assembly-line equipment.

39.

Period costs
a.
include only fixed costs.
b.
seldom influence financial success or failure.
c.
include the cost of selling, delivering, and after-sales support for
customers.
d.
should be treated as an indirect cost rather than as a direct
manufacturing cost.

28.

Manufacturing overhead costs in an automobile manufacturing plant MOST

likely include
a.
labor costs of the painting department.
b.
indirect material costs such as lubricants.
c.
sales commissions.
d.
steering wheel costs.

29.

Manufacturing overhead costs are also referred to as

a.
indirect manufacturing costs.
b.
prime costs.
c.
period costs.
d.
conversion costs.

40.

Period costs
a.
are treated as expenses in the period they are incurred.
b.
are directly traceable to products.
c.
include direct labor.
d.
are also referred to as manufacturing overhead costs.

30.

Manufacturing costs include all EXCEPT

a.
costs incurred inside the factory.
b.
both direct and indirect costs.
c.
both variable and fixed costs.
d.
both inventoriable and period costs.

41.

Which of the following is NOT a period cost?

a.
Marketing costs
b.
General and administrative costs
c.
Research and development costs
d.
Manufacturing costs

31.

Inventoriable costs
a.
include administrative and marketing costs.
b.
are expensed in the accounting period sold.
c.
are particularly useful in management accounting.
d.
are also referred to as nonmanufacturing costs.

42.

Costs expensed on the income statement in the accounting period incurred

are referred to as
a.
direct costs.
b.
indirect costs.
c.
period costs.
d.
inventoriable costs.

32.

Inventoriable costs are expensed on the income statement

a.
when direct materials for the product are purchased.
b.
after the products are manufactured.
c.
when the products are sold.

43.

Prime costs include

a.
direct materials and direct manufacturing labor costs.
b.
direct manufacturing labor and manufacturing overhead costs.
c.
direct materials and manufacturing overhead costs.

d.
44.

45.

46.

47.

a.
b.
c.
d.

50.

51.

54. Problem :

Total manufacturing costs equal

a.
direct materials + prime costs.
b.
direct materials + conversion costs.
c.
direct manufacturing labor costs + prime costs.
d.
direct manufacturing labor costs + conversion costs.

55. Problem :

The cost classification system used by manufacturing firms include all of the
following EXCEPT
a.
direct materials costs and conversion costs.
b.
direct materials costs, direct manufacturing labor costs, and
manufacturing overhead costs.
c.
indirect materials costs, indirect manufacturing labor costs, and
manufacturing overhead costs.
d.
prime costs and manufacturing overhead costs.
Manufacturing overhead costs may include all EXCEPT
a.
salaries of the plant janitorial staff.
b.
labor that can be traced to individual products.
c.
wages paid for unproductive time due to machine breakdowns.
d.
overtime premiums paid to plant workers.

Which of the following formulas determine cost of goods sold in a

manufacturing entity?
Beginning work-in-process inventory + Cost of goods manufactured - Ending
work-in-process inventory = Cost of goods sold
Beginning work-in-process inventory + Cost of goods manufactured + Ending
work-in-process inventory = Cost of goods sold
Cost of goods manufactured - Beginning finished goods inventory - Ending
finished goods inventory = Cost of goods sold.
Cost of goods manufactured + Beginning finished goods inventory - Ending
finished goods inventory = Cost of goods sold.
Underapplied overhead is
a. reported as unearned revenue in the balance sheet.
b. added to the Manufacturing Overhead account.
c. added to Cost of Goods Sold.
d. credited to Cost of Goods Sold.
Product costs may refer to
a.
inventoriable costs for external reporting.
b.
design costs plus manufacturing costs for government contracts.
c.
all costs incurred along the value chain for pricing decisions.
d.
all of the above refer to product costs, it varies.

THE FOLLOWING INFORMATION APPLIES TO QUESTIONS 52 THROUGH 53.

The following information pertains to Alleighs Mannequins:
Manufacturing costs P 1,500,000
Units manufactured
30,000
Units sold
29,500 units sold
for P85 per unit
Beginning inventory 0 units
52.

53.

Conversion costs include

a.
direct materials and direct manufacturing labor costs.
b.
direct manufacturing labor and manufacturing overhead costs.
c.
direct materials and manufacturing overhead costs.
d.
only direct materials.

48.
Which of the following formulas determine cost of goods sold in a
merchandising entity?
a. Beginning inventory + Purchases + Ending inventory = Cost of goods sold
b.
Beginning inventory + Purchases - Ending inventory = Costs of goods sold
c.
Beginning inventory - Purchases + Ending inventory = Cost of goods sold
d.
Beginning inventory - Ending inventory - Purchases = Cost of goods sold
49.

d.

What is the average manufacturing cost per unit?

a.
P50.00
b.
P50.85
c.
P17.65
d.
P85.00
What is the amount of ending finished goods inventory?
a.
P42,500
b.
P25,424
c.
P25,000

A firm has 1,000 A items (which it counts every week, i.e., 5 days), 4,000 B items
(counted every 40 days), and 8,000 C items (counted every 100 days). How many
items should be counted per day?

Assume you have a product with the following parameters:

Annual Demand = 360 units
Holding cost per year = P1.00 per unit

What is the EOQ for this product?

56. Problem :
Given the data from Problem 3, and assuming a 300-day work year, how many
orders should be processed per year? What is the expected time between orders?

57. Problem :
What is the total cost for the inventory policy used in Problem 3?

58. Problem :
If demand for an item is 3 units per day, and delivery lead-time is 15 days, what
should we use for a simple re-order point?

59. Problem :
Litely Corp sells 1,350 of its special decorator light switch per year and places orders
for 300 of these switches at a time. Assuming no safety stocks, Litely estimates a
50% chance of no shortages in each cycle and the probability of shortages of 5, 10,
and 15 units as 0.2, 0.15, and 0.15 respectively. The carrying cost per unit per year is
calculated as P5 and the stockout cost is estimated at P6 (P3 lost profit per switch
and another P3 loss of goodwill or future sales). What level of safety stock should
Litely use for this product? (Consider safety stock of 0, 5, 10, and 15 units.)

60. Problem :
Presume that Litely carries a modern white kitchen ceiling lamp that is quite popular.
The anticipated demand during lead-time can be approximated by a normal curve
having a mean of 180 units and a standard deviation of 40 units. What safety stock
should Litely carry to achieve a 95% service level?
-------------END------------------

d.

P1,475,000