1BDC CPA REVIEW INSTITUTE

O SQUARE ACCOUNTING SERVICES

3/F Fuentes Bldg., Marasbaras, Tacloban City

Mobile No.: 0927-981-6331; 0919-340-7505
E-mail: dargelaluser@gmail.com

COST ACCOUNTING

JOB ORDER COSTING

Problem 1
The Usry Company uses a job order cost system. The inventories on October 1: Finished goods, P5,000 (Job Order No.
1000), Work in process, P445 (Job Order No. 1001) and direct materials of P2,000. Purchases of direct materials, P30,000
pieces @ P1.40 per piece. Following are the additional costs incurred during the month.
Job Order No. Direct Materials Direct labor Cost Direct labor hours
1001 P4,100 P1,375 1,300
1002 9,150 7,250 3,700
1003 11,275 14,325 8,200
1004 3,225 2,800 1,500
1005 6,500 6,100 3,200
1006 2,750 1,650 980

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 totalled 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

1. The cost of goods manufactured amounted to:

a. P55,495 c. P56,495
b. P55,500 d. P57,500
2. The work-in process on October 31 amounted to:
a. P25,675 c. P43,770
b. P29,820 d. P69,445
3. The cost of goods available for sale amounted to:
a. P55,495 c. P60,500
b. P60,495 d. P61,495
4. The finished goods on October 31 amounted to:
a. P8,275 c.P30,675
b. P17,400 d. P43,770
5. The cost of goods sold amounted to:
a. P29,820 c. P21,950
b. P29,375 d. P7,870
6. The gross margins on Jobs 1001 and 1002 amounted to:
Job 1001 Job 1002
a. P1,200 P1,850
b. P1,130 P(1,950)
c. P1,150 P1,850
d. P1,130 P(1,850)
7. The direct materials on October 31 amounted to:
a. P5,000 c. P30,675
b. P7,000 d. P43,770

Problem 2
Adams Co. uses a job order costing system and the following information is available from its records. The company has
3 jobs in process: #5, #8, and #12.
Raw Materials used P120,000
Direct labor per hour P8.50
Overhead applied based on direct labor cost 120%

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Direct materials was requisitioned as follows for each job respectively: 30%, 25%, and 25%; the balance of the
requisitioned was considered indirect. Direct labor hours per job are 2,500; 3,100; and 4,200, respectively. Indirect labor
is P33,000. Other actual overhead costs totalled P36,000.

1. Refer to Adams Co. What is the prime cost of Job #5?

a. P42,250 c. P73,250
b. P57,250 d. P82,750
2. What is the total amount of overhead applied to Job #8?
a. P18,250 c. P30,000
b. P26,350 d. P31,620
3. What is the total amount of actual overhead?
a. P36,000 c. P93,000
b. P69,000 d. P99,960
4. How much overhead is applied to Work in Process?
a. P69,000 c. P132,960
b. P99,960 d. P144,000
5. If Job #12 is completed and transferred, what is the balance in Work in Process inventory at the end of the period
if overhead is applied at the end of the period?
a. P96,700 c. P170,720
b. P99,020 d. P139,540
6. Assume the balance in Work in process inventory was P18,500 on June 1 and P25,297 on June 30. The balance on
June 30 represents on job that contains direct materials of P11,250. How many direct labor hours have been
worked on this job (rounded to the nearest hour)
a. 751 c. 1,653
b. 1,324 d. 2,976

Problem 3
Harper Company’s Job 501 for the manufacture of 2,200 coats, which was completed during August at the unit costs
presented below:
Direct materials P20
Direct labor 18
Factory overhead (includes an allowance of P1 for
spoiled work) 18
P56
Final inspection of Job 501 disclosed 200 spoiled costs which were old to a local jobber for P6,000.

1. Assume that spoilage loss is charged to all production or due to internal failure during August. What would be the
unit cost of the good coats produced on Job 501?
a. P53.00 c. P56.00
b. P55.00 d. P58.60
2. Assume that the spoilage loss is attributable to the exacting specifications of Job 501 (or production run) and is
charged to specific job. What would be the unit cost of the good coats produced on Job 501?
a. P53.00 c. P57.50
b. P55.00 d. P58.60

PROCESS COSTING

Problem 4
Collins Company, which on April 1 had 6,000 units of WIP in Department B, the second and last stage of its production
cycle. The costs attached to these 6,000 units were P12,000 of costs transferred in from Department A, P2,500 of material
cost added in Department B, and P2,000 of conversion costs added in Department B. Materials are added at the beginning
of the process in Department B. Conversion was 50% complete on April 1. During April, 14,000 units were transferred in
from Department A at a cost of P27,000, and material costs of P3,500 and conversion costs of P3,000 were added in
Department B. On April 30, Department B had 5,000 units of WIP, 60% complete a to conversion costs. The cost attached
to these 5,000 units were P10,500 of costs transferred in from Department A, P1,800 of material costs added in
Department B, and P800 of conversion costs added in Department B.

1. Using the weighted average method, what were the equivalent units for the month of April?
Transferred in Material Conversion
cost cost costs
a. 15,000 15,000 15,000
b. 19,000 19,000 20,000
c. 20,000 20,000 18,000
d. 25,000 25,000 20,000

Problem 5
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Cost and statistics for Department 2 of a company manufacturing a single product in three department follows:
Work-in-process, October 1:
Cost in Department 1 P11,300
Cost in Department 2
Materials None
Labor 500
Factory overhead 50
Cost in Department 2 in October:
Materials None
Labor P13,000
Factory overhead 450
Units in process, October 1, 60% completed
as to conversion cost 500
Units received from Department 1 in October at P2.60 per unit 6,700
Units completed and transferred to Department 3 in October 6,800
Units in process, October 31, half completed as to
conversion cost 400

Compute the conversion costs per equivalent unit (rounded to nearest centavo)
FIFO AVERAGE
a. P2.00 P2.00
b. P2.01 P2.01
c. P2.01 P2.00
d. P2.00 P2.01

Problem 6
The Glorious Corporation manufactures only one product in which the raw material must pass through Process A, B, and
C, in that order, before completion.

Inventories of Process C and of Finished Goods on Oct.1 were as follows:

Process C – 1,200 units, 2/3 completed P4,200

Finished goods – 1,000 units at P3.00 per unit.

During October the following transactions were completed:

2,000 units with a value of P5,000 were transferred from Process B.
Direct labor applied to Process C during October was P3,100.
Overhead costs for October applied to Process C were P3,200.

Inventories on October 31 are as follows:

Process C – 600 units ½ completed
Finished goods – 1,300 units

Using FIFO method, the value of Process C inventory in process for October 31 is
a. P4,200 c. P5,400
b. P3,500 d. P2,400

Problem 7
Tornado electronics uses a weighted average process costing system for its production process in which all materials is
added at the beginning of production. Company management has specified that the normal loss cannot exceed 7 percent of
the units started in a period. Normal lost happens during the production while abnormal lost was discovered at the end.
March processing information follows:
Beginning inventory (10% complete – conversion) 7,000 units
Started during March 60,000 units
Completed during March 52,000 units
Ending Inventory (60% complete – conversion) 10,000 units

The equivalent units of production for materials and conversion cost:

FIFO AVERAGE
Materials Conv. cost Materials Conv. Cost
a. 60,000 62,300 67,000 63,000
b. 55,800 58,100 62,800 58,800
c. 55,000 57,300 62,000 58,000
d. 62,800 58,800 55,800 58,100

Problem 8
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Samahan Inc. manufactures a highly sensitive smoke alarm. The company uses the FIFO method for process costing and
for costing goods sold. In costing finished goods, the unit cost for units completed from work in process inventory at the
beginning is kept separate from the unit cost of smoke alarm started and completed during the month.

The total manufacturing costs for the month of June is P264,000 and 2,50 units are completed during the month. The
inventories at the beginning of June are as follows:
Smoke alarm in process
(estimated 80% completed) 1,250 units P128,000
Smoke alarm on hand (completed) 600 units 76,800

The inventories at the end of June are:

Smoke alarms in process (50% complete) 500 units
Smoke alarms on hand (completed) 700 units

Compute the cost assigned to:

Work in process, end Finished Goods, end
a. P33,000 P79,200
b. P33,000 P92,400
c. P33,200 P79,200
d. P64,400 P66,000

JOINT AND BY-PRODUCT COSTING

Problem 9
Forward Inc., which manufactures products P, Q, and R from joint process, has the following information regarding its
operation:
P Q R Total
Units produced 4,000 2,000 1,000 7,000
Joint costs P36,000 ? ? P60,000

Sales value at split-off ? ? P15,000 P100,000

Additional cost if processed
further P7,000 P5,000 P3,000 P15,000
Sales value if processed further P70,000 P30,000 P20,000 P120,000

Assuming that joint costs are allocated using the relative sales value at split-off approach, what was the sales value at
split-off for product P?
a. P58,333 c. P60,000
b. 59,500 d. 63,000

Problem 10
Atlas Foods produces three supplemental food products simultaneously through a refining process costing P93,000.

The joint products, Alfa and Betters, have a final selling price of P4 per pound and P10 per pound respectively, after
additional processing cost of P2 per pound of each product are incurred after the split-off point. Morefeed a by product, is
sold at the split-off point for P3 per pound.

Alfa: 10,000 pounds of Alfa, a popular but relatively rare grain supplemental having a caloric
value 4,400 calories per pound.

Betters: 5,000 pounds of Betters, a flavouring material high in carbohydrates with a caloric value
of 11,200 calories per pound.

Morefeed: 1,000 pounds of Morefeed, used as a cattle feed supplement with a caloric value of 1,000
calories per pound.

1. Assuming that Atlas Foods inventories Morefeed, the by-product (with joint costs allocated), the joint costs to be
allocated to Alfa using net realizable value method is:
a. P3,000 c. P31,000
b. P30,000 d. P60,000
2. Assuming Atlas Foods inventories Morefeed, the by-product (with joint cost allocated), the joint cost allocated to
Alfa, using the physical quantity method is:
a. P3,000 c. P31,000
b. P30,000 d. P60,000
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 3. Assuming Atlas Foods inventories Morefeed, the by-product (with joint cost allocated), the joint cost allocated to
Betters using the weighted quantity method based on caloric value per pound is:
a. P39,208 c. P50,400
b. P39,600 d. P52,080

Problem 11
A cheese company produces natural cheese from cow’s milk. As a result of the process, a secondary product, Whey is
produced in the proportion of one pound for each pound of cheese. The following are the standards for 1,000 pound of
milk:
Input: 1,000 pounds of milk at P0.20 per pound
40 hours of labor at P10 per hour
Overhead applied equalling 100% of direct labor cost

Output: 450 pounds of cheese

450 pounds of Whey

The following prices and demand are expected:

Price per pound Demand in Pounds
Cheese P2.00 450
Whey 0.80 375

Given that the company allocates common costs on the basis of NRV’s, the allocated common costs per 1,000 pounds of
milk (rounded) are:
Cheese Whey
a. P450 P150
b. P500 P500
c. P714 P286
d. P750 P250

Problem12
The following information pertains to a by-product called Moy:
Sales in 2010 5,000 units
Selling price per unit P6
Selling costs per unit 2
Processing costs 0
Inventory of Moy was recorded at net realizable value when produced in 2009. No units of Moy were produced in 2010.
What amount should be recognized as profit on Moy’s 2010 sales?
a. P -0- c. P20,000
b. P10,000 d. P30,000

Problem 13
Petro-Chem, Inc. is a small company that acquires high grade crude-oil from low volume production wells owned by
individuals and small partnerships. The crude oil is processed in a single refinery into Two Oil, Six Oil, and impure
distillates. Petro-Chem does not have the technology or capacity to process these products further and sells most of its
output each month to major refineries. There were no beginning inventories of finished goods or work-in-process on
November 1. The production costs and output of Petro-Chem for November are as follows:
Crude oil acquired and laced in production P5,000,000
Direct labor and related cost 2,000,000
Factory overhead 3,000,000

Production and sales:

 Two Oil, 300,000 barrels produced; 80,000 barrels sold at P20 each.
 Six Oil, 240,000 barrels produced; 120,000barrels sold at P30 each.
 Distillates, 120,000 barrels produced and sold at P15 per barrel.

1. The portion of the joint costs assigned to Six Oil based on Physical output would be:
a. P3,636,000 c. P1,818,000
b. P3,750,000 d. P4,800,000
2. The portion of the joint production costs assigned to Two Oil based upon the relative sales value of output would
be:
a. P4,800,000 c. P2,286,000
b. P4,000,000 d. P2,500,000

ACTIVITY-BASED COSTING

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Problem 14
Cadott manufacturing produces three products. Production and cost information show the following:
Model X Model Y Model Z
Units produced 1,000 3,000 6,000
Direct labor hours 2,000 1,000 2,000
Number of inspections 20 30 50
Inspections costs totalled P50,000. Using direct labor hours as the allocation base, inspection costs allocated to each unit
of Model X would be:
a. P5.00 c. P20.00
b. P10.00 d. Some other answer

Problem 15
Genco manufactures two versions of product. Production and cost information show the following:
Model A Model B
Units produced 100 200
Material moves 10 40
Direct labor hours per unit 1 2
Material handling costs total P100,000. Under ABC, the material handling costs allocated to each unit of Model B would
be:
a. P200 c. P400
b. P333 d. Some other answer

Problem 16
Kimball Company produces two products in a single factory. The following production and cost information has been
determined:
Model 1 Model 2
Unit produced 10,000 2,000
Material moves (total) 100 40
Testing time (total) 250 125
Direct labor hours per unit 1 5
The controller has determined total overhead to be P480,000. P120,000 relates to material moves; P150,000 relates to
testing; the remainder is related to labor time. If Kimball uses direct labor hours to allocate overhead to each model, what
would overhead per unit be for Model 1?
a. P1.00 c. P24.00
b. P12.00 d. P40.00

Problem 17
Kimball Company produces two products in a single factory. The following production and cost information has been
determined:
Model 1 Model 2
Unit produced 10,000 2,000
Material moves (total) 100 40
Testing time (total) 250 125
Direct labor hours per unit 1 5
The controller has determined total overhead to be P480,000. P120,000 relates to material moves; P150,000 relates to
testing; the remainder is related to labor time. If Kimball uses activity-based costing to allocate overhead to each model,
what would overhead per unit be for Model 1?
a. P1.00 c. P24.00
b. P29.50 d. P40.00

Problem 18
Superior Inc. produces three products. Production and cost information is as follows:
Model Q Model R Model S
Units produced 2,000 6,000 12,000
Direct labor hours 4,000 2,000 4,000
Number of setups 100 150 250

The consumption ratios based on units produced would be:

Q R S
a. 40% 20% 40%
b. 20% 30% 50%
c. 10% 30% 60%
d. Some other answer

BACKFLUSH COSTING

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Problem 19
The Pampanga manufacturing company uses a raw and in process inventory account and expense all conversion costs to
the costs of goods sold account. At the end of each month, all inventories are counted, their conversion costs components
are estimated, and inventory account balances are adjusted accordingly. Raw materials cost is backflushed from RIP to
Finished Goods. The following information is for the month of April:

Beginning balance of RIP account, including P1,400

of conversion cost P31,000
Raw materials received on credit 367,000
Ending RIP inventory per physical count, including P1,800
conversion cost estimate 33,000

Compute the amount to be backflushed from RIP to Finished goods:

a. P365,000 c. P367,000
b. P368,600 d. P365,400

Problem 20
Changi Ong, general manager of Casio Corporation’s Midwest Division, has provided the following information for
transactions that occurred during March. This division uses a JIT costing system.

a. Raw materials were purchased at the cost of P97,000.

b. All materials purchased were requisitioned for production.
c. Direct labor costs of P77,000 were incurred.
d. Actual factory overhead costs amounted to P225,000.
e. Applied conversion costs totalled P300,000. This included p77,000 of direct labor.
f. All units were completed

1. Compute the March 31 balance in the Conversion cost:

a. P2,000 debit c. P25,000 credit
b. P2,000 credit d. P22,000 debit
2. Using the same information in No.4, compute the March 31 balance in the Finished goods account:
a. P397,000 credit c. P320,000 debit
b. P397,000 debit d. P377,000 debit

Problem 21
Kara Company uses backflush costing to account for an electronic meter it makes. During August 2008, the firm produced
16,000 meters, of which is sold 15,800. The standard cost for each meter is:
Direct materials P20
Conversion costs 44
P64
Assume that the firm had no inventory on August 1. The following events took place in August:
1. Purchased P320,000 of direct materials.
2. Incurred P708,000 of conversion costs.
3. Applied P704,000 of conversion cost to Raw and In Process Inventory (RIP).
4. Finished 16,000 meters
5. Sold 15,800 meters for P100 each.

Compute the amount to be backflushed from RIP to Finished goods:

a. P320,000 c. P1,024,000
b. P704,000 d. P1,028,000

Using the same information above, determine the August 31 (ending balance) of Finished goods account:
a. P -0- c. P12,962
b. P12,850 d. P12,800

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