Cost

Classify the following items if they are Direct or Indirect materials. 1. Gold used to make rings and necklace. 2. Sandpaper used in furniture making. 3. Paper used in making novels. 4. Water to make ice. 5. Seats to be placed in a van. 6. Leather to make boxing gloves of Pacman. 7. Tape measure used by tailors. 8. Flour used in making pastries. 9. Pineapple in a Del Monte Fruit Cocktail. 10.Ink used by refill station. 11.Glass used in making sunglasses. 12.Glue used by Parol Makers in Pampanga. 13.Rubber used in making slippers. 14.Candle used to seal the plastic wrapper of Espasol. Classify the following as either Manufacturing, Selling or Administrative Expenses. 1. Factory suppliers like nails. 2. Advertising posters. 3. Rent expense on factory building. 4. Freight out 5. Salary of CEO 6. Cost of repairing machine break down. 7. Litigation expense of the company. 8. Free samples to customers. 9. Doubtful accounts expense. 10.Transportation expense of sales men. 11.Wage of employees 12.Pieces of wood used in making tables. 13.Rugby used as adhesive in the product. 14.Salary of production supervisor. 15.Billboard of company’s product in EDSA. 16.Cost of hiring services of an advertising agency. 17.Internet used in receiving orders from abroad. 18.Municipal taxes to be paid. Prepare journal entries for the following: 1. Purchase raw materials 50,000; indirect materials 5,000for the month on account. 2. During the month, direct materials costing 40,000 and indirect materials costing 2,000 where issued to the factory. 3. Total payroll for the month 36,000 consisting of 20,000 earned by laborers working on the project, 7,000 to factory supervision, 9,000 for sale and administrative employees. 4. Depreciation expense for the building with a cost of 750,000 is 6% per year. The office occupied 1/10 of the total building and the factory is in the other 9/10. 5. Depreciation expense for machinery with a cost of 150,000 is 20% per year. All machinery is used in the factory for production purposes. 6. The cost of heat, light and power was 3,000 for the month. 7. Miscellaneous expenses for telephone, office supplies, travel and rental of office furniture totalled 1,500. 8. Factory overhead is charge to production at 85% of Direct labor cost.

At the end of the month, the company produces 1,000 units. There is no work in process at the beginning and end of the month. The company wants a gross profit of 40% on the products. 9. The company sold 800 units. Prepare the last journal entry for the sale of 800 units. P1-1 The general ledger of the Jaja Bearings Company contained the following accounts among others on January 1: Finished goods, P15,000; Work in process P30,000; Materials, P25,000. During January, the following transactions were completed. a. b. c. d.

Materials were purchased on account at cost of P13,500. Steel in t5he amount of P17,500 was issued to factory. Requisitions for indirect materials and supplies amounted to P1,800. The total payroll for January amounted to P27,000, including marketing salaries of P5,000 and administrative salaries of P3,000. Job time tickets show that P17,000 of the labor cost was direct labor. A payroll clearing accounts used. e. Various indirect manufacturing costs totalling P2,508 were paid in cash. f. Various indirect manufacturing costs totalling is P8,500 were incurred on account. g. Total factory overhead is charged to Work in Process. h. Cost of production completed in January totalled P60,100 and finished goods on January totalled P15,100. i. Customers to whom shipments were made during the month were billed for P75,000. Required: Prepare journal entries for transactions. P1-2 The following transactions pertain to the manufacturing operations of PPG Company: a. Materials purchased totalling P100,000. b. Materials were issued as follows: Direct materials Indirect materials

P49,000 9,000

c. Total payroll was P60,000 direct labor, P12,000 indirect labor, P6,000 sales salaries and P10,000 office salaries. Income tax withheld was 10% of wages earned; SSS Contribution at a rate of 5%. Phil. Health contribution at 1.5% and Pag-ibig contribution at 1% were deducted. The payroll due to employees was paid. d. The employer’s share of payroll taxes for all categories of employees consists of 5% SSS Contribution, 1.5% Phil Health contribution, ½% Employees compensation contribution and 1% Pag-ibig contribution. e. Miscellaneous factory expenses of P15,000 were paid. f. Factory overhead of P30,000 was charged to production. g. Cost of production completed during the period was P120,000. h. Goods costing P40,000 were billed to customers at a sales price of P52,000. Required: Prepare journal entries to record transactions. P1-4 The following summary data relate to Gloria Corporation for the month of October 2014:

a. Raw materials purchased P200,000 b. Raw materials issued to jobs in process 180,000 c. Total factory payroll accrued for the month 120,000 Payroll deductions: Income tax withheld 5% SSS Contributions P 3,200 Phil Health contributions 1,300 Pag-ibig contributions 2,000 d. Employer’s share inSSS Contribution P 5,500 Phil. Health contribution 1,300 Pag-ibig contribution 2,000 e. Payroll distribution: Direct labor (8000 hours) P80,000 Indirect labor 40,000 f. Other factory overhead incurred (excluding labor) 67,500 g. The overhead application rate is P12 per direct labor hour h. Total costs of job completed during the month 320,000 i. All completed jobs were shipped to customers at cost plus 50% j. Underapplied or overapplied factory overhead is closed to Cost of Goods Sold. REQUIRED: 1. Prepare journal entries to record the transactions resulting to the above data. 2. If the balance of Work in Process on October 1 was P15,000, what would be the October 31 Work in Process balance? P1-5 The following job order cost detail pertains to the three jobs that were in process at the Michelle Company during January. Job 66 Job 67 Job 68 Cost charged in prior period P40,00 P15,000 P 0 Costs added in January: Direct materials 35,00 45,000 55,000 0 Direct labor 45,00 40,000 35,000 0 Factory overhead (P50 per machine hour) ? ? ? January machine hours used 720 640 560 REQUIRED: Prepare the appropriate journal entry to record each of the following January transactions 1. Direct materials were issued from the materials storeroom to work in process. 2. The payroll was distributed to work in process. 3. Factory overhead was applied to production for the period. 4. Job Orders 66 and 67 were completed and transferred to the finished goods storeroom.

P1-7 Neri Inc. Had the following inventories on March 1: Finished Goods (Job 620)

P15,000

Work in Process Materials The work in process account controls three jobs:

19,700 14,000

Job 621 Job 622 Job 623 Materials P2,800 P3,400 P1,600 Labor 2,100 2,700 1,350 Applied factory overhead 1,680 2,160 1,080 Total P6,580 P8,260 P4,320 The following information pertains to March operations: a. Materials purchased and received cost P22,000 at terms n/30. b. Materials requisition for production cost P21,000. Of this amount, P2,400 was for indirect materials, the difference was distributed: P5,300 to job621; P7,400 to Job 622; and P5,900 to Job 623. c. Materials returned to the storeroom from the factory totaled P600, of which P200 was for indirect materials, the balance from Job 622. d. Materials returned to vendors totalled P800. e. Payroll of P38,000 was accrued in March. f. Of the payroll, direct labor represented 55%; indirect labor, 20%; sales salaries, 15%; and administrative salaries, 10%. The direct labor cost was distributed; P6,420 to Job 621; P8,160 to Job 622; and P6,320 to Job 623. g. Factory overhead, other than any previously mentioned, amounted to P9,404.50. Included in this figure were P2,000 for depreciation of factory building and equipment and P250 for expired insurance on the factory. The remaining overhead, P7,154.50, was unpaid at the end of March. h. Factory overhead was applied to production at a rate of 80% of the direct labor cost to be charged to the three jobs, based on the labor cost for March. i. Jobs 621 and 622 were completed and transferred to the finished goods warehouse. j. Both Jobs 620 and 621 were sold and billed at a gross profit of 40% of the cost of goods sold. k. Cash collections from accounts receivable during March were P40,000. REQUIRED: 1. Journalize the March transactions. 2. Prepare a schedule of inventories on March 31. P103 There are 1,000 trolls in stock, and 1,500 are due in from orders that were placed previously. The company sells Trolls at the rate of 100 per day and finds that it takes an average of 20 days for an order to be received. Because usage and lead times are known with certainty and because the company has determined that an order must be placed now, the desired safety stock quantity must be equal to: P104 Basketball, Inc. Operates a megastore featuring sports merchandise. It uses EOQ decision model to make inventory decisions. It is now considering inventory decisions for its PBA’s jerseys product line. This is highly popular item. Data for 2014 are: Expected annual demand for PBA 10,000 Ordering costs for purchase order P225 Carrying costs per year P10 per jersey Each jersey costs Basketball, Inc. P40 (12% x P40 purchase price) plus P5.20 in relevant insurance, handling, and theft related costs. The purchasing lead time is 7days. Basketball, Inc. is open 365 days a year. 1. What is the EOQ? 2. Using the data in no.5, what is the number of orders that will be placed each year? 3. Using data in No.5, what is the reorder point? Rounded.

P1-6 On January 1, the general ledger of Jocelyn Company contained the following accounts and balances: Cash 94,000 Accounts Receivable 100,000 Finished Goods 65,000 Work in Process 15,000 Materials 44,000 Machinery 90,600 Accumulated Depreciation – Machinery 20,000 Accounts Payable 118,750 Common Stock 200,000 Retained Earnings 69,850 Details of inventories are: Finished goods inventory P65,000 Job 101 Job 102 Work in process inventory 100 units of A @ 5,000 P5 400 units of B @ 1,200 P3 Direct labor: 1000 hours @ P4 4,000 400 hours @ P5 2,000 Factory Overhead applied at the rate of P2 per direct 2,000 800 labor hour Total P11,000 P4,000 Materials inventory P44,000 During January, the following transactions were completed: a. Materials were purchased on account for P229,040. b. Payroll totalling P220,000 was accrued. c. Payroll was distributed as follows: Jobs 101, 5,000 direct labor hours @ P8; Job 102, 8,000 hours @ P10; Job 103, 6,000hours @ P6; Indirect labor, P24,000 and selling and admin expenses P40,000 d. Materials were issued as follows: P103,200 to Job 101; P84,000 to Job 102; P29,150 to Job 103. Indirect materials costing P15,040 were issued. e. Factory overhead was applied to Job 101, 102 and 103 at a rate of P4.50 per direct labor hour. f. Jobs 101 and 102 were completed and immediately sold on account for P250,000 and P270,000 respectively. g. After allowing a 5% cash discount, a net amount of P494,000 was collected on accounts receivable. h. Marketing and admin expenses (other than salaries) paid during the month amounted to P30,000. Other factory overhead paid, P49,720. i. Payments on account, other than payrolls paid, amounted to P170,000. j. Applied Factory Overhead is closed to Factory Overhead Control. The over or under applied overhead is then closed to Cost of Goods Sold. REQUIRED: 1. Journalize the January transactions. 2. Prepare a cost of Goods sold statement for January.

ILLUSTRATIVE PROBLEM: FIFO, LIFO, Moving Weighted Average. Aug 1 Inventory 400 units at P10 4,000 Aug 12 Purchase 600 units at P12 7,200 Aug 16 Issue 500 units Aug 18 Purchase 300 units at 15 4,500 Aug 20 Issue 200 units Aug 25 Purchase 400 units at P14 5,600 Aug 28 Issue 400 units P4-1 The Jing Manufacturing Company uses perpetual inventory system to control materials. Data relating to Material B-1 during March 2014 are given below: March 1: Balance 150 units to P40.00 each. 6: Received 200 units at P40.50 each per Purchase Order 074. 12: Issued 225 units per Requisition 018. 14: Received 250 units at P41.000 each per Purchase Order 083. 17: Issued 200 units per Requisitioned 023. 31: Issued 40 units per Requisition 019. REQUIRED: Enter the beginning balance in the Materials Ledger Card for each of the three inventory costing methods: FIFO, LIFO and moving average method. Record each of the transactions on each of the materials ledger cards. Round unit costs to the nearest centavo under the moving average method. P4-2 The following data pertain to the materials inventory at the Jess Bike Company on December 31, 2014: Quantity Cost per NRV per unit Unit Group I – Wheels: Material X-1 100 P100.00 P110.00 Material X-2 200 150.00 130.00 Material X-3 120 160.00 150.00 Group II – Chain Material A-4 120 50.00 45.00 Material A-5 110 75.00 72.50 Material A-6 25 60.00 63.00 REQUIRED: Determine the amount to be reported as the inventory valuation at cost or NRV, under each of the following methods: (1) lower of cost or NRV for each item, (2) lower of total costs or total NRV, and (3) lower of total cost or NRV by Group. 10.The following data relates to the materials inventory of the Manual Garments factory: units Unit costs Net realizable value per unit Group I Material AA 460 P140 P130 Material BB 830 85 90

Group II Material CC 1290 120 145 Material DD 580 65 55 What is the value of the inventory if the lower of cost or net realizable value method is applied to the individual items? 11.Based on the data given in No. 10, what is the value of the inventory is the lower of cost or net realizable value rule is applied to the inventory as a whole? 12.Using the same data in No. 10, what is the value of the inventory if the lower of cost or net realizable value rule is applied to the inventory by groups? P5-1 The general ledger of the JG Manufacturing Company showed these balances at the end of July: Factory labor of P480,000 which includes P288,000 of direct labor; P66,000 of indirect labor ; sales salaries of P72,000; and office salaries at P54,000. The following rates are available for payroll distribution. Withholding Tax 1% SSS Contributions 10% (40% employee and 60% employer) Employees’ 2% (employer only) Compensation Contributions Phil. Health 2% (50% employee and 50% employer) Contributions PAG-IBIG Contributions 3% (50% employee and 50% employer) REQUIRED: 1. The journal entry to record labor incurrence. 2. The journal entry to record labor distribution and the related employer’s contribution. P5-2 MD Company is preparing its monthly payroll for October. The following data apply to Jean Go, the chief accountant: a. Year to date, through September: Gross payroll P144,000 SSS premiums withheld 9,360 Income tax withheld 19,200 Take home pay 115,440 b. Jean’s October earnings were P18,000. Income tax to be withheld is P2,400. REQUIRED: (Use the same table rates in P5-1) 1. The journal entry to record labor incurrence for October. 2. The journal entry to record labor distribution and the related employer’s contribution. ILLUSTRATIVE PROBLEM X Company estimates factory Overhead at P50,000 for next year. It is estimated that 100,000 units will be produced at a material cost of P714,000. It will require an estimated 125,000 direct labor hours at a cost of P8/hr; with 50,000 machine hours. Required: Compute the predetermined factory rate based on: 1. Direct labor hours 2. Direct labor costs 3. Machine hours 4. Material costs 5. Units of production 1. Rolex Corporation estimates that its production for the coming year will be 10,000 units, which is 80% of normal capacity, with the following unit costs: Materials P40 Direct Labor 60

2. 3. 4. 5. 6. 7.

Direct labor is paid at the rate of P24 per hour. The machine should be run for 1 hour to produce one unit. Total estimated overhead is expected to consist of P400,000 for variable overhead and P400,000 for fixed overhead. What is the predetermined overhead rate based on units of production using the expected actual capacity activity level? Using the data in No. 1, what is the predetermined overhead rate base on material cost? Using the data in No.1, what is the predetermined overhead rate base on direct labor cost? Using the data in No.1, what is the predetermined overhead rate base on direct labor hours? Using the data in No. 1, what is the predetermined overhead rate base on machine hours? Using the data in No. 1, what is the overhead rate base on units of production using the normal capacity activity level? Using the data in No. 1, what is the overhead rate base on material cost using the normal capacity activity level?

P6-1 Anita Company assembles and sells electric mixers. All parts are purchased, and the cost of the parts per mixer totals P1,600. Labor is paid on the basis of P1,280 per mixer assembled. Budgeted manufacturing overhead for the next fiscal year based on a production of P1,200,000 mixers is as follows: Indirect Materials P8,800,000 Indirect labor 9,600,000 Light and power 1,200,000 Depreciation 800,000 Insurance 200,000 Miscellaneous 2,200,000 During the period, 1,160,000 mixers were assembled and actual manufacturing overhead incurred was P22,384,000. These units were completed but not yet transferred to the finished goods storeroom. REQUIRED: 1. Prepare the journal entries to record the above information. 2. Compute the amount of overapplied or underapplied overhead. ILLUSTRATIVE PROBLEM Budgeted FOH P 300,000 Budgeted direct labor hours 100,000 hrs Variable FOH rate P 1/ direct labor hour Actual FOH P 350,000 Actual direct hours used 110,000 hrs REQUIRED: 1. Compute for the spending variance 2. Compute for the volume (idle capacity) Variance. Selected data for the Palawan Manufacturing Company for the year 2014 follow: Budgeted for Actual for year year Direct labor hours 260,000 248,300 Manufacturing overhead Fixed P585,000 P578,400 Variable 1,092,000 1,039,940 Total P1,677,000 P1,638,340 16.What is the over or underapplied overhead for the year? 17.What is the fixed volume variance? 18.What is the spending variance? 19.What is the net variance?

1. The following information was taken from X Company’s accounting records for the year ended December 31, 2015. Increase in materials inventory P15,000 Decrease in finished goods inventory 35,000 Raw materials purchased 430,000 Direct labor payroll 200,000 Factory overhead 300,000 Freight out 45,000 There was no work in process inventory at the beginning or end of the year. X’s cost of goods sold is: 2. X uses a job order cost system and applies factory overhead to production orders on the basis of direct labor cost. The overhead rate for 2015 are 200% for Department A and 50% for Department B. Job 123, started and completed during 2015, was charged with the following costs: A B Direct materials P25,000 P5,000 Direct labor ? 30,000 Factory overhead 40,000 ? 3. The work in process account of X Company, which uses job order costing follows: Work In Process Finished Goods

May 1 balance P100,000 P501,800 Direct materials used 200,000 Direct labor 160,000 Applied factory overhead 120,000 Factory overhead applied to production is based on direct labor. The work in process at May 31 represents the costs of Job 123 which has been charged with direct labor cost P12,000 and Job no. 456 which has been charged with applied overhead of P9,600. The cost of direct materials charged to Job order Nos 123 and 456 totaled: Jobs January February March 1 P5,400 2 3,600 3 4,800 4 4,200 P4,000 5 3,550 6 5,850 P6,500 7 9,600 3,800 8 4,500 4,200 9 2,500 10 6,000 Jobs Completed January 1,2,3 February 4,5 March 7,8 4. Work in process inventory, Feb 28 5. Work in process inventory, March 31 6. Finished Goods inventory, Jan 31 7. Finished Goods inventory, Feb 28 8. The following data relates to X Company’s Material Annual usage in units Working days per year Normal lead time in working days Maximum lead time in working days

Jobs sold 1,3 2,5 7,8

X: 7,200 240 20 45

Assuming that the units of Material X will be required evenly throughout the year, thye safety stock and order point would be: 9. The following data refer to various annual costs relating to the inventory of a single product company: Units transportation cost on purchase P 0.20 Storage cost per unit 0.12 Insurance cost per unit 0.10 Annual interest foregone from alternate investment of funds 800 Annual number of units required 10,000 What is the annual carrying cost per unit? 10.X Manufacturing Company uses 1,00 units of chip annually in its production. Order cost consists of P10 for placing a long distance call to make the order and P40 for delivering the order by truck to the company warehouse. Each chip costs P100 and the carrying costs are estimated at 15.625% of the inventory cost. What is the Economic order quantity for chip?

11.The following information was available from the inventory record of the X Company for January 2015. Unit Unit cost Total cost Balance at Jan 1 2,000 9,775 19,550 Purchase orders: Jan 6 1,500 P10.30 15450 Jan 26 3,400 10.75 86,550 Issues Jan 7 1,800 Jan 31 3,200 Balance at Jan 31, 1,900 2008 Assuming that X maintains perpetual inventory records, what should be the inventory at January 31, 2015, using the moving average costing method rounded to the nearest peso? 12.Assuming that X does not maintain perpetual inventory records, what should be the cost of inventory at Jan 31, 2015, using the average cost inventory costing method/ 13.Four factory workers and a supervisor make a team in the Machining Department. The supervisor earns P100 per hour and the combined hourly charge of the four workers is P320. Each employee is entitled to a 2 week paid vacation and a bonus equal to 4 week’s wages each year. Vacation pay and bonuses are treated as indirect costs and are accrued over the 50 week work year. A provison in the union contract does not allow these employees to work in excess of 40 hours per week. What is the amount to be charged to Manufacturing overhead control account? 14.The pay stub of X, employee No. 106 who works on the production line, showed the following for a 2-week pay period: Gross earnings P4,560 Income tax withheld 611.68 SSS premiums withheld 342 Phil health premiums withheld 112.16 Pag-ibig premiums withheld 222.00 Union dues 44.00 X works a regular 40 hours week and is paid P48 per hour regular time and time and a half for overtime. She is also paid an additional P1,092.80 in benefits for the 2 week pay period with regard to the employer’s contribution to the company’s SSS and Phil Health premiums. What is the amount to be charged to work in process for employee No 106 for the 2-week period, assuming that any overtime work is not traceable to a particular job order?

15.Using the information in No 14, how much is to be charged to Manufacturing overhead control account for the 2-week period employee No. 106? 16.The normal annual capacity for X Company is 48,000 units with the production rates being level throughout the year. The march budget shows fixed manufacturing overhead of P1,440 and an estimated variable manufacturing overhead rate of P2.10 per unit. During March, actual output was 4,100 units, with a total manufacturing overhead of 9,000. What is the applied manufacturing overhead? X Company manufactured a line of products distributed nationally through wholesalers. Presented below are planned manufacturing data for 2015 and actual data for November of 2014. The company apllies overhead based on planned machine hours using a predetermined annual rate. Annual November Fixed manufacturing overhead P1,200,000 P100,000 Variable manufacturing 2,100,000 220,000 overhead Direct labor hours 48,000 4,000 Machine hours 240,000 22,000 DATA FOR NOVEMBER, 2015: Direct labor hours (actual) 4,200 Direct labor hours (plan based 4,000 output) Machine hours (actual) 21,600 Machine hours (plan based 21,000 output) Fixed m,anufacturing overhead 101,200 Variable manufacturing 214,000 ovberhead 17.What is the pre determined overhead application rate for 2015? 18.What is the applied manufacturing overhead for November 2015? 19.What is the amount of over or underapplied variable manufacturing overhead for November 2015? 20.What is the variable manufacturing overhead spending variances for November 2015? 21.What is the fixed overhead volume variance for November 2015? X Company uses direct labor hours method for applying manufacturing overhead. The overhead application rate for 2015 is P8.60 per hour, based on anticipated fixed costs of P348,000 and anticipated variable costs of P648,000 with an expected volume of 120,000 labor hours. During the year, the company actually operated for 115,800 hours, incurring fixed overhead of P348,000 and variable overhead of P637,880. 22.What is the fixed volume variance? 23.What is the spending variance? 24.What is the total variance? 25.The normal capacity for X Company is 36,000 machine hours, with fixed manufacturing overhead budgeted at P16,920 and an estimated variable manufacturing overhead rate of P2.10 per hour. During July, actual production required 2,100 machine per hours, with a total overhead of P7,800. What is the applied manufacturing overhead? ILLUSTRATIVE PROBLEM: Computation of equivalent units of production 1. Units started 100,000 Units completed and transferred 80,000 Units in process end (70% complete) 20,000

Materials are added at the beginning of the process. Compute for equivalent production in units. 2. Same data in No.1 except that materials are added at the end of the process. 3. Same data in No.1 except materials are added 50% at the beginning and the remaining 50% when the units are 30% completed. 4. Same data as in No. 1 except that materials are added as follows 50% at the beginning of the process 30% when the units are 20% complete 20% when the units are 80% complete. 1. Department 1 had put 95,000 units into process during the period and had ending units in process of 21,000 units. What is the number of units transferred to finished goods inventor, if department 2’s units in process are 12,000? 2. Red Company had 6,000 units in process at the beginning of the month in Department 1. During the month an additional 14,000 units were placed into process. If Red Company had 4,200 units in process at the end of the month, what is the number of units transferred to department 2, assuming all units completed in Department 1 are transferred to department 2? 3. The cost of materials put into production in a department during the month totalled P188,400. By the end o9f the month, these materials had been used for 32,000 units, of which 29,000 were completed and transferred out and 3,000 were in process. 80% of materials were added to the units in process. What is the equivalent unit production for materials?

4. Using the data in No. 3, what is the cost per equivalent unit for materials ? Beginning inventory 0 Units transferred in during month 4,700 Units transferred to Finished Goods during month 4,300 Ending work in process (25% complete as to labor) 400 Labor costs for month P14,080 5. What is the equivalent production for labor during the month? 6. What is the labor cost per equivalent unit? 7. What is the labor cost in the ending work in process? Beginning inventory 0 Units placed in production during the month 73,000 Units transferred to next department during month 67,000 Ending work in process (1/3 complete as to overhead) ? Overhead costs incurred for month P282,900 8. What is the number of units in the ending work in process? 9. What is the equivalent production for overhead during the month? 10.What is the overhead cost in the units transferred out? 11.What is the overhead cost in the ending inventory of work in process?

ILLUSTRATIVE PROBLEM: Units: Dept. 1 Dept.2 Started in process 25,000 Completed and transferred 20,000 18,000 In process end 5,000 2,000 Stage of completion 40% 50% Costs: Materials P100,000 P54,000 Labor 66,000 38,000 Overhead 44,000 19,000 In Dept.1, materials are added at the beginning of the process while in Dept. 2, materials are added at the end of the process. Required: 1. Prepare the equivalent units of production 2. Prepare the cost of production report. P10-5 The AMG Plastic Co. has two processing departments. All direct materials are added in Dept.1 at the beginning of the process. Conversion costs are incurred evenly throughout both processes. Data for January, 2014 are shown below: Units started in process Units transferred to next department Units transferred to finished goods inventory Ending units in process Costs added by department: Direct materials

Department 1 75,000 60,000 15,000 (60% complete) P300,000

Department 2 55,000 5,000 (80% complete)

Direct labor Manufacturing overhead applied No beginning work in process inventory exists. REQUIRED: For both departments: 1. Compute for equivalent units of production. 2. Prepare a cost of production report. P10-7 The October data for CPA Company are shown below: Units started in process Units received from previous department Units transferred to finished goods inventory Units completed but not transferred Ending units in process

Costs added by department: Direct materials Direct labor Manufacturing overhead applied REQUIRED: For both departments:

172,500 86,250

P162,250 81,125

Department 1 25,000

Department 2

10,000 (80% direct materials, 65% conversion costs) P12,650 13,545 5,160

15,000 7,000 1,000 7,000(75% conversion costs)

P9,805 6,625

1. Compute for equivalent unit of production 2. Prepare a separate cost of production report.

1. Red Corporation’s production starts in Department 1. The following data is available for April: Units work in process, April 1 (50%complete) 40,000 Units started in April 240,000 Units work in process, April 30% (60% complete) 25,000 Materials are added at the beginning of the process in Department 1. Using the average cost method, what are the equivalent units of production for the month of April? 2. Information concerning Department 1 of Black Company for June is as follows: Units Material Costs Work in process, beginning 17,000 P12,800 Started in June 82,000 69,700 Units completed 85,000 Work in process, ending 14,000 All materials are added at the beginning of the process. Using the average cost method cost for material is: 3. White Company adds materials in the beginning of the process in Department 1, which is the first of two stages of its production cycle. Information concerning the materials used in Department 1 in July is as follows: Units Materials costs Work in process, July 1, 2014 6,000 P3,000 Started in process 50,000 25,560 Completed and transferred 44,000 Using the weighted average cost method, what was the materials cost of work in process at July 31?

4. During March, Brown Company’s Department 2 equivalent unit costs computed under the average cost method were as follows: Materials P10 Conversion 30 Transferred in 50 Materials are introduced at the end of the process in Department 2. There were 4,000 units (40% complete as to conversion costs) in work in process at March 31. The total costs assigned to the March 31 work in process inventory should be?

10. Consider the following data for the Assembly Department of Pink Manufacturing Company: Quantity Work in process – May 1 Started in May 2010

80 500

Completed during May 2010

460

Work in process – May 31

120

Stage of completion WIP-Beg WIP-End Materials 90% 60% Conversion costs 40% 30% Cost data: Materials Conversion Costs Work in process – May 1 P49,336 P9,104 Costs added during May 322,000 139,200 The Assembly Department uses the average method of process costing. What are the equivalent units for direct materials and conversion costs? 11.Using the data in No. 5, what is the cost of the units completed and the ending work in process? 12.The Wilkens Company makes a water treatment chemical in a single processing department. Direct materials are added at the start of the process. Conversion costs are added evenly during the process. Wilkens uses the average method of process costing. The following information for July 2014 is available. PRODUCTION REPORT Units Work in process, July 1 10,000 Started during July 40,000 Completed during July 34,000 Work in process, July 31 16,000 Cost data Work in process, beginning: Materials Conversion costs Direct materials added during July Conversion costs added during July Total costs to account for What is the cost per equivalent unit for direct materials and

Stage of completion Direct Conversion materials costs 100% 70% 100% P60,000 70,000

50%

P130,000 280,000 371,000 P781,000 conversion costs?

13.Using the data in No. 9, what are the costs of units completed and units in ending work in process?

P11-1 Honey Corporation produces a single product. All materials are added at the beginning of production. On January 1, 2014, 10,000 units of the product were in process in the Refining Department, the first department. During the month of January, 75,000 units were placed into production and 73,000 units were transferred out to the toning department, the second department. On January 31, 12,000 units were still in process in the Refining Department. The ending inventory is estimated to be complete as to materials and two-thirds complete as to labor and overhead. Cost data for the month of January are presented below: Beginning work in process inventory Added during January REQUIRED:

Materials P64,000 616,000

Labor P25,500 266,080

Overhead P14,400 134,640

1. Compute for the Equivalent units of production for the month of January 2014. 2. Prepare a cost of production report for the refining department for the month of January 2014.

P11-2 On April 1, 2014, the beginning inventory of work in process in the Processing Department, the second department in the production process of the Stone Company, was 1,000 units. Costs in the beginning inventory were as follows: Prior department costs P120,000 Materials 24,000 Labor 25,060 Overhead 6,320 Additional costs incurred in the Processing Department during April were as follows: Materials P90,000 Labor 107,440 Overhead 86,948 Of the 7,000 units, 6,500 units were completed and transferred out to finished goods. The remaining 500 units were still in process on April 30. All materials had been added, but only 25%

of the labor and 40% of the overhead had been added. The company is using the average costing method of valuing inventories. REQUIRED: 1. Compute the equivalent units of production for the month of April. 2. Prepare a cost of production report for the Processing Department for the month of April. Carry decimals 3 places. P11-3 The Ace Company produces a single product involving three processing departments. All materials are added at the beginning of production. On June 1, 2014, 10,000 units of the production were in process in the first department. During the month of June, 104,000 units were placed into production and 106,000 units were transferred out to the next department. The ending inventory costs were as follows: materials, P80,000; labor, P36,000; and overhead, P18,000. During June, additional costs were as follows: materials, P832,000; labor P298,800; and overhead P192,924. The company uses the average method of costing inventories. REQUIRED: Prepare a cost of production report for the first department for the month of June 2014. FIFO: ILLUSTRATIVE PROBLEM The following information relates to the operation of X Company for the month of January 2016. In process Jan 1 (40% complete) 10,000 Received from preceeding dept 80,000 Transferred out to next dept 82,000 In process Jan 31 (20% complete) 8,000 Costs In process 1/1 Cost-January Cost from preceeding dept 135,000 810,000 Materials 90,000 720,000 Conversion costs 50,360 835,800 Materials in this dept are added 100% at the beg. Of the process. REQUIRED: Prepare the equivalent units of production using FIFO Costing & Average costing. 3. The following information is given for the final producing department of the German Company: Beginning work in process inventory, Jan 1 (40% complete as to labor) 1,000 units Transferred in during the month 30,000 units Transferred out during the month 27,000 units Ending work in process (70% complete as to labor) 4,000 units Labor costs in the beginning work in process P3,600 Labor costs incurred during the month P238,140 What is the labor cost in the units transferred out of the department during the month? 4. The following information is given for the Assembling Department of the Danny Company, a metal producer, for the month of June: Beginning work in process inventory (1/3 complete as to overhead) 3,300 units Transferred in during the month 15,200 units Transferred out during the month 16,500 units Ending work in process inventory (3/4 complete as to overhead) 2,000 units Overhead cost incurred in beginning work in process P2,332 Overhead cost incurred during the month P38,025 What is the overhead cost of the units transferred out of the department during the month? 5. Tom manufacturing Company uses the FIFO costing method to account for their inventories. The following information pertains to operations for the month of May 2014:

6. 7. 8. 9.

Beginning work in process inventory, May 1 16,000 units Started in production during May 100,000 units Completed production during May 92,000 units Ending work in process inventory, May 31 24,000 units The beginning inventory was 60% complete for materials and 20% complete for conversion costs. The ending inventory was 90% complete for materials and 40% complete for conversion costs. Costs pertaining to the month of May are as follows: The beginning inventory costs are : materials, P54,560; direct labor, P20,320; and overhead, P15,240. Costs incurred during May are: materials used, P468,000; direct labor, P182,880; and overhead, P391,160. What are the equivalent units of production for materials? What are the equivalent units of production for conversion costs? What is the equivalent unit cost of materials for May? What is the equivalent unit conversion cost for May? What is the total costs of units in the ending work in process inventory at May 31?

19.The production data for Department 2 are as follows: Units received from preceeding department 55,000 Units added to production 5,000 Units finished and transferred out 48,000 Ending units in process (direct materials, 100%, conversion costs, 70% complete) 12,000 Cost from preceeding department P24,750 Costs added by department: Materials P7,200 Conversion costs 53,580 What is the total unit cost? 12-1 Star Toys manufactures one type of wooden toy figure. It buys as its direct material for the Forming Department of its factory. The toys are transferred to the Finishing department. There they are hand-shaped and metal is added to them. The process-costing system at Star Toys has a single direct cost category (direct materials) and a single indirect-cost category (conversion costs.) Direct materials are added when the Forming Department process is 10% complete. Conversion costs are added evenly during the Forming Department’s process. Star toys uses the FIFO method of process costing. Consider the following data for the Forming Department in April 2014: Units(toys) Direct Conversion materials costs Work in process, April 300 P75,000 P21,250 Started during April 2014 2,200 Completed during April 2014 2,000 Work in process, April 30 500 Cost added during April 2014 P699,600 P425,060 Stage of completion: Beginning WIP Ending WIP Direct materials 100% 100% Conversion Costs 40% 25% REQUIRED: 1. Summarize total Forming Department costs for April 2014, and assign these costs to units completed (and transferred out) and to units in ending work in process. 2. Prepare a set of summarized journal entries for all April transactions affecting Work in process – forming department. 12-2

Star Toys , as you know, manufactures on type of wooden toy figure at its factory. It has two departments: a Forming Department and a Finishing Department. (Problem 12-1 focused on the forming department) Consider now the finishing department, which processes the formed toys through hand-shaping and the addition of metal. All additional direct materials are added when the Finishing Department process is 80% complete. Conversion costs are added evenly during finishing operations. When the finishing department completes work on each toy, it is immediately transferred to Finished Goods. Star toys uses the FIFO method of process costing. The following is a summary of the April 2014 operations in the finishing department: Units Transferred Direct Conversion (toys) in costs materials costs Work in process, April 1 500 P175,200 P0 P72,500 Transferred in during April 2,000 Completed during April 2,100 Work in process, April 30 400 Costs added during April P1,035,410 P231,000 P384,000 STAGE OF COMPLETION: Beginning WIP Ending WIP Transferred in costs 100% 100% Direct materials 0% 0% Conversion costs 60% 30% REQUIRED: 1. Summarize total Finishing Department costs for April 2014, and assign these costs to units completed (and transferred out) and to units in ending work in process. 2. Prepare journal entries for April transfers from the Forming Department to the finishing department and from the finishing department to finished goods. 12-3 The Viagra Chemical Corporation produces a single product. The Cooking Department is the first department. Data for July 2014 is as follows: Units in beginning work in process inventory 4,000 Units started in July 52,000 Units completed and transferred out in July 50,000 Units in ending work in process inventory 6,000 Beginning Ending Stage of completion of work in process: Materials 100% 100% Labor and overhead 60% 75% Materials Labor Overhead Beginning work in process inventory P44,800 P0.544 P19,104 Added during July 595,920 442,850 417,842 REQUIRED: 1. Compute for the equivalent units of production in the Cooking Department for the month of July 2014. 2. Prepare a costs of production report for the Cooking Department for the month of July 2014. ILLUSTRATIVE PROBLEM X produces a product in 2 departments. Dept 1 and 2. Data for the month are given for Dept 2 Units Received from Dept 1 50,000 Transferred out 40,000 In process end (60% complete) 5,000 Lost units during the month – dept1 5,000 Costs From Dept 1 P225,000

Added in Dept 2 during the month Materials 135,000 Labor 103,200 Overhead 103,200 In this dept, materials are added 100% at the beginning of the process. Required: Prepare the equivalent units of production and costs schedule for dept 2 if: 1. Lost units classified as normal were discovered at the beginning of the process. 2. Lost units classified as normal were discovered at the end of the process. P13-1 The Avenson Company manufactures small appliances. The first department is the Assembly Department. The average cost method to price the beginning work in process inventory. The cost of normal loss of units is absorbed by the units completed and transferred out. Data relating to costs in the Assembly Department during May 2014 are shown below: Cost data: Beginning work in process: Materials P37,498 Labor 8,268 Overhead 22,764 P68,530 Costs incurred in March: Materials P847,002 Labor 173,676 Overhead 410,710 1,431,388 Total costs to Account for P1,499,918 Monthly production report: Quantity: Work in process – beginning 200 Units started in process – current month 5,900 Transferred out to next department 4,940 Work in process ending 810 Lost units 350 Stage of completion of ending work in process: Materials 100% Labor 60% Overhead 80% Required: 1. Prepare the equivalent production computations for the Assembly Department for May 2014. 2. Prepare the cost of production report for the Assembly Department for May.

13-2 The Lim Company uses a process cost system. On June 1, the company had 500 units in production in the Mixing Department (the second department). All materials had been applied to these units, but processing was only one-half complete. Costs applicable to the beginning work in process inventory follow: Transferred In costs from prior department P43,540 Materials 37,620 Labor 38,150 Overhead 40,200

During the month of June, an additional 14,300 units were transferred into the Mixing Department with prior department costs of P752,404. Additional costs were incurred in the Mixing Department in June as follows: Materials P480,380 Labor 535,200 Overhead 814,800 A total of 13,600 units were transferred out to finished goods. The ending work in process inventory consisted of 900 units to which all materials had been added, but on which only 75% of the processing had been completed. The other units were lost as normal spoilage at the end of the process. REQUIRED: 1. Prepare the equivalent production computations for the Mixing Department for June. 2. Prepare the cost of production report for the mixing department for June. Assume that the average cost method of accounting for inventories is used. 1. Materials are added at the start of the process in first department of JG Manufacturing Company. The following information is available for the month of January 2014: Work in process – beginning (60% complete as to conversion costs) 30,000 units Started in January 75,000 units Transferred out to next department 55,000 units Normal lost units 15,000 units Work in process – ending (50% complete as to conversion costs) 35,000 units The cost of normal lost units are absorbed by the units transferred out to the next department. Using the average method, what is the equivalent unit for materials? a. 90,000 b. 72,500 c. 90,500 d. 105,000 2. Using the data in No. 1, assuming the FIFO method is used what is the equivalent unit for conversion costs? a. 69,500 b. 84,500 c. 75,500 d. 87,500 3. Ping Products transferred 15,000 units to the department. An additional 5,000 units were in beginning inventory in the department. At the end of the month 12,000 units were transferred to the next department, 6,000 units remained in work in process, 40% complete as to conversion costs and the remaining units spoiled at the 75% stage of conversion. Beginning inventory was 60% complete as to conversion costs and spoiled units were considered normal. What is the equivalent unit for conversion costs using the FIFO costing method? a. 14,400 b. 12,900 c. 13,900 d. 13,400

4. Using the data in No. 3, what is the equivalent unit for conversion costs under the average method? a. 15,900 b. 14,400 c. 16,400 d. 20,000

5. Jet Company manufactures a product that passes in four departments in a continuous process. Department 3 had no beginning work in process inventory and transferred in 18,000 units from department 2, each with an equivalent unit cost P12.50. Within the department 3, unit cost for direct materials, direct labor and manufacturing overhead (applied) were P8.00, P9.75 and P4.00 respectively. Direct materials in Department 3 are added at the beginning of the process. Department 3 had 4,800 units in ending work in process inventory which are 65% complete as to conversion costs. If 620 units were lost in Department 3 at Jet’s inspection point where conversion costs were 45% complete, what was the total costs of lost units? a. P11,325.22 b. P13,818.25 c. P16,536.25 d. P8,796.25 6. Using the data in No. 5, if at Jet’s Department 3 inspection point , which is at the halfway through Department 3’s conversion process, 1,200 spoiled units were removed from production. Normal lost units was 800 units. If total cost of lost units was P32,850, how much of the amount should be allocated to ending work in process inventory? a. P5,840.00 b. P7,320.00 c. P6,257.14 d. P0 7. Rose Company instituted a new process in July. During the mo nth, 10,000 units were started in Dept 1. Of the units started, 1,000 were spoiled at the end of the process, considered normal in the operation of the company, 7,000 units were transferred to Dept 2, and 2,000 remained in work in process at July 31 which was 100% complete as to material costs and 50% complete as to conversion costs. Material costs of P30,000 and conversion costs of P45,000 were charged to Dept 1 in July. What were the total costs transferred out to Dept 2? a. P46,900 b. P53,600 c. P56,000 d. P57,120 8. The following production data were available for the month of May 2014 for the first dept of Tan Company. Work in process, May 1 (40% complete as to conversion costs) 40,000 Started in process during the month 100,000 Transferred out to next department 85,000 Normal lost units discovered when units are 80% completed 10,000 Work in process, May 31 (60% complete as to conversion costs) 45,000 If materials are added at the beginning of the process, using the average method, what is the equivalent unit for materials? a. P122,000 b. P112,000 c. P140,000 d. P120,000

9. Loren Company has the following production data for the month of March 2014: Work in process at March 1 10,000 units Started during March 40,000 units Transferred out to finished goods 33,000 units Work in process at March 31 15,000 units Abnormal lost units 2,000 units Materials were added at the beginning of the process. As to conversion costs, the beginning work in process was 70% completed and the ending work in process was 60% completed. Lost units are detected at the end of the process. Using the average method, what is the equivalent unit for March with respect to conversion costs? a. 42,000 b. 44,000 c. 45,000 d. 46,000 10.Heaven Company adds materials at the start of production in the Forming Department. Data related to production in May 2014 are as follows: Work in process,May 1 14,000 units Started in May 70,000 Completed and transferred out in May 72,000 Normal lost units 4,000 Work in process, May 31 8,000 Materials in beginning work in process inventory P68,000 Cost of materials added during the month P100,000 Assuming that lost units are ignored in computing equivalent production, what is the equivalent unit in production for materials under the average method? a. 80,000 b. 84,000 c. 88,000 d. 82,000 11.Using the data in No. 10, what is the cost per unit for materials? a. P2.00 b. P2.10 c. P2.20 d. P2.30 ILLUSTRATIVE PROBLEM The following information is available for X Company. Joint costs amounted to 164,000. Products Units produced Disposal cost Sales value at Additional Final sales split off processing value costs X 28,000 P4,000 P8.00 P50,000 P11.50 Y 34,000 1,000 7.00 30,000 10.00 Z 20,000 5,000 9.50 35,000 14.00 Prepare the joint cost allocation using the three different methods. Also compute for total production costs.

The following information relates to the costs and production for the first department of the Golf Manufacturing for the month of June 2014. PRODUCT UNITS PRODUCED Red 10,000 kilos, sales price of P1.20 per kilo with no additional processing costs. Blue 10,000 kilos, sales price of P2 per kilo with additional processing costs of P.20 per kilo after separation. The total manufacturing costs applicable to Red and Blue in this Department were P21,000. 1. What is the amount of joint costs to be allocated to each kilo of each product using the physical units (kilos)? a. P1.05 b. P2.00 c. P1.50 d. 2.50 2. What is the amount of joint costs to be allocated to each kilo of each product using the Relative Sales Value at Split-Off point method? Red Blue a. P.79 per kilo P1.31 per kilo b. P.98 per kilo P1.31 per kilo c. P.79 per kilo P1.95 per kilo d. P.98 per kilo P1.95 per kilo 3. What is the amount of joint costs to be allocated to each kilo of each product using the Adjusted Sales Value (net realizable sales value) method? Red Blue e. P.84 per kilo P1.26 per kilo f. P.84 per kilo P1.50 per kilo g. P.95 per kilo P1.26 per kilo h. P.95 per kilo P1.50 per kilo 4. Alpha Company manufactures Product A and Product B from a joint process. Joint costs are allocated on the basis of sales value at split-off point. It costs P4,560 of processing 500 units of Product A and 1,000 units of Product B to the split-off point. The sales value at split-off point is P10 per unit for Product A and P14 for Product B. Product B requires and additional processing after split-off at a cost of P2 per unit before it can be sold. What is Alpha’s cost to produce 1,000 units of Product B? a. P5,040 b. P5,360 c. P4,360 d. P4,860 5. Bravo Company manufactures Products A and B from a joint process that also yields a byproduct, X. Bravo accounts for the revenues from its by-product sales as a deduction from the cost of goods sold of its main products. Additional information is as follows: A B X Total Units produced 15,000 9,000 6,000 30,000 Joint costs P264,000 Sales value at split-off P290,000 P150,000 P10,000 P450,000 Assuming that joint costs are allocated using the sales value at split-off point method, what is the joint cost allocated at Product B? a. P86,591 b. P80,950 c. P95,590 d. P90,951 P14-1

Bulacan Chemicals purchases coconut and processes it into products such as copra, vinegar, alcohol. In July 2014, Bulacan purchased coconut for P40,000. Conversion costs of P60,000 were incurred up to the split-off point, at which time two saleable products were produced : copra and vinegar. Vinegar can be further processed into alcohol. The July 2014 production and sales data are: Production Sales Sales Price Per Ton Copra 1,200 tons 1,200 tons P50 per ton Vinegar 800 tons Alcohol 500 tons 500 tons P200 per ton All 800 tons of vinegar were further processed, at an incremental cost of P20,000 to yield 500 tons of alcohol. There were no beginning or ending inventories of copra, vinegar or alcohol in July. There is an active market for vinegar. Bulacan Products could have sold all of its July Production of vinegar at P75 a ton. REQUIRED: 1. Allocate the joint costs of P100,000 between copra and vinegar under the a. Sales value at split-off point method, b. Physical measure (tons) method and c. Net realizable value (NRV) method. 2. Compute for the gross margin under each method. 3. What is the incremental revenue of further processing the vinegar. 1. If a company reports two different unit costs for goods transferred to the next department, it is reasonable that a. The department accounts for lost units at the end of process. b. A FIFO costing method is used. c. Lost unit costs are computed separately. d. An average cost method is used. 2. In a production cost report using process costing, transferred in costs are similar to a. Direct materials added at a point during the process. b. Conversion costs added during the process c. Cost transferred to the next process. d. Costs included in beginning inventory. 3. A company manufactures a product that passes through two production departments, Molding and Assembly Direct materials are added in the assembly department when conversion is 50% complete. Conversion costs are incurred uniformly. The activity in units for the Assembly Department during April is as follows: Work in process, April 1 (60% complete as to conversion) 5,000 Transferred in from Molding Department 32,000 Defective at final inspection (within normal limits) 2,500 Transferred out to finished goods inventory 28,500 Work in process, April 30 (40% complete as to conversion) 6,000 The number of equivalent units for direct materials in the Assembly Department for April calculated on the weighted average basis is a. 26,000 b. 31,000 c. 34,000 d. 37,000 4. When spoilage occurs because of some action taken by the customer, the unrecoverable cost of spoilage should be charged to a. Work in process b. Spoiled goods inventory c. Factory overhead control d. Applied factory overhead 5. When spoilage occurs because of some internal failure, the unrecoverable cost should be charge to a. Work in process b. Spoiled goods inventory

c. Factory overhead control d. Applied factory overhead

6. Complete the following process account of X. Co. by supplying the peso amount on the credit side account indicated Process Y May 1 6,000 units 1/3 completed Materials 12,000 (0.50)

16,000 units completed P4,800 6,000

2,000 units ½ completed

Labor 3,600 Overhead 5,400 The peso amount for the 16,000 units completed under FIFO method a. 17,600 b. 18,200 c. 17,800 d. 18,800 The X Corp. Manufactures only one product in which the raw materials must pass through Process A, B and C in order, before completion. Inventories of Process C of finished goods on October 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 7. The number of units completed in October and transferred to finished goods a. 2,600 b. 2,300 c. 2,200 d. 2,000 e. 3,200 8. The processing cost per equivalent unit for October is (FIFO Method) a. 5.50 b. 2.75 c. 3.00 d. 1.5 e. 4.00 9. X Co. manufactures product Y in a two-stage production cycle in Department A and B. Materials are added at the beginning of the process in Department B. X uses the average costing method. Conversion costs for Department B were 50% complete as to the 6,000 units in beginning work in process, and 75% complete as to the 8,000 units in ending work in process. A total of 12,000 units were completed and transferred out of Department B during February. An analysis of the costs relating to work in process and production activity in department B for February follows: Transferred in Materials costs Conversion costs costs

Work in process, Feb 1 Cost 12,000 2,500 1,000 attached February activity: Cost attached 29,000 5,500 5,000 What is the total cost per equivalent units transferred out for February of Product Y? a. 2.82 b. 2.85 c. 2.05 d. 2.78 10.Information concerning Department B of X Co. follows: Units Total costs Transfer in DM CC Beg Work in process 5,000 6,300 2,900 3,400 Units transferred in 35,000 58,000 17,500 25,000 15,000 40,000 64,300 20,400 25,000 18,400 Units completed 37,000 Ending work in process 3,000 Conversion costs were 20% complete as to the beginning work in process and 40% complete as to the ending work in process. All materials are added at the end of the process. X Co. uses the weighted average method. The portion of the total cost of ending work in process attributable to transferred in costs is: a. 0 b. 1,500 c. 1,530 d. 1,650 11.X, a local company produces a small standard component5 in process operation. There is a quality check control at the end of the processing. Item which fail this check are sold as scrap for P1.80 per unit. The expected rate of rejection is 10%. Normal loss is not given a cost, except that whenever scrap value it has is credited to the process account. The cost/value of the abnormal loss or gain, net of scrap value, is written off to the profit and loss account. Data for July are as follows: No work in process at the beginning and end of the period Material input 1,000 units P5,100 Conversion cost P3,000 Output to finished goods 800 units What was the full cost of the finished goods output that passes the quality control check? a. 7,040 b. 7,920 c. 7,200 d. 8,100 12.During May, X Co. completed 50,000 units costing P600,000 exclusive of spoilage allocation. Of these completed units, 25,000 were sold during the month. An additional 10,000 units, costing P80,000 were 50% complete at May 31. All units are inspected between the completion of manufacturing and transfer to finished goods inventory. Normal spoilage for the month was P20,000 and abnormal spoilage of P50,000 was also incurred during the month. The portion of total spoilage that should be charged against revenue in May is a. 50,000 b. 20,000 c. 70,000 d. 60,000 e. 30,000 13.X CO. manufactured the following units Saleable 5,000 Unsaleable (normal spoilage) 200 Unsaleable (abnormal spoilage) 300

Manufacturing cost totalled P99,000. What amount should X debit to finished goods? a. 90,000 b. 93,600 c. 95,400 d. 99,000 The following information is available for X Co. for the month of May: Started this month 80,000 units Beginning work in process (40% complete) 7,500 units Normal spoilage (discrete) 1,100 units Abnormal spoilage 900 units Ending work in process(70% COMPLETE) 13,000 units Transferred out 72,500 units Beginning work in process – costs: Materials P10,400 Conversion 13,800 Costs this month: Materials P120,000 Conversion 350,000 All materials are added at the start of the process and the inspection point is at the end of the process 14.What a. b. c. d. 15.What a. b. c. d. 16.What a. b. c. d. 17.What a. b. c. d. 18.What a. b. c. d. 19.What a. b. c. d. 20.What a. b. c. d.

are the equivalent units of production for matertials using FIFO? 80,000 79,100 81,100 80,600 are the equivalent units of production for conversion costs using FIFO? 79,700 79,500 81,100 80,600 is the cost per equivalent unit for materials using FIFIO? 1.63 1.37 1.5 1.56 is the cost per equivalent unit for conversion using FIFO? 4.00 4.19 4.34 4.38 is the cost assigned to ending inventory using FIFO? 75,920 58,994 56,420 53,144 is the cost assigned to abnormal spoilage using FIFO? 1,350 3,906 5,256 6,424 is the cost assigned to normal spoilage how is it classified using weighted average? P6,193 allocated between WIP and transferred out P6,424 assigned to units transferred out P6,103 assigned to loss account P6,424 assigned to loss account

The following info is available for X Corp for the month of October: Beginning work in process (75% complete) 14,500 units Started 75,000 units Ending work in process (60% complete) 16,000 units Abnormal spoilage 2,500 units Normal spoilage (continuous) 5,000 units Transferred out 66,000 units Cost beginning work in process: Materials P25,100 Conversion 50,000 Costs this month: Materials P120,000 Conversion 300,000 All materials are added at the start of the process. 21.Using FIFO, what are the equivalent units for materials? a. 75,000 b. 72,500 c. 84,500 d. 70,000 22.Using FIFO, what are the equivalent units for conversion costs? a. 72,225 b. 67,225 c. 69,725 d. 78,100 23.Using FIFO, what is the cost per equivalent unit for materials? a. 1.42 b. 1.66 c. 1.71 d. 1.60 24.Assume that the FIFO EUP cost for materials and conversion are P1.50 and P4.75. Using FIFO, what is the total cost assigned to the units transferred out? a. 414,194 b. 339,094 c. 445,444 d. 396,975 25.X Products transferred 10,000 units to one department and additional 3,000 units of materials were added in the department. At the end of the month 7,000 units were transferred to finished goods; while 4,000 units remained in work in process inventory. There was no beginning inventory, and lost units were as a result of normal production shrinkage. The production costs for the period in this department would be effectively allocated over a. 12,000 units b. 11,000 units c. 13,000 units d. 7,000 units P14-2

The Milan Company has three producing departments. The first department, the second department and the third department. Five percent of the raw materials put into production in the first department becomes a by-product that has an estimated sales value of P130 per unit. The estimated sales value of the by-product is treated as a reduction from the cost of the main product. During November, 200 units are put into production. There are no beginning and ending inventories. During November, the following costs are incurred in the first department: Materials P76,293.27 Labor 11,232.32 Overhead 7,847.40 REQUIRED: 1. Record the costs incurred in the work in process account. 2. Record the removal of the by-product from the first department. 3. Record the sale of half the by-product from the first department for P618 cash. P14-4 Cola Bottling Company is a manufacturer of bulk soft-drink. A single production process yields two bulk softdrinks: Coke (the main product) and Pepsi (the by-product). Both products are fully processed at the spilt off point, and there are no seperable costs. For May 2014, the cost of the softdrink operations is P1,200,000. Production and sales data are as follows: Production (in Sales (in gallons) Selling Price gallons) (per gallons) Main product: Coke 10,000 8,000 P200 By-product: Pepsi 2,000 1,400 P20 There were no beginning inventories on May 1, 2010. REQUIRED: 1. What is the gross margin for Cola Bottling Company if: a. By-product is recognized at time production is completed. b. By-product is recognized at time of sale. 2. What are the inventory costs reported in the balance sheet on May 31,2014, for Coke and Pepsi under the methods mentioned above. ILLUSTRATIVE PROBLEM: X Co. produces product A from a process that yielded a by product B. The by-product required P4,000 additional processing cost. The company decided to charge the joint cost to A. The by product will require selling and administrative expenses of P1,000. Information concerning the above follows: PRODUCT UNITS PRODUCED SALES VALUE AT UNITS SOLD SPLIT OFF A- Main product 50,000 P10 40,000 B - by product 20,000 1 15,000 The costs incurred up to the split off point are: Direct materials P120,000 Direct labor 100,000 Factory Overhead 80,000 The company also incurred P80,000 selling and administrative expenses for the main product. REQUIRED: Income statement showing the net revenue of the by product using the following methods 1. Additional sales revenue 2. Deduction from the cost of goods sold of A 3. Other income.