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 companys 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 employers share of payroll taxes for all categories of employees consists of 5% SSS
Contribution, 1.5% Phil Health contribution, % 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. Employers 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 PBAs 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 employers 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. Jeans 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 employers 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 Companys 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. Xs 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 Companys 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 weeks
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 employers contribution to the companys 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 2s 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 Corporations 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 Companys 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 Departments 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 Jets
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 Jets Department 3 inspection point , which is at the halfway
through Department 3s 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 Alphas 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 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 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.