Republic of the Philippines

BULACAN STATE UNIVERSITY

Cost Accounting
Quiz 6 Accounting for Materials

Name__________________________________ BSA/BSAT ____ March ____, 2019

Computation (Two points for every correct answer with proper solution. Use yellow
paper/s to support your answers.)

Ronquillo Company has an annual demand of 52,000 of Material A. The cost per unit is P14.
The order cost is P200 per order and the annual inventory carrying cost per unit is P5.20. Assume
that the units will be required evenly throughout the year. Compute for the following:
a. Economic order quantity __________
b. Number of orders in a year __________
c. Average inventory based on economic order quantity __________
d. Total carrying cost and total ordering cost of economic order quantity __________

San Miguel Company received an invoice for materials R, S and T from the supplier. Invoice
totals are: R – P200,000; S – P250,000; T – P150,000. The freight charges on this shipment of
20,000 kilos total P12,000. Weights for the respective materials are 10,000, 6,000, and 4,000,
respectively.
Compute the cost per kilo to be entered on the stock cards based on
Material (e) Cost (f) shipping weight
R __________ __________
S __________ __________
T __________ __________

Deang Company regularly buys merchandise from its favorite supplier and is allowed a trade
discount of 15/10/15. For February, Deang Company purchased merchandise with a list price of
P300,000 and terms of 2/10, n/30.
g. The amount debited to Materials if the purchased discount is treated as other income
(Purchases recorded at gross) __________
h. The amount debited to Materials if the purchase discount is treated as a reduction of purchases
(recorded at net) __________.
i. The amount paid if the payment is made within the discount period. __________
j. The amount paid if the payment is made beyond the discount period. __________

Fulgencio Company will use the following information in costing inventory on January 31:
Jan 01 Beginning inventory 3,200 units at P5.00
05 Purchased 800 units at P6.00
09 Purchased 800 units at P7.00
16 Issued 1.600 units
24 Purchased 1,200 units at P7.50
27 Issued 2,000 units
Compute the cost of materials used and the cost assigned to the January 31 inventory by each
of these perpetual inventory costing methods:
Cost of materials used Cost assigned on January 31
k. FIFO _______________ _______________
l. Average _______________ _______________
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The Makiramdam Manufacturing Company uses several raw materials in the production schedule.
Management wishes to use a system of selective control. The following data have been
completed:
Material Yearly Usage Unit Cost Total Cost
J 15,000 P 1.00 P 15,000
O 10,650 1.30 13,845
K 3,000 5.00 15,000
I 7,875 4.00 31,500
N 9,000 3.50 31,500
G 4,125 1.60 6,600
L 2,250 2.00 4,500
Y 8,250 3.70 30,525
Total 60,150 P 148,470
Categorize the above material using the ABC plan where A is the most expensive while C is the
least expensive.
Materials Total Cost
m. A (top 3) __________ __________
n. B (next 3) __________ __________
o. C (last 2) __________ __________

The BSA Company is a manufacturer of golf clothing. During February, 2019, the company cut
and assembled 20,000 golf jackets. One hundred of the jackets did not meet specifications and
were considered “seconds”. Seconds are sold for P2,000 per jacket, whereas first quality
jackets sell for P4,000. During February, Work in Process was charged for P5,000,000 of
materials, P3,000,000 of labor, and factory overhead is applied at 125% of direct labor (including
allowance of 25% of direct labor for spoiled units).
Required:
p. Loss due to spoiled work is spread over all jobs.
q. Loss due to spoiled work is charged to this specific job (Factory overhead is applied at
100% of direct labor cost.)
r. Compute the unit cost of the good units under (p) and (q).

BSAIS Company manufacture golf carts and other recreational equipment. One order for BSA
Company for 5,000 carts showed the following cost per unit: direct materials – P200; direct labor
– P100; and factory overhead applied at 140% of direct labor cost if defective work is charged to
a specific job and 150% if defective work is charged to all jobs.

Final inspection revealed that wheels were assembled with improper bearings. The wheels were
disassembled and the proper bearings inserted. The cost of correcting each defective cart
consists of P10 added cost for bearings, P20 for labor, and factory overhead at the predetermined
rate.
Required:
Journal entries to record the transactions including correction of defective units
and transfer of the work in process to finished goods if
s. The BSA Company is to be charged with the cost of defective units.
t. The cost of defective units is charged to BSAIS Company.
Compute the cost per unit of the finished goods if:
u. The BSA Company is to be charged with the cost of defective units.
v. The cost of defective units is charged to BSAIS Company.

One CBA Company received an order of 10,000 automatic mixing machines. The cost per unit
is: materials – P300; labor – P180; factory overhead applied at 150% of direct labor cost (140%
in cases in which any defective units are to be charged to a specific order). Final inspection
revealed that 1,500 units were incorrectly assembled. To correct each defective unit requires P75
for materials; P45 for labor, and factory overhead of the appropriate rate. Then 30 units were
classified as “second” and sold for P500 each, the proceeds being credited to the order. The
customer has agreed to accept the remaining good machines, although the acceptable units are
fewer than the number ordered.
Required:
w. Entries if the method used is charged to specific job.
x. Entries if the method used is charged to all production.
y. Compute the cost per unit of the finished goods under (w) and (x).

End of the Quiz. Good Luck! Reminder: Honesty is the best policy!
FOR SUBMISSION ON 2ND MEETING DURING WEEK March 4 to 8, 2019.

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