MANILA

PR~CTICAL ACCOUNTING PROBLEMS II

GUERRERO/GERMAN/DE JESUS/LiM COST ACCOUNTING

PROCESS COSTING

Problem 1. JVC Company ma~s fabric-covered hat boxes. The company began September with 500
bgxe~ iJLprocessibaLwer
r100 percent-complete as ~ cardboard, 4~Q!!lPfete'as to cloth,and ?iI'S
complete as to conversion c-os~During the month, 3,300 boxes were started) On September 30, 350
axes were in process (100 percent complete as to cardb;ard, 30 percenfincomplete as to cloth, and 45
percent incomplete as to conversion costs). . - - -

Using the FIFOmethod, what are equivalent units for cloth?

GB. 3,295 trol) ., 'Ii - \00

3,450 IOOl. J.q~D
C. 3,395 j,4S1) _
D. 3,595 "S-D wt. ~
Problem 2. URL Company
e~)
uses a FIFO process costing system. The company had 10,000 units that were
40% percent incomplete as to conversion costs at the beginning of the month. The company started
30,000 units this period and had 9,000 units in ending Work In Process inventory that were 50%
complete as to conversion costs.

What are tne equivalent units for conversion costs?

tl.r I
U
A. 35,500
31,500 ".lLC I

~J
D.
29,500
25,500
~. DOD -c (7) 1

Problem 3. XYZ Company uses a weighted average process costing system and started ~~ this
month. XYl had 12,000 units that were 4/5 incomplete as to conversion costs.in beginning Work in
Process Inventory and 3,000 units that were 40 percent complete as to conversion costs in ending Work
in Process Inventory.

What are equivatent units for conversion costs?

B.
C.
37,800
40,200
40,800 I~.(j\f J
f'AZ-7208
r7f.i ov-~.)I )' ~q[J1J1J
D. 42,000
liCrr "qr), - ~()
j),b-nl 4-"-'-
-;;;;.-
 Problem 4. lMN Company Co. uses a FIFOprocess costing system. The company had 5,000 units that
were 60 percent complete as to conversion costs at the beginning of the month. The company started
22,000 units this period and had 7,000 units in ending Work in Process Inventory that were 35 percent
complete as to conversion costs.

What are equivalent units for materials If materials are added at the beginning of the process?
I

A. 18,000
BJ 22,000
25,000
D. 27,000

Problem 5. Finale Manufacturing Co. operates two consecutive departments, X & Y and uses FIFO
costing. The February, 2012 production data for Department Yare as follows:

In process, February 1 12,000 units, 1/3incomplete

Received from Dept. X 60,000 units
In process, February 28 10,000 units, 2/5 completed
Normal loss 5,000 units

What should be the equivalent pr~d~SMmin9-that-the-"-9Hnalloss occllrred at the beginning,?

C!tthe end? when the units were lLS completed?

At the beginning At the end One-fifth completed

~') 53,000 62,000 58,000
B. 53,000 58,000 54,000
C. 57,000 58,000 57,000
D. 61,000 66,000 62,000

Problem 6. Progress Manufacturing Company applies process costing in the manufacture of its sole
product, "enermix".

o Manufacturing starts in Department 1 where materials are all added at the start of processing.
The good units are then transferred 0 -Department 2 where all the incremental materials
needetifor ittJ;omeJetion.J!re added a ter inal inspection.
y

o In Department 1, units are inspected at the end of processing while in Department 2, inspection
takes place when the' units are 9~~ cgJ11pJete~--

o Department 1 uses FIFOcosting while Department 2 usesthe weighted average costing.

The production data for the month of August show the following: .

DeE!..artment1 DeE!..artment2
UNITS

Beginning work in process, August 1 8,000 4,000

Work to be done 80% 20%
Ending work in process, August 31 12,000 7,000
Work completed 2/3 5/7
Started in process during August 60,000
Normal spoilage (4% of units started in process) 1,000
Abnormal spoilage (1/4 of normal spoilage) 500
.,

fJA2-iZD ~
,,
 COST

Work in Process, August 1:

Transferred in p - P ,114,180
Materials p 5~0> P 85,950
Conversion costs P 39,000 P 112,290
Current costs:
Transferred in p P ?
Materials P 792,000 P 336,000
Conversion costs P1,235,520 P 513,000

Total costs transferred to Department 2 and the amount of work in-process, end in Department 1

o 'J'
./ r 0, ',)!,'1''''''''/2-
- ~vu?J" • ~ IIi! , ff..(
v"lJ
A P1,690,920; P316,8OO ~, C '\ !OJ - ~:r)J _., - ,

B. Pl,783,920; P316,800
, r,.QO 0 - lil (,y}() 9, 00 q,g -- 1-.5. (; <.,I'F)

P1,704,720; P158,400
4',vuO - 'It./-g),OOD
D. Pl,783,920; P219,720
'1tNr.[r;; f1'i7N'f f~1i9YJ
Total costs transferred to the Storeroom and the amount of work in-:;;;'ocess, end in Department 2

~P2,633,460; P290,100
B. P2,589,900; P233,l,OO
C. P2,589,900; P290,lOO
D. P2,633,460; P233,lOO
rtPJl -~:::. '~I'b
'If') x!',(j ~~f~()

Problem 7. The cost data and production data for Velocity Company for the month of Augus
»«: ere as
follows:

Cost Data:

Work in process, August 1: Materials P 20,800

Conversion costs P 27,600

Cost added this month: Materials P240,OOO

Conversion costs P640,800

Production Data:
\
Work in process, August 1 (60% incomplete) 3,750 units
Started in production this August 40,000 units
Transferred out 3~250 Un!
Work in process, August 31 (:~O%to be done) 6,500 units
Normal lost units 550 units
Abnormal lost units ? <JWur'-{;
•
All materials are added at the f the process and lost .•units.ar detected at the Inspection point of
\]5% cornpletloji.

17eq~ Jrw
£lo,tOO '.
1J1lt
S-t"
111"\
L!'{
--
'wrfD Mo.r
-p
I
~ ~.
( .,'" ~
13q. 2..[0 1- If, -=i6.v
3/l.5CO
:;;.~rJ
tool J2 TV
\NW 3.7, rev 'I.j •.•.: 4l{) k
£v IOO/. bfv }])l,l K.b
L. l ) fOOl. ()

r- 'fr' I Dol
-
" J
YOJ.ivo
 4

1. Using the FIFO method, what are the cost assigned to units transferred out and units in ending
work in process?

Transferred out Ending WIP

a. P807,650 Pl13,450
"b.) P809,300 Pll1,800
c. P807,650 Plll,800
d. P809,300 Pl13,450

2. Using the average method, what are the cost assigned to units transferred out and units in
ending work in process?
10 ~6,).JO
Transferred out Ending WIP n ',6fVD
A. P807,638 Pl13,450
B. P799,229 Pl13,4S0
(-c.
P809,143 Plll,941
D. P799,212 P 38,748

3. What is the cost of abnormal lost units?

FIFO Average
A. P8,lOO P8,lOO
B. P9,900 P9,920
C. P5,430 P5,400
m. P8,lOO P8,112

Problem .8. Vector Company employs process cost system. A unit of product passes through two
departments: Assembly and Finishing before it is complete. Information regarding Assembly
Department follow:

Work in-process, Aug 1 4,000 units

Spoiled units 3,000
Started in Production 26,000
Transferred out 24,000

Raw materials are added at the beginning of processing in the Assembly department without changing
the number of units being processed. Work in Processon August 1 was 90% complete as to conversion
whil~p%,.coml~ed on August 31. In the Assembly Department, inspection takes place when the units
are tz. % converted. The c0'12P~y'--'.J~y experienced a 5% loss based on the completed units. Cost
data for onth of August follow: -

Materials Labor Overhead

Work in-process beginning P 32,400 P26,400 P 28,500
Current cost P 111,600 P88,200 P 114,750

Using Weighted Average Costing, compute

~

Total cost of units transferred-out and total cost of work in process, end

A P331,200; P37,376
\!9 P343,684;
c. P331,200;
1".:-"
P37,376
P36,OOO-.
PA2~ 12D8
D. P343,684; P36,000 -
 5

Problem 9. The following information is available for Detox Company for the current year:

Beginning Work in Process Costs of Beginning Work in Process:

(75% complete) 14,500 units Material P 25,100
Started 75,000 units Conversion 50,OOa.
Ending Work in Process Current Costs:
(60% complete) 16,000 units Material P120,OOO
Abnormal spoilage 2,500 units .• Conversion 3.00,000
Normal spoilage 5,000 units ~
(continuous)
Transferred out 6~900 units

All materials are added at the start of production.

Using FIFO, what is the cost per equivalent unit for conversion costs?

Ii!, G
fA) P4.46
- r/,J ~ - ~L1,
B. P4.15
...
'rtJ G1.~2( - ~
C. P4.30 ~CO() -of. :- q r
I

') '< troT, s: :;

D. P3.84
r 1- (')J{_ :- 0
;.----
(P"'pK
Problem 10. The production data for Department 1 for August 2012 are as follows:

WIP, August 1 (1/4 done as to conversion costs)

Started in August
Transferred out during August
Spoiled units

Cost of Beginning work-in process:

Materials P500,000J
Conversion Costs P 60,000 ~O
Current Coslf:
Materials ' P2,960,003--
Conversion Costs P1)m;r,OOO

Unit costs:

- Materials
Conversion Costs

o Materials are added at the s~rt of the process.

o Conversion costs are added evenly during the process.

o
--
The company uses the FIFO method of gLs!ing.

Inspection occurs, when production is 100% complete.

o Normal spoilage is 11% of good units transferred out during August.

 6

What are the cost allocated to?

,
Next Department In-process, end in Dept 1. Period cost
A. P3,264,000 Pl,370,560 P512,OOO
B. P4,456,000 P 888,000 P 82,560
P3,944,OOO Pl,317,440 P 82,000
P4,433,440 P 888,000 P 82,560

fv?i~l _
JOB ORDER
III Jl1Jrul)
Problem 1. The following data were taken from the records of Fast Track Company: ~rrr~}
08/31/2012 09/30/2012 ~
r~~ (fJ,O()tJ
Inventories
?;S,IU/)
Raw materials P ? P 50,000
Work in process P 80,000 P 95,000
1~.v·:!.-
J' . ...,)
Finished goods P 60,000 P 78,000
1I.lV
o Raw materials purchased amount to P46,OOO
M'1,rT'J
~--~ ..
~ ,V .
o Factory overhead amount to P63,OOOwhich isr75% of direct labor cos{)
( 'iI,W'
o Selling and administrative expenses amount to P25;o00which IS 8% of saleS, {IO,IT]'
--- - --
o Net income for September 2012, P40,OOO

Compute for the cost 0/ goods manufactured and the amount of raw materials inventory on August
31.,201.2

~I
A. P 162,500
P 162,500
C. P 1~1t~0
D. P , P 1"54,500-
~t1'f01)
, I?~

Problem 2. Crack Company uses a job order costing system. During August 2012, the following costs
appeared in the Work in Process Inventory account:

Beginning balance P 192,000

- Direct material used
Direct labor incurred
560,000
480,OOC).-,6(;/
Applied overhead 384,000 '
Cost of goods manufactured 1,480,000

Crack Compan ap lies overhea on the basis of direct labor cost. There was only one job Ie

--
orkin
Process at the end of August which contained 44,800 of overhea
-- -
What amount 0/ direct material was included in this job?

P35,200
P35,840
C. P55,360
D. P64,OOO
Problem 3. Products at Red Manufacturing are sent through two production departments: Fabricating
and Finishing. Overhead is applied to QclUCl in the Fabricating Department e.d on 150 percent of
. - --
direct labor cost and Pl8 per machine hour in Finishing. T e 0 owmg In ormation is available about Job
-=---
#297:' I I
Fabricating Finishing
Direct material P31,800 Pll,600
Direct labor cost "'? J)? P 960
Direct labor hours 440 /120
Machine hours 100 300
Overhead applied P 8,580 ? ~11OD

What is the total cost 0/ Job #297?

A. P52,940
B. P60,100
C. P61,860
@ P64,060

Problem 4. Strong Products has no Work in Process or Finished Goods inventories at the close of
business on December 31, 2012. The balances of Strong Products' accounts as of December 31, 2012,
were asfollows:

Cost of goods sold--unadjusted P 6,120,000

Selling & administrative expenses 2,700,000
Sales 10,800,000
Manufacturing overhead control 2,100,000
Manufacturing overhead applied 1,944,000

Pretax income for 2012 is:

Pl,824,OOO
(p,r:o,
,liT
P1,980,OOO
~\ &~~(P,c'VJ
C. P2,136,OOO
D. P1,860,OOO

Problem 5. Speed Company uses a job order cost system. The following data were obtained from the
company's cost records as of July 31. No jobs were in process at the beginning of July, all costs listed
being incurred during the month.
l
Job Order No Direct Materials Direct Labor Hours Direct labor Cost
1001 P 4,320 1,300'/ P 1,600 /
1002 9,150 3,700 7,250 .
,Jf 1003 11,275 8,200 " 14,325/
1004 3,225 1,500 2,800
1005 6,500 3,200 6,100
'. {r 10Q6 2,750 980 1,650

o Manufacturing overhead costs are charged to jobs on the basis of P1.50 per direct labor hour.

o The actual manufacturing overhead cost for the month totaled P30,350. :l.k,320

o During July, only Job Order Nos. 1003 and 1006 were still in process.
~

.fA'Z., -J 2. DZ;,
o Jobs 1001 and 1002 were shipped out and the customers were billed P9,OOOfor Job 1001 and
P20,OQOfor Job 1002.
 8

The cost of goods manufactured would be:

fo)P55,500
B. P55,495
C. P56,495 o i

D. P57,500

Problem 6. The Vigor Company uses job order costing. At the beginning of August, two jobs were in
process.
Job 769 \ Job 772
Materials P80,OOO P28,000
Direct Labor ~40,OOO P12,OOO
Applied factory overhead ;':J)! LP60,000 P18,ODO

o There was no inventory of finished goods on August 1.

o During the month of August, Job,77}, 774{7Z6r}?8Jnd 779;f.;ere started.

o Materials requisitions for August totaled P5~0,OOO

direct labor cost, P400,000 and actual factory
-
overhead, P640,000.
~
o The only job still in process at the end of August is'Job779:'with costs of P56,000 materials and
P36,000 for direct labor. . - -
--...
o Job 776, the only finished job on hand at the end of August has a total cost of'P80,000

71 "0 U20. vfJ1J

The c~st of goods sold atnorm"Oiis: W(flbo J;';; V'JO
--"
!1rt.IJ~U
GIP
( 11./ ~ ( I
Pl,572,OOO Ii,,' '~
Pl,532,OOO -;'o/2.CUV
r ~'
Pl,600,000 r G£ a
Pl,652,000 1& ~ OJ. 0')
"'GM
( )'

, . '"
I 0

Problem 7. XY~Company has the following balances as ofthe year ended December 31,2012
u:;:. ""'-J, roA 1/J2.0/){;
I 0/'1 V •.•
," n vA (~clt __
Debit '" oRr?
77t, p.£ U 5SJJTO'J
t»: P~,(l7F.l1
Direct Materials Inventory P135,OOO P~fcJCIr (- bqC'r~1 )
WIP Inventory P310,500
Finished Goods Inventory P44S,500
If}OJ)J
Cost of Goods Sold P670,500
.oc {
f(p ~. cJ
Credit
" !' -: :;
/)(.1/1
Factory Department Overhead P 36,000

Additional information were as follows:

Cost of direct materials purchased during 2012 P 369,000
Cost of direct materials requisitioned in 2012 P423,000
C~goods completed du~l~ , 918,003))
Cost of direct labor P360,000
Factory overhead is applied at 120% of direct labor

------~~--_~~~~~~~~~
\ ,.,

Beginning direct materials inventory; Beginning finished goods inventory; Actual factory
overhead incurred

A. P270,OOO; P225,OOO; P396,000

@P189,OOO; P198,OOO; P396,OOO
C. P189,OOO; P216,OOO; • P432,OOO
D. P270,OOO; P198,OOO; P468,OOO

Problem 8. W company has ov~ applied overhead.of ~ for the_year. Before disposition of over
applied overhead, selected year end balances from W's accounting records were ...

Sales Pl,OOO,OOO
Cost of Goods Sold 750,000
Direct Materials Inventory 50,000
Work in Process Inventory l8~
Finished Goods Inventory (270,000

Under W's accounting system, over or under applied overhead ts.allccated.to aQQrogriate inventori s
and cost of go~s sold based on ear en la es.

In its year end income statement, W should report cost of goods sold of
,
(~P712,500 -'/r?1,G _I.. ~O j

B. P714,OOO I~"')an
C. P730,OOO 1'n
c...-<
) 1
D. P787,500

~roblem 9. NOP Company's Job 921 manufactured 13,750 units that was completed in August at unit
/ costs presented as follows:

Direct materials P50

Direct labor 45
Factory overhead (includes an allowance of P2.50
Spoiled work) 45
\
Final inspection of Job 921 disclosed 1,250 spoiled units which were sold for P37,500.l

r" _~~=~=-3!.g.::.oo.::.d::..-:u:..:n::..it==-s
if -ihe spoilage loss is attributable to exacting

A. P137.50
B. P143.75
C. P140
@ P148.25
',ZaOV2f
r WVD7

Wit' 1&<10(1
~G ~ It J

(,h ::-!fig,S
~
v(~) oil
o~ LJJ~
 10

Problem 10. During August 2012, Faithfully Inc. incurred the following costs for Job 522 (450 drum
sets):

Direct materials P42,SOO

Direct labor P65,2S0
Factory overhead P78,3OO
,
45 units of drum sets were found to be defective and Faithfully Inc. had to incur the following to remedy
the said defects:

ut specific to Job 522, the cost per fin;sh~t is:

~ P518.11
B. P497.75
C. PS75.68
D. P484.22

-end of handouts-