UST-JPIA MOCK QUIZ IN CA5101

Accounting for Merchandising and Manufacturing

Name:________________________________________
Section: ______________________________________ Score: ______________
CONCEPTUAL (1.2 points each, 30%) COMPUTATIONAL (2.5 points each, 70%)
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 UST-JPIA MOCK QUIZ IN CA5101
Accounting for Merchandising and Manufacturing

I. CONCEPTUAL
A. TRUE OR FALSE. Write T if the statement is true and F otherwise.

1. Adding the cost of goods manufactured and the beginning finished goods inventory gives
the cost of goods sold during the period.
2. The direct labor cost is included in the computation of both the prime cost and the
conversion cost.
3. Operating expenses are deducted from the gross profit in order to compute for the
earnings before interest and tax which is also known as the operating income.
4. PAS 2 pertains to Inventories.
5. If the gross profit rate is 30% based on cost, the net sales is equivalent to 130% of the
cost of goods sold.
6. Whenever the owner makes a withdrawal of cash from the business, the cash receipts
journal is used to record the entry.
7. In order to get the cost of goods sold, the ending finished goods inventory is deducted
from the total goods available for sale.
8. Freight-in, utilities of the store, and freight-out are all part of the selling expenses.
9. When the perpetual inventory system is used by a merchandising business, only one entry
is needed to record a sale.
10. Indirect materials and indirect labor are insignificant. Therefore, they are not considered
when computing for the cost of goods manufactured.

B. IDENTIFICATION. Identify what is being asked in each number.

11. This statement shows the manufacturing costs incurred by the company during the period.
12. These are costs incurred outside of the factory but are associated with a certain time
period.
13. This is issued by the seller whenever the buyer returns goods purchased.
14. These are costs incurred inside the factory and are considered inventoriable costs.
15. This is the account credited whenever the buyer is able to pay within a reasonable amount
of time to avail a reduction in the price to be paid.

C. MULTIPLE CHOICE. Write DM if it is considered a direct material, M if it is considered

manufacturing overhead, and S if it is considered a selling expense. If none apply, write
NONE.

16. The fabric used in a dress

17. The freight cost to deliver merchandise to a buyer
18. The salary of the supervisor inside the factory
19. The utilities of the head office
20. The plastic casing of a smartphone

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 21. The telephone bill of the store
22. The salaries of the accountants in the main office
23. The wages of the workers assembling the product
24. Written-off accounts estimated to be uncollectible
25. The insurance of the store that has expired

II. COMPUTATIONAL
A. PROBLEM SOLVING. Supply the answer.

PROBLEM A
AMVIAN CO. manufactures SUCCESS using STRESS, CHALLENGES, DILIGENCE, and
DETERMINATION which are all considered direct materials. The company provided the following
information:

Decrease in Finished Goods P 25,000

Increase in Raw Materials P 50,562
Increase in Work in Process P 100,920
Cost of Goods Manufactured P 460,230

The company’s material purchases during the period amounted to P 521,500. Direct labor is
equivalent to 130% of factory overhead.

COMPUTE FOR:
1. Direct Materials used
2. Factory Overhead
3. Cost of Goods Sold

PROBLEM B
TONY LABRUSCA CO., a merchandising company, had the following transactions during the
month of November:

11/2 Purchased an antique lamp for P 64,500 from ILAW CO. with credit terms 4/10, n/30
and freight terms FOB Shipping point, Freight Prepaid. Freight cost is 6,450.
11/4 Sold a vintage record for P12,500 to Mr. Right with credit terms 2/10, n/30 and freight
terms FOB Destination point, Freight Prepaid. Freight cost is 1,250.
11/7 Cash sales for the week amounted to P43,500.
11/14 Received amount due from Mr. Right.
11/19 Paid the amount due to ILAW CO.

COMPUTE FOR:
4. Net purchases for the month
5. Net sales for the month
6. Ending cash balance assuming initial cash balance was P 256,000

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PROBLEM C
On April 01, 2018, JAMES REID CO. was engulfed in a devastating fire. Most of the accounting
records were obliterated. However, a few pieces of paper were recovered at the site, revealing
the following information:

Opening Merchandise Inventory P 920,750

Sales P 1,231,950
Closing Merchandise Inventory P 309,500

The accountants remembered that the company usually had a gross profit rate of 25%.

COMPUTE FOR:
7. Purchases
8. Cost of Goods Sold

PROBLEM D
The incomplete Statement of Cost of Goods Manufactured of GREYSON CHANCE CO. is
presented below:

GREYSON CHANCE CO.

STATEMENT OF COST OF GOODS MANUFACTURED
For the year ended September 30, 2018
Direct Materials:
Raw Materials Inventory, Oct. 1 P ????????
Plus: Net purchases of Raw Materials 345,000.00
Raw Materials Available P ????????
Less: Raw Materials Inventory, Sept. 30 135,607.00
Raw Materials Issued to Production P 2,450,320.00
Direct Labor ????????
Factory Overhead
Indirect Materials P 650,730.00
Indirect Labor 564,390.00
Other Factory Expenses 400,000.00 1,615,120.00
Total Manufacturing Costs P 5,544,365.00
Work in Process Inventory, Oct. 1 352,460.00
P 5,896,825.00
Less: Work in Process Inventory, Sept. 30 ????????
Cost of Goods Manufactured P 4,689,700.00

COMPUTE FOR:
9. Raw Materials Inventory, Oct. 1
10. Raw Materials Available
11. Direct Labor
12. Work in Process Inventory, Sept. 30

PROBLEM E

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TROYE SIVAN CO. sells music albums. The company’s sales information for the period is
summarized in the table below:

Product Selling Price Quantity

Sold
Happy Little Pill P 250.00 50
Wild – EP P 300.00 125
Blue Neighborhood P 350.00 240
Bloom P 350.00 300

The cost of the goods sold were P 119,500. TROYE SIVAN CO. incurred selling expenses of P
20,450 which make up a part of the total operating expenses which amount to P 63,902. The
income tax rate is 40%.

COMPUTE FOR:
13. Gross margin
14. Administrative Expenses
15. Net income (disregarding income tax)
16. Net income (considering income tax)

PROBLEM F
MILES HEIZER CO. provided the following information below:

Merchandise Inventory, July 1 P 94,350

Accounts Receivable, July 1 14,560
Accounts Receivable, July 31 23,050
Gross Profit 52,310
Markup on Cost 25%
Merchandise Inventory, July 31 45,390

COMPUTE FOR:
17. Cost of Sales
18. Total Cash Receipts
19. Total Sales

PROBLEM G
During the first year of its operations, KRIST PERAWAT CO. had net purchases of P 1,320,000.
It returned a total of P140,050 to various suppliers, and it was able to avail purchase discounts of
P24,560. The total freight-in cost to deliver its purchases amounted to P12,000. Its total sales
amounted to P 1,900,500. Selling expenses totaled to P230,000 which accounted for 58% of the
total operating expenses. The merchandise inventory at year-end amounted to P 650,782.

COMPUTE FOR:
20. Cost of Goods Sold
21. Total Operating Expenses
22. General and Administrative Expenses
23. Net income

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PROBLEM H
TOM DALEY CO. is a manufacturing company that produces exercise equipment, such as
barbells, weights, and others. On its first year of operations, it purchased a total of P 3,520,000
in raw materials. It incurred freight costs worth P 52,600 to bring the materials to the factory. It
issued P 2,400,600 of the raw materials to production. The wages of the factory workers totaled
to P702,430, all of whom directly assembled the products. Factory overhead amounted to P
620,000.

The ending work in process inventory was worth 12% of the total manufacturing cost.

COMPUTE FOR:
24. Raw Materials Inventory, ending
25. Total Manufacturing Cost
26. Cost of Goods Manufactured

PROBLEM I
COLE SPROUSE CO. provided the following information:

Decrease in Raw Materials P 54,650

Increase in Work in Process 26,050
Increase in Finished Goods 31,450
Purchases 253,460
Conversion Cost 56,080

The direct labor costs are 65% of the factory overhead.

COMPUTE FOR:
27. Cost of Goods Manufactured
28. Cost of Goods Sold

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 SUGGESTED ANSWER KEY
I. CONCEPTUAL
A. TRUE OR FALSE
1. F; it gives the cost of goods available for 6. F; the cash disbursements journal is used
sale
2. T 7. T
3. T 8. F; freight-in is not part of the selling
expenses
4. T 9. F; two entries are needed using the
perpetual inventory system
5. T 10. F; they are still considered under
manufacturing/factory overhead
B. IDENTIFICATION
11. Statement of Cost of Goods Manufactured 14. Product Costs
(may have other name variants)
12. Period Costs 15. Purchase Discounts (Periodic) or
Merchandise Inventory (Perpetual)
13. Credit Memo
C. MULTIPLE CHOICE
16. DM 21. S
17. S 22. NONE
18. M 23. NONE; it is a direct labor cost
19. NONE 24. NONE
20. DM 25. S
II. PROBLEM SOLVING
1. 470,938 15. 55,598
2. 39,222.61 16. 33,358.80
3. 485,230 17. 209,240
4. 70,950 18. 253,060
5. 55,750 19. 261,550
6. 239,550 20. 669,218
7. 312,712.50 21. 396,551.72
8. 923,962.50 22. 166,551.72
9. 2,240,927 23. 834,730.28
10. 2,585,927 24. 1,172,000
11. 1,478,925 25. 3,723,030
12. 1,207,125 26. 3,276,266.40
13. 119,500 27. 338,140
14. 43,452 28. 306,690

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