1.

Department II of Charity Manufacturing Company presents the

following production data for the month of May, 2001:

Opening Inventory, 3/8 completed ……………………. 4,000 units

Started in process ………………………………………… 13,000 units
Transferred ……………………………………………….. 9,000 units
Closing inventory, ½ completed …………………………. 4,000 units
¾ completed ………………………….. 4,000 units

What are the equivalent units of production for the month of May,
2001 using average?
a. 13,000 units b. 12,500 units c. 14,000
d. 15,000
C
Answer: 
C. 14,000
Equivalent unit of production = Transferred unit + Closing inventory

Transferred unit = 9,000

2. Walden Company has a process cost system. All materials are

introduced at the beginning of the process in Department One. The
following information is available for the month of January 2001:

Work-in-Process, 1/1/2001 (40% complete as to conversion

costs) … 500
Started in January …………………………………………….
2,000
Transferred to Department Two during January ……………..
2,100
Work-in-process, 1/31/2001 (25% complete as to conversion
costs) …… 400

What are the materials equivalent units of production for the month
of January 2001 using average method?
a. 1,900 b. 2,000 c. 2,200
d. 2,500
D
Answer: d .
Computing equivalent units of production for materials:
= (Units completed and transferred out x Completion percentage for materials) + (Units in ending work-in
process x Completion percentage for materials)
= (2,100 x 100%) + (400 x 100%)
3. Department A is the first stage of Mann Company’s production
cycle. The following information is available for conversion costs for
the month of April 2001:

Units
Work-in-process, beginning (60% complete) ……………………….
20,000
Started in April ………………………………………………………..
340,000
Completed in April and transferred to department B ……………….
320,000
Work-in-process, ending (40% complete) …………………………..
40,000

Using fifo method, the equivalent units for the conversion cost
calculation are:
a. 324,000 b. 336,000 c. 340,000 d.
360,000
A
4. Bart Co. adds materials at the end of the process in Department
M. The following information pertain to Department M’s work-in-
process during April:

Units
Work in process, April 1 …(60% complete as to conversion cost)
…………………………. 3,000
Started in April ………………………………………………………
25,000
Completed………………………………………………………… …
20,000
Work-in-process, April 30
(75% complete as to conversion cost) …………………………..
8,000

What are the equivalent units of production for the month of April
using average?
Materials Conversion Materials Conversion
a. 28,000 28,000 c. 20,000
26,000
b. 26,000 26,000 d. 26,000
20,000
C
Answer: c .
To compute the EUP, we add beginning inventory, units started and completed, and ending inventory. The
number of units completed is 20,000, and the beginning inventory is 3,000, which means that the units
started and completed is 17,000 (20000 - 3000). This will be true for either material and conversion cost.
Since materials are added at the end of production, then there is no material for ending inventory. For
conversion cost, it is 75% complete:

5. Sussex Corporation’s production cycle starts in the Mixing

Department. The following information is available for April:

Units
WIP, April 1 (50% complete) …………………………………..
40,000
Started in April ………………………………………………….
240,000
WIP, April 30 (60% complete) ………………………………….
25,000

Materials are added at 55% stage of completion in the Mixing

Department. What are the equivalent units of production for the
month of April using fifo?
Materials Conversion Materials Conversion
a. 280,000 250,000 c. 280,000 280,000
b. 250,000 280,000 d. 270,000 270,000
A
6. On September 30, work-in-process totaled 9,000 units 60%
complete (based on conversion costs added uniformly throughout
the department and material added at the start of the process). A
total of 100,000 units were transferred to the next department
during October. On October 31, a total of 8,000 units 40%
complete (based on conversion costs) were still in process in
Department A.

Using the weighted – average cost flow method, which of the

following equivalent units should be used in the calculation on costs
for October?

Equivalent Units
Transfer Materials Conversio
Costs n
a. 108,000 100,000 103,200
b. 108,000 100,000 100,000
c. 108,000 108,000 103,200
d. 109,000 101,000 104,200
C
7. BWIP was 60% complete as to conversion costs, and EWIP was
45% complete as to conversion costs. The peso amount of the
conversion cost included in EWIP (using the weighted average
 method) is determined by multiplying the average unit conversion
cost by what percentage of the total units in EWIP?

a. 100% b. 60% c. 55%

d. 45%
D
8. The following data refer to the units processed by the grinding
department for a recent month.

Beginning WIP ………………………………………………….. 12,000

Units started …………………………………………………….. 200,000
Units completed …………………………………………………. 192,000
Ending WIP ……………………………………………………… 20,000

The beginning work-in-process was 60% complete and the ending

work-in-process is 70% complete. What are the equivalent units of
production for the month?

FIFO Average FIFO Average

a. 206,000 198,800 c. 206,000 206,000
b. 198,800 206,000 d. 198,800 198,800
B
9. Kew Co. had 3,000 units in work-in-process at April 1 which
were 60% complete as to conversion cost. During April, 10,000
units were completed. At April 30, 4,000 units remained in work-in-
process which were 40% complete as to conversion cost. Direct
materials are added at the beginning of the process. How many
units were started during April?
a. 9,000 b. 9,800 c. 10,000
d. 11,000
D
Answer: d .
Calculated of number units started during the month of April:
It is determined by the number of completed units in the month of April minus the number of units started
production before the month of April plus the number of units started producing this year but remains
uncompleted.
= 10,000 - 3,000 + 4,000

10. If 100 units are 70% complete, 30 units 60%, complete, 200
units 40% complete, and 60 units 5% complete, how many EUP
have been produced?
a. 70 b. 171 c. 175
d. 390
B
Answer: b .
Answer: Option b is correct.
Rationale: Computation of equivalent units of production:
Units Completion percentage of Equivalent units
100 70% 100 x 70% = 70

1. Data pertaining to Lam Co.s’ manufacturing operations:

Inventories 4/1 4/30
Direct materials P18,000 P15,000
WIP 9,000 6,000
Finished Goods 27,000 36,000
Additional information for the month of April:
Direct materials purchased P42,000
Direct labor payroll 30,000
Direct labor rate per hour 7.50
Factory overhead rate per direct labor hour 10.00
For the month of April, cost of goods manufactured was:
a. P118,000 b. P115,000 c. P112,000
d. 109,000
A
2. Avery Co. uses a predetermined factory overhead rate based on
direct labor hours. For the month of October Avery budgeted
overhead was P300,000 based on a budgeted volume of 100,000
direct hours. Actual overhead amounted to P325,000 with actual
direct labor hours totaling 110,000. How much was the overapplied
or underapplied overhead?
a. P30,000 overapplied c. P5,000 overapplied
b. 30,000 underapplied d. 5,000 underapplied
C
3. Harper Co.’s Job 501 for the manufacture of 2,200 coats, which
was completed during August at the unit costs presented below.
Final inspection of Job 501 disclosed 200 spoiled coats which were
sold to a jobber for P6,000.
Direct materials
P20
Direct labor
18
Factory overhead (includes an allowance of P1 for spoiled work)
18

P56
Assume that spoilage loss is charged to all production during August.
What would be the unit cost of the good coats produced on Job 501?
a. P53.00 b. P55.00 c. P56.00
d. 58.60
C
4. Using the same information in No. 13 assume instead that the
spoilage loss is attributable to the exacting specifications of Job 501
 and is charged to this specific job. What would be the unit cost of
the good coats produced on Job 501?
a. P55.00 b. P57.50 c. P58.60
d. 61.60
B
5. Under Heller Company’s job order cost system, estimated costs
of defective work (considered normal in the manufacturing process)
are included in the predetermined factory overhead rate. During
March, Job No. 210 for 2,000 hand saws was completed at the
following costs per unit:
Direct materials P5
Direct labor 4
Factory overhead (applied at 150% of direct labor cost
6
P15
Final inspection disclosed 100 defective saws, which were reworked at
a cost of P2 per unit for direct labor, plus overhead at the
predetermined rate. The defective units fall within the normal range.
What is the total rework cost and to what accounts should it be
charged?
a. P200 to WIP
b. P200 to factory overhead control
c. P500 to WIP
d. P500 to factory overhead control
D
11. Hamilton Company uses job order costing. Factory overhead is
applied to production at a determined rate of 150% of direct-labor
cost. Any over-or under applied factory overhead is closed to the cost
of goods sold account at the end of each month. Additional information
is available as follows:
 Job 101 was the only job in process at January 31,
2001, with accumulated costs as follows:
Direct materials P4,000
Direct labor 2,000
Applied factory overhead 3,000
P9,000
 Jobs 102, 103 and 104 were started during
February.
 Direct materials requisitions for February totaled
P26,000.
 Direct-labor cost of P20,000 was incurred for
February.
 Actual factory overhead was P32,000 for February.
  The only job still in process at February 28, 2001
was Job 104, with costs P2,800 for direct materials and P1,800
for direct labor.
The cost of goods manufactured for February 2001 wwas:
a. P77,700 b. P78,000 c. P79,700 d.
85,000
A
12. Using the same information No. 11, any over-or under applied
factory overhead should be closed to the cost of goods sold account at
February 28, 2001, in the amount of
a. P700 overapplied c. P1,700 underapplied
b. 1,000 overapplied d. 2,000 underapplied
D
13. Simpson Company manufactures electric drills to the exacting
specifications of various customers. During April 2001, Job 203 for the
production of 1,100 drills was completed at the following costs per
unit:
Direct materials P10
Direct labor 8
Applied factory overhead 12
Total P30
Final inspection of Job 403 disclosed 50 defective units and 100 spoiled
units. The defective drills were reworked at a total cost of P500, and
the spoiled drills were sold to a jobber for P1,500. What would be the
unit cost of the good units produced on Job 403?
a. P33 b. P32 c. P30
d. 29
B
Answer: b .
Production unit = 1,100 drills
Direct material = P 10
Direct labor = P 8
Factory overhead cost = P 12

14. Ajax Corporation transferred P72,000 of raw materials to its

production department to its production department in February and
incurred P37,000 of conversion costs )P22,000 of direct labor and
P15,000 of overhead). At the beginning of the period, P14,000 of
inventory (material and conversion costs) was in process. At the end
of period, P18,000 of inventory was in process. What was the cost of
goods manufactured?
a. P105,000 b. P109,000 c. P123,000
d. 141,000
A
15. Carley Products has no work-in-process or finished goods
inventories at the close of business on December 31, 2001. The
balances of Carley’s accounts as of December 31, 2001 are as follows:
Cost of goods sold P2,040,000
General selling and administrative expenses 900,000
Sales 3,600,000
Factory overhead control 700,000
Factory overhead applied 648,000
Carley Products income before income taxes 2001 is:
a. P660,000 b. P608,000 c. P712,000
d. 1,508,000
B
Answer: a .
Carley Products income before the income taxes 2001 will be calculated as follows:
Income = Sales - Cost of goods sold - General selling and administrative expenses
= 3,600,000 - 2,040,000 - 900,000
= P660,000