BA 314 MODULE 3 QUIZ

1. Play Labs develops 35mm film using a four-step process that moves progressively
through four departments. The company specializes in overnight service and has the
largest drugstore chain as its primary customer. Currently, direct labor, direct materials
and overhead are accounted for by the department. The cost accumulation system that
best describes the system Play Labs is using is:
a. Process costing
b. Operation costing
c. Activity based costing
d. Job order costing
Answer: A

2. Panther Company incurred the following costs during the month: direct labor: P120,000;
factory overhead: P108,000; and direct materials purchases: P160,000. Inventories
show the following costs:

Beginning Ending

Finished goods P27,000 P30,000

Work in progress 61,500 57,500

Direct materials 37,500 43,500

How much is the cost of goods manufactured?

a. P386,000
b. P443,500
c. P382,000
d. P388,000

Answer: A

Solution:

Beginning Raw Materials Inventory 37,500.00

Add: Cost of Raw Materials Purchased 160,000.00
Total Raw Materials Available 197,500.00
Less: Ending Raw Materials Inventory 43,500.00
Total Raw Materials Used 154,000.00
Add: Direct Labor 120,000.00
Add: Manufacturing Overhead 108,000.00
Total Manufacturing Costs 382,000.00

Add: Beginning Work in Process Inventory 61,500.00

Less: Ending Work in Process Inventory 57,500.00
Cost of Goods Manufactured 386,000.00

3. Which of the following is not a characteristic of job order costing?

a. Identical units are produced on an ongoing basis
b. Each job is distinguishable from other jobs
c. Costs of various jobs are kept separate during manufacturing
d. Job cost data are used for setting prices

Answer: A

4. Tarzan Co. employs a job order cost system. Its manufacturing activities in July 2021 are
summarized as follows:

Job Numbers

1201 1202 1203 1204

Direct materials P7,000 P5,800 P11,600 P5,000

Direct labor costs P6.600 P6,000 P8,400 P2,400

Direct labor hours 1,100 1,000 1,400 400

Factory overhead is applied at a rate of P5 per direct labor hour. Jobs 1201, 1202 and
1203 were completed in July 2021.

What is the cost of completed jobs?

a. P62,900
b. P62,500
c. P72,900
d. P65,900

Answer: A

Solution:
 1201 1202 1203 Total
Direct materials 7,000.00 5,800.00 11,600.00 24,400.00
Direct labor 6,600.00 6,000.00 8,400.00 21,000.00
Applied Factory Overhead
1201: 1,100 * (2+3) 5,500.00 5,500.00
1202: 1,000 * 5 5,000.00 5,000.00
1203: 1,400 * 5 7,000.00 7,000.00
Cost of completed jobs 62,900.00

5. The following selected information pertains to Ajax Processing Co.: direct materials: P62,500;
indirect materials: P12,500; factory payroll: P75,000 of direct labor and P11,250 of indirect labor;
and other factory overhead incurred: P37,500.

The total conversion cost was:

a. P136,250
b. P137,500
c. P250,000
d. P273,750

Answer: A

Solution:

Direct labor 75,000.00

Factory overhead
Indirect materials 12,500.00
Indirect labor 11,250.00
Other factory overhead 37,500.00 61,250.00
Total conversion cost 136,250.00

6. A company had the following total usage of direct labor and direct materials:

Hours Pounds

Direct Labor (P8 per hour) 400

 Direct Materials (P10 per pound) 300

Incomplete Job #101 has used 20 hours of direct labor and 8 pounds of direct materials. Factory
overhead is applied at the rate of 200% per direct labor peso. What is the balance in
Work-in-Progress Inventory relating to Job #101?

a. P560 debit
b. P560 credit
c. P12,600 debit
d. P12,600 credit

Answer: A

Solution:

Work in progress, end (Job 101)

Direct materials (P10/hr * 8 lbs) 80.00
Direct labor (P8/hr * 20 hours) 160.00
Applied factory overhead (P160 * 200%) 320.00
Total 560.00

7. Bronson Company, which had 6,000 units in work-in-progress at January 1 that were 60%
complete as to conversion costs. During January, 20,000 units were completed. At January 31,
8,000 units remained in WIP which were 40% complete as to conversion costs. Materials are
added at the beginning of the process.

Using the weighted average method, the equivalent units for January for conversion costs were:

a. 23,200
b. 19,600
c. 22,400
d. 25,600

Answer: A
 Solution:

Quantity Schedule Actual Work Done EU - Conversion Costs

In process, beginning 6,000.00

Started in process (28,000 - 6,000) 22,000.00
28,000.00

Accounted for as follows:

Finished and transferred 20,000.00 100% 20,000.00
In process, ending 8,000.00 40% 3,200.00
28,000.00 23,200.00

8. Maurice Company adds materials at the beginning of the process in the Forming Department,
which is the first of two stages of its production cycle. Information concerning the materials used
in the Forming Department in April is as follows:

Units Materials Costs

Work in progress, April 1 12,000 P6,000

Units started 100,000 P51,120

Units completed and transferred to next 88,000

department

Using the weighted average method, what was the materials cost of WIP on April 30?

a. P12,240
b. P6,120
c. P11,040
d. P12,000

Answer: A
 Solution:

Quantity Schedule Actual Work Done EU - Materials

In process, beginning 12,000.00

Started in process 100,000.00
112,000.00

Accounted for as follows:

Finished and transferred 88,000.00 100% 88,000.00
In process, ending 24,000.00 100% 24,000.00
112,000.00 112,000.00

Cost per unit

= (6,000 + 51,120) / 112,000

= 0.51

Cost of in process, ending

= 0.51 * 24,000
= 12,240

9. The following data refer to the units processed by the grinding department for a recent month.

Beginning work-in-progress 12,000

Units started 200,000

Units completed 192,000

Ending work-in-progress 20,000

The beginning work-in-progress was 60% complete and the ending work-in-progress is 70%
complete. What are the equivalent units of production for the month?

a. FIFO: 198,800, Average: 206,000

 b. FIFO: 206,000, Average: 198,800
c. FIFO: 206,000, Average: 206,000
d. FIFO: 198,800, Average: 198,800

Answer: A

Solution:

Quantity Schedule Actual Work Done EU

In process, beginning 12,000.00

Started in process 200,000.00
212,000.00

Accounted for as follows - FIFO:

In process, beginning 12,000.00 40% 4,800.00
Started (192,000 - 12,000) 180,000.00 100% 180,000.00
In process, ending 20,000.00 70% 14,000.00
212,000.00 198,800.00

Accounted for as follows - Average:

Finished and transferred 192,000.00 100% 192,000.00
In process, ending 20,000.00 70% 14,000.00
212,000.00 206,000.00

10. The following data for the month of September were taken from the cost records of
Department 1 of Pro-Leaf Products which uses process costing system:

Beginning inventory of work in process

Units (with all materials added and 50% of labor 500 units
and overhead)

Costs

Materials P2,400

Labor 1,500
 Factory Overhead 760

Put into production

Units 5,000 units

Costs

Materials P25,100

Labor 19,380

Factory Overhead 14,900

Completed and transferred 4,800 units

Ending inventory of work in process

Units (will all materials added and 60% of labor 700 units
and overhead)

Compute for the total cost per equivalent unit (rounded to the nearest centavo)

a. FIFO: P11.92, Average: P12.00

b. FIFO: P11.92, Average: P11.92
c. FIFO: P12.00, Average: P11.92
d. FIFO: P12.00, Average: P12.00
Answer: A

Solution:

EU -
Quantity Schedule Actual Work Done Materials Work Done EU - Conversion Costs

In process, beginning 500.00

Started in process 5,000.00
5,500.00

Accounted for as follows -

FIFO:
In process, beginning 500.00 0.00 50% 250.00
Started (4,800 - 500) 4,300.00 100% 4,300.00 100% 4,300.00
In process, ending 700.00 100% 700.00 60% 420.00
5,500.00 5,000.00 4,970.00
Accounted for as follows -
Average:
Finished and transferred 4,800.00 100% 4,800.00 100% 4,800.00
In process, ending 700.00 100% 700.00 60% 420.00
5,500.00 5,500.00 5,220.00

Cost per EU, FIFO: Materials Conversion Costs Total

Cost added during September 25,100.00 34,280.00
Divided by EU 5,000.00 4,970.00
5.02 6.90 11.92

Cost per EU, Average: Materials Conversion Costs Total

In process, beginning 2,400.00 2,260.00
Cost added during September 25,100.00 34,280.00
Total 27,500.00 36,540.00
Divided by EU 5,500.00 5,220.00
5.00 7.00 12.00