Problem 1

The manufacturing operations of Seeley, Inc. had the following balances for the month of
January:
January 1 January 31
Raw materials P12,000 P13,000
Work in process 21,000 23,000
Finished goods 14,000 16,000

Seeley transferred P250,000 of completed goods out of work in process during January.

Instructions
Compute the cost of goods sold for January.
Problem 2
A selected list of accounts used by Sloan Manufacturing Company follows:
Code Code
A Cash F Accounts Payable
B Accounts Receivable G Factory Labor
C Raw Materials Inventory H Manufacturing Overhead
D Work In Process Inventory I Cost of Goods Sold
E Finished Goods Inventory J Sales

Sloan Manufacturing Company uses a job order system and maintains perpetual inventory
records.

Instructions
Place the appropriate code letter in the columns indicating the appropriate account(s) to be
debited and credited for the transactions listed below.
—————————————————————————————————————————
——
Account(s)
Account(s)
Transactions Debited Credited
—————————————————————————————————————————
——
1. Raw materials were purchased on account.
—————————————————————————————————————————
——
2. Issued a check to Estes Machine Shop for
repair work on factory equipment.
—————————————————————————————————————————
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3. Direct materials were requisitioned for Job 280.
—————————————————————————————————————————
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4. Factory labor was paid as incurred.
—————————————————————————————————————————
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5. Recognized direct labor and indirect labor used.
Problem 2 (cont.)
Account(s)
Account(s)
Transactions Debited Credited
—————————————————————————————————————————
——
6. The production department requisitioned indirect
materials for use in the factory.
—————————————————————————————————————————
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7. Overhead was applied to production based on a
predetermined overhead rate of $8 per labor hour.
—————————————————————————————————————————
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8. Goods that were completed were transferred to
finished goods.
—————————————————————————————————————————
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 9. Goods costing $80,000 were sold for $105,000
on account.
—————————————————————————————————————————
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10. Paid for raw materials purchased previously
on account.
—————————————————————————————————————————
——
Problem 3
Finn Manufacturing Company uses a job order cost accounting system and keeps perpetual
inventory records. Prepare journal entries to record the following transactions during the month
of June.

June 1 Purchased raw materials for P25,000 on account.

8 Raw materials requisitioned by production:

Direct materials P8,000
Indirect materials 1,000

15 Paid factory utilities, P2,100 and repairs for factory equipment, P3,000.

25 Incurred P78,000 of factory labor.

25 Time tickets indicated the following:

Direct Labor (4,500 hrs × P12 per hr) = P54,000
Indirect Labor (3,000 hrs × P8 per hr) = 24,000
P78,000

25 Applied manufacturing overhead to production based on a predetermined

overhead rate of P9 per direct labor hour worked.

28 Goods costing P18,000 were completed in the factory and were transferred to
finished goods.

30 Goods costing P15,000 were sold for P20,000 on account.

Problem 4
Selected accounts of Kosar Manufacturing Company at year end appear below:

RAW MATERIALS INVENTORY WORK IN PROCESS INVENTORY

(a) 40,000 (d) 25,000 (d) 25,000 (g) 140,000
(e) 60,000
(f) 90,000

FINISHED GOODS INVENTORY COST OF GOODS SOLD

(g) 140,000 (h) 120,000 (h) 120,000

FACTORY LABOR MANUFACTURING OVERHEAD

(b) 110,000 (e) 85,000 (c) 75,000 (f) 90,000
(e) 25,000

Instructions
Explain the probable transaction that took place for each of the items identified by letters in
the accounts. For example:
(a) Raw materials costing P40,000 were purchased.
Problem 5
Sardin Company begins the month of March with P17,000 of work in process costs from Job
324. Information from job cost sheets shows the following additional costs assigned during
March, April, and May of 2008:
Manufacturing Costs Assigned
Job No. March April May
324 P26,000
325 18,000 P23,000 P15,000
326 41,000 11,000
327 16,000 31,000
328 24,000 46,000

Job 324 was completed in March. Jobs 325 and 327 were completed in May, and Job 326
was completed in April. Jobs are sold during the month after completion. Total revenue for
jobs sold during the 3-month period is P145,000.

Instructions
Calculate the balances of the work in process and finished goods inventory accounts at the
end of May.

Problem 6
The gross earnings of factory workers for Dinkel Company during the month of January are
P250,000. The employer's payroll taxes for the factory payroll are P30,000. Of the total
accumulated cost of factory labor, 75% is related to direct labor and 25% is attributable to
indirect labor.

Instructions
(a) Prepare the entry to record the factory labor costs for the month of January.
(b) Prepare the entry to assign factory labor to production.
(c) Prepare the entry to assign manufacturing overhead to production, assuming the
predetermined overhead rate is 125% of direct labor cost.
Problem 7
Darden Manufacturing uses a job order cost accounting system. On April 1, the company has
Work in Process Inventory of P7,600 and two jobs in process: Job No. 221, P3,600, and Job
No. 222, P4,000. During April, a summary of source documents reveals the following:
For Materials Requisition Slips Labor Time Tickets
Job No. 221 P2,200 P 3,600
222 1,700 3,200
223 2,400 2,900
224 2,100 2,800
General use 600 400
Totals P9,000 P12,900

Darden applies manufacturing overhead to jobs at an overhead rate of 60% of direct labor
cost. Job No. 221 is completed during the month.

Instructions
(a) Prepare summary journal entries to record the raw materials requisitioned, factory labor
used, the assignment of manufacturing overhead to jobs, and the completion of Job No.
221.
(b) Calculate the balance of the Work in Process Inventory account at April 30.

Problem 8
Manufacturing cost data for Dolan Company, which uses a job order cost system, are
presented below:
Case A Case B
Direct Materials Used (a) P103,000
Direct Labor P 70,000 130,000
Manufacturing Overhead Applied 56,000 (d)
Total Manufacturing Costs 230,000 (e)
Work in Process, 1/1/08 (b) 45,000
Total Cost of Work in Process 290,000 (f)
Work in Process, 12/31/08 (c) 40,000
Cost of Goods Manufactured 210,000 (g)
Instructions
Indicate the missing amount for each letter. Assume that overhead is applied on the basis of
direct labor cost and that the rate is the same for both cases.
Problem 9
Farr Corporation had the following transactions during its first month of operations:
1. Purchased raw materials on account, P85,000.
2. Raw Materials of P30,000 were requisitioned to the factory. An analysis of the materials
requisition slips indicated that P6,000 was classified as indirect materials.
3. Factory labor costs incurred were P125,000 of which P100,000 pertained to factory wages
payable and P25,000 pertained to employer payroll taxes payable.
4. Time tickets indicated that P104,000 was direct labor and P21,000 was indirect labor.
5. Overhead costs incurred on account were P112,000.
6. Manufacturing overhead was applied at the rate of 150% of direct labor cost.
7. Goods costing P135,000 are still incomplete at the end of the month; the other goods were
completed and transferred to finished goods.
8. Finished goods costing P100,000 to manufacture were sold on account for P130,000.

Instructions
Journalize the above transactions for Farr Corporation.

Problem 10
Lando Company reported the following amounts for 2008:
Raw materials purchased P103,000
Beginning raw materials inventory 5,200
Ending raw materials inventory 4,500
Beginning finished goods inventory 7,600
Ending finished goods inventory 8,000
Direct labor used 25,000
Manufacturing overhead costs applied 36,000
Beginning work in process inventory 6,100
Ending work in process inventory 6,300

Instructions
Calculate (a) the cost of materials used in production and (b) total manufacturing costs.
Problem 11
Watson Manufacturing Company employs a job order cost accounting system and keeps
perpetual inventory records. The following transactions occurred in the first month of
operations:
1. Direct materials requisitioned during the month:
Job 101 P22,000
Job 102 20,000
Job 103 24,000
P66,000

2. Direct labor incurred and charged to jobs during the month was:
Job 101 P30,000
Job 102 35,000
Job 103 25,000
P90,000

3. Manufacturing overhead was applied to jobs worked on using a predetermined overhead

rate based on 80% of direct labor costs.

4. Actual manufacturing overhead costs incurred during the month amounted to P76,000.

5. Job 101 consisting of 1,000 units and Job 103 consisting of 200 units were completed
during the month.

Problem 11 (cont.)
Instructions
(a) Prepare journal entries to record the above transactions.
(b) Answer the following questions:
1. How much manufacturing overhead was applied to Job 103 during the month?
2. Compute the unit cost of Jobs 101 and 103.
3. What is the balance in Work In Process Inventory at the end of the month?
4. Determine if manufacturing overhead was under- or overapplied during the month.
How much?