MASTERY OF AFAR

COST ACCOUNTING CYCLE/JOB ORDER COSTING

1) PINK COMPANY INCURRED THE FOLLOWING COSTS DURING THE MONTH: DIRECT LABOR, P120,000; FACTORY OVERHEAD,
P108,000; DIRECT MATERIAL PURCHASES, P160,000. INVENTORIES SHOW THE FOLLOWING COSTS:
BEGINNING ENDING
FINISHED GOODS 27,000 30,000
WORK IN PROCESS 61,500 57,500
DIRECT MATERIALS 37,500 43,500
HOW MUCH IS THE COST OF GOODS MANUFACTURED? ________

2) LAST MONTH, PARE COMPANY PLACED P60,000 OF MATERIALS INTO PRODUCTION. THE PRINTING DEPT. USED 8,000
LABOR HOURS AT P5.60 PER HOUR AND THE BINDING DEPT. USED 4,600 HOURS AT P6.00 PER HOUR. FACTORY OVERHEAD IS
APPLIED AT THE RATE OF P6 PER LABOR HOUR IN THE PRINTING DEPT. AND P8 PER LABOR HOUR IN THE BINDING DEPT.
PARE'S INVENTORY ACCOUNTS SHOW THE FOLLOWINGBEGINNING ENDING
FINISHED GOODS 22,000 17,000
WORK IN PROCESS 15,000 17,600
MATERIALS 20,000 18,000
WHAT IS THE COST OF GOODS SOLD? __________

3) 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; OTHER FACTORY
OVERHEAD INCURRED, P37,500. THE TOTAL CONVERSION COST WAS _________

4) THE CHILDERS COMPANY MANUFACTURES WIDGETS. DURING THE FISCAL YEAR JUST ENDED, THE COMPANY INCURRED
PRIME COSTS OF P2,000,000 AND CONVERSION COSTS OF P1,800,000. OVERHEAD IS APPLIED AT THE RATE OF 200% OF
DIRECT LABOR COST. HOW MUCH OF THE ABOVE COSTS REPRESENT MATERIAL COST? _____________

5) LUNA CO'S YEAR END MANUFACTURING COSTS WERE AS FOLLOWS:

DIRECT MATERIALS AND DIRECT LABOR- P500,000 DEPRECIATION OF FACTORY BUILDING- P40,000
DEPRECIATION OF MANUFACTURING EQUIPMENT- P70,0JANITOR'S WAGES FOR CLEARING FACTORY PREMISES-
P15,000
HOW MUCH OF THESE COSTS SHOULD BE INVENTORIED FOR EXTERNAL REPORTING PURPOSES? ___________

6) WOODMAN COMPANY APPLIES FACTORY OVERHEAD ON THE BASIS OF DIRECT LABOR COSTS. BUDGET AND ACTUAL DATA
FOR DIRECT LABOR AND OVERHEAD FOR THE YEAR ARE AS FOLL BUDGET ACTUAL
DIRECT LABOR COSTS P600,000 P550,000
FACTORY OVERHEAD COSTS P720,000 P680,000
THE FACTORY OVERHEAD FOR WOODMAN FOR THE YEAR IS:
A) OVERAPPLIED BY P20,000 C) UNDERAPPLIED BY P20,000
B) OVERAPPLIED BY P40,000 D) UNDERAPPLIED BY P40,000

7) AT THE END OF LAST FISCAL YEAR, BETER COMPANY HAD THE FOLLOWING ACCOUNT BALANCES:
OVERAPPLIED OVERHP1,000 WORK IN PROCESS INVENTORY- P38,000
COST OF GOODS SOLDP980,000 FINISHED GOODS INVENTORY- P82,000
THE MOST COMMON TREATMENT OF OVERAPPLIED OVERHEAD WOULD BE:
A) PRORATE IT BETWEEN WIP INVENTORY AND FG INVENTORY C) REPORT IT AS MISCELLANEOUS REVENUE IN THE I/S
B) PRORATE IT AMONG WIP INVENTORY, FG INVENTORY AND CGSD) CREDIT IT TO COST OF GOODS SOLD

8) DURING THE CURRENT ACCOUNTING PERIOD, A MANUFACTURING COMPANY PURCHASED P70,000 OF RAW MATERIALS,
OF WHICH P50,000 OF DIRECT MATERIALS AND P5,000 OF INDIRECT MATERIALS WERE USED IN PRODUCTION. THE COMPANY
ALSO INCURRED P45,000 OF TOTAL LABOR COSTS AND P20,000 OF OTHER FACTORY OVERHEAD COSTS. AN ANALYSIS OF THE
WIP CONTROL ACCOUNT REVEALED P40,000 OF DIRECT LABOR COSTS. BASED ON THIS INFORMATION, WHAT IS THE TOTAL
AMOUNT ACCUMULATED IN THE FACTORY OVERHEAD CONTROL ACCOUNT? __________________________
9-10) HARPER CO'S JOB 501 FOR THE MANUFACTURE OF 2,200 COATS, WHICH WAS COMPLETED DURING AUGUST AT UNIT COST
PRESENTED BELOW. FINAL INSPECTION OF JOB 501 DISCLOSED 200 SPOILED UNITS WHICH WERE SOLD TO A JOBBER FOR
P9,000. DIRECT MATERIALS P30
DIRECT LABOR P18
FOH (INCLUDES AN ALLOWANCE OF P1 FOR SPOILED WP18

9)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? _______________________________
10) ASSUME THAT THE SPOILAGE LOSS IS ATTRIBUTABLE TO THE EXACTING SPECIFICATIONS OF JOB 501 AND IS CHARGED TO
THIS SPECIFIC JOB, WHAT IS THE UNIT COST OF THE GOOD COATS PRODUCED? ______________________________

11-12: The Zimco Corporation manufactures a product whose unit cost consists of P100 for materials,
P60 for labor and P80 for FOH. During the month, 200 units were spoiled.
Required: Prepare the journal entries to account for the spoiled units assuming:
11) Spoilage is chargeable to a specific order, and the spoiled units can be sold for P30 each.

12) The number of spoiled units is normal for the month and spoilage cost is to be charged against all
production. The spoiled units can be sold for P40 each.

13-14) M & P Tools has three service departments that support the production area. Outlined below is
the estimated overhead by department for the coming year:
Estimated OH No. of employees
Service departments: Receiving P25,000 2
Repair P35,000 2
Tool P10,000 1
Production Departments: Assembly 25
Bolting 12
The Repair department supports the greatest no. of departments, followed by the Tool Dept. Overhead
cost is allocated to departments based on the number of employees.
13) Using the direct method of allocation, how much of the Repair Dept;s overhead will be allocated
to the Tool Dept.? _________________________
14) Using the step down method, the allocated cost from the Repair dept. to the Tools Dept. would be____________

15-18) THE MANAGERS OF ROCHESTER MFG. COMPANY ARE DISCUSSING WAYS TO ALLOCATE THE COST OF SERVICE DEPTS. SUCH A
THE QUALITY CONTROL AND MAINTENANCE TO THE PRODUCTION DEPTS. TO AID THEM IN THE DISCUSSION, THE CONTROLLER HAS
PROVIDED THE FFG. INFORMATION: QUALITY
CONTROL MAINTENAMACHININ ASSSEMBL TOTAL
BUDGETED OH COSTS BEFORE ALLOCATIONP300,000 P250,000 P400,000 P300,000 P1,250,000
BUDGETED MACHINE HOURS 60,000 60,000
BUDGETED DIRECT LABOR HOURS 20,000 20,000
BUDGETED HOURS OF SERVICE:
QUALITY CONTROL 7,000 21,000 7,000 35,000
MAINTENANCE 10,000 18,000 12,000 40,000

15) IF THE COMPANY USES THE DIRECT METHOD OF ALLOCATING SERVICE DEPT.COSTS, THE TOTAL SERVICE COSTS ALLOCATED TO
ASSEMBLY DEPT. WOULD BE _____________________
16) IF THE COMPANY USES THE DIRECT METHOD OF ALLOCATING SERVICE DEPT.COSTS, THE TOTAL SERVICE COSTS ALLOCATED TO
MACHINING DEPT. WOULD BE _____________________
17) IF THE COMPANY USES THE STEP DOWN METHOD OF ALLOCATING SERVICE COSTS BEGINNING WITH QUALITY CONTROL, THE
MAINTENANCE COSTS ALLOCATED TO THE ASSEMBLY DEPT. WOULD BE ________________________________
17) IF THE COMPANY USES THE STEP DOWN METHOD OF ALLOCATING SERVICE COSTS BEGINNING WITH QUALITY CONTROL, THE
THE OVERHEAD RATE IN THE MACHINING DEPT. WOULD BE _______+_.
19) MARSH COMPANY HAD 150 UNITS OF PRODUCT ON HAND AT JANUARY 1 COSTING P20 EACH. PURCHASES
OF PRODUCT A DURING JANUARY WERE AS FOLLOWS:
UNITS UNIT COST
JAN. 10 200 P22
JAN.18 250 P21
JAN.28 100 P24
ISSUANCES TO PRODUCTION WERE AS FOLLOWS: JAN. 15- 180 UNITS; JAN. 24- 220 UNITS
COMPUTE FOR: a) COST OF ENDING INVENTORY OF PRODUCT A USING FIFO- _____________________
b)COST OF ENDING INVENTORY OF PRODUCT A USING WEIGHTED AVE.-____________
c) COST OF ENDING INVENTORY OF PRODUCT A USING MOVING AVERAGE-__________

20) Some selected sales and cost data for Alabama Manufacturing Company are given below:
Direct materials used- P180,000 Factory overhead (45% variable)- P90,000
Direct Labor- P200,000 Selling and administrative expenses (60% direct, 50% variable)- P160,000
Compute for: 1) Prime cost-______________________ 4) Indirect costs- _____________________
2) Conversion cost- ________________ 5) Product cost-_______________________
3) Direct costs- ____________________ 6) Variable costs- ____________________

20) THE FOLLOWING INFORMATION WAS TAKEN FROM THE RECORDS OF A MANUFACTURING COMPANY FOR THE YEAR:
Increase in raw materials inventory 30,000
Decrease in finished goods inventory 50,000
Raw materials purchased 400,000

Direct Labor payroll 200,000

Factory overhead 300,000
There was no Work in Process Inventory at the beginning nor at the end of the year. The company's cost of goods sold
amounted to _________________________

21) Orange Company manufactures textiles. Salaries and wages were:

Loom operators- P150,000 Factory foreman- P65,000 Machine mechanics- P40,000
What was the amount of Fab's direct manufacturing labor? _____________________________

22) The factory ledger of WTS Mfg. Co. contains the following account:
Work in Process
Materials 40,000 Finished goods 120,000
Labor 100,000
Overhead 80,000
The amount of materials charged to uncompleted job was P28,000. The amount of labor and
overhead charges for the uncompleted job are : Labor- _________ Overhead- ______________

23-25) Roman Company has the following information for 2021:

Total manufacturing costs P8,000,000
Cost of goods manufactured P7,920,000
Manufacturing overhead applied P3,600,000
Manufacturing overhead was applied to production at a rate of 200% of direct labor costs.
Beginning work in process inventory was P320,000.

23) What is the amount of direct labor cost for 2021?

24) What is the total cost of direct materials used in 2021?
25) What is the balance of the WIP on Dec.31, 2021?

Items 26-33:
Selected account balances for ABC Company are shown below:
Jul-01 Jul-31
Finished Goods 34,000 30,000
Work in Process 7,000 ?
Materials and supplies 20,000 15,000
Accrued Payroll 13,000 9,000
Accounts Receivable 54,000 22,000
Accounts Payable 18,000 6,000
Sales 500,000
Additional information:
a) All sales are on account
b) The A/P account is used for the purchase of materials and supplies only.
c) The company's mark up is 30% on sales.
d) At the end of July the WIP account had P2,000 of materials, P6,000 of direct labor and P3,000 of
e) Actual factory overhead costs:
Supplies 20,000
Indirect labor 55,000
Depreciation 10,000
Insurance 2,000
Miscellaneous 13,000
f) Materials and supplies purchased on account were P65,000.

Compute for:
26) Materials issued to production-_______ 30) Cost of goods sold- __________
27) Direct Labor-_______ 31) Payment of accounts payable- _______
28) Total factory overhead-________ 32) Collection of accounts receivable- ________
29) Cost of goods manufactured- ________ 33)Payment of payroll - _________

Items 34-45:
Fill In the blank:
34) Prime cost and conversion cost share what common element of total cost? _____________________________
35) Under job order costing, the ___________________ account collects the cost of materials, labor and overhead applicable to a
specific job.
36) __________________________ overhead results when actual overhead costs is less than the overhead applied to production.
37) The most common treatment of under-or-over applied overhead is to close it to ______________________________.
38) Under the __________________ inventory system, purchase of materials in recorded in the accoount "Purchases".
39 _______________________ is a kind of discount granted to customers to motivate them to pay promptly.
40) The ______________________________ of costing inventories is used for periodic inventory system, and is based on the
assumption that units issued should be charged at an average cost, such average being influenced or weighted by the number
of units acquired at each price.
41) ________________ are units that do not meet production standards and are either sold for their salvage value or discarded.
42) ______________________ are left over from the production process that has no further use or resale value and may require
cost for their disposal.
43) The _____________________________________________ is the productive capacity level that does not have provision for
either a lack of sales orders or interruptions in production (due to work stoppage, machine repairs and maintenance, set up
time, holiday, weekend, etc.)

Items
Encircle the letter of the correct answer:
44) Under an effective system of internal control, the authorization for issuing materials is made
a) by anyone in the company c) by the accounting department
b) orally d) on a prenumbered materials requisition slip
45) Which of the following is not a characteristic of job costing?
a) each job is distinguishable from other jobs c) it is not possible to compare actual costs with estimated costs
b) identical units are produced on an ongoing basis d) job cost data are used for setting prices and bidding prices

46) The unit cost of a product, under job order costing, can be determined only
a) at the end of the manufacturing process c) at the end of the month
b) upon completion of a job d) at a point in time

47) A manufacturing company reports cost of goods manufactured as

a) a current asset on the balance sheet c) a component in the calculation of CGS
b) an administrative expense on the income statement d) a component of the raw materials inventory on the balance sheet

48) Cost of goods manufactured in a manufacturing company is analogous to

a) ending inventory in a merchandising company c) cost of goods available for sale in a merchandising company
b) beginning inventory in a merchandising company d) cost of goods purchased in a merchandising company

49) If the amount of Cost of goods manufactured during a period exceeds the amount of total manufacturing cost for the period,
then: a) ending WIP inventory is greater than or equal to the amount of the beginning work in process inventory
b) ending work in process is equal to the cost of goods manufactured
c) ending work in process is less than the amount of the beginning work in process inventory
d) ending work in process is greater than the amount of the biginning work in process inventory

50) THERE ARE SEVERAL ALTERNATIVE DENOMINATOR MEASURES FOR APPLYING OVERHEAD. WHICH IS NOT COMMONLY
USED? a) direct labor hours b) direct labor cost c) machine hours d) sales value of product produced

51) WHEN THE AMOUNT OF OVERAPPLIED FACTORY OVERHEAD IS SIGNIFICANT, THE ENTRY TO CLOSE OVERAPPLIED FOH WILL
MOST LIKELY REQUIRE:
a) a debit to CGS c) a credit to CGS
b) debits to CGS, FG Inventory and WIP inventory d) credits to CGS, FG inventory and WIP inventory

52) UNDER JOB ORDER COST ACCUMULATION, THE FACTORY OVERHEAD CONTROL ACCOUNT CONTROLS:
a) factory overhead analysis sheets c) cost reports by processes
b) job order cost sheets d) material inventories

53) SUPPLIES NEEDED FOR USE IN THE FACTORY ARE ISSUED ON THE BASIS OF:
a) job cost sheets b) materials requisitions c) time tickets d) factory OH analysis sheets

54)For a manufacturing concern , the cost of goods available for sale during a given accounting period is
a) the beginning inventory c) the sum of (a) and (b)
b) the cost of goods manufactured during the period d) none of the given

55) IN A TRADITIONAL JOB ORDER COST SYSTEM, THE ISSUANCE OF SUPPLIES TO A PRODUCTION DEPARTMENT INCREASES:
a) stores control b) WIP control c) FOH control d) Factory Overhead Applied

56) A DIRECT LABOR OVERTIME PREMIUM SHOULD BE CHARGED TO A SPECIFIC JOB WHEN THE OVERTIME IS CAUSED BY
a) increased overall level of activity d) management's requirement that the job be completed
b) customer's requirement for early completion of the job before the annual factory vacation closure
c) management's failure to include the job in the production schedule

57) UNDER THE JOB ORDER COST SYSTEM, THE PESO AMOUNT OF THE GENERAL LEDGER ENTRY INVOLVED IN THE TRANSFER
OF INVENTORY FROM WIP TO FG IS THE SUM OF COSTS CHARGED TO ALL JOBS:
a) started in process during the period c) completed and sold during the period
b) in process during the period d) completed during the period
58) A COMPANY IS MORE LIKELY TO USE A JOB ORDER COST SYSTEM IF
a) it manufactures a large volume of similar products c) it manufactures products with unique characteristics
b) its production is continuous ) it uses a periodic inventory system

59) WHEN A MANUFACTURING COMPANY HAS A HIGHLY AUTOMATED PLANT PRODUCING MANY DIFFERENT PRODUCTS,
PROBABLY THE MOST APPROPRIATE BASIS OF APPLYING FACTORY OVERHEAD COSTS TO WIP IS:
a) units processed b) machine hours cP direct labor hours d) direct labor costs

60) IN A MANUFACTURING CONCERN, THE COST OF DIRECT MATERIALS, DIRECT LABOR AND FACTORY OVERHEAD
MUST FIRST FLOW THROUGH THE:
a) finished goods account c) work in process account
b) cost of goods sold account d) cost of goods manufactured account

Problem:
ABC Company uses job order costing and applies overhead based on direct labor hours, Any underapplied or overspplied overhead is adjustef
directly to cost of goods sold at the end of each month. On April 1, job cost sheets indicated the following:
Job 201 Job 202 Job 203 Job 204
Direct Materials 3,590 2,000 1,480 2,000
Direct Labor 2,700 1,500 1,000 1,200
Applied overhead 2,160 1,200 800 960
Job status Finished In process In process In process

On April 30, finished goods contained Job 204 and Job 207, which had the following total costs:
Job 204 Job 207
Direct Materials 2,970 2,450
Direct Labor 2,200 1,900
Applied overhead 1,760 1,520

Besides working on Jobs 204 and 207 in April, ABC continued work on Jobs 202 and 203 and started work on Hobs 205 and 206. A summary of
direct maaterials used and direct labor hours worked on Jobs 202,203, 205 and 206 during April showed the following:
Job 202 Job 203 Job 205 Job 206
Direct Materials P1,250 P555 P2,500 P1,980
Direct Labor hours 100 75 105 50
Other information:
a) Ob April 30, the only jobs still in process were Job 203 and Job 206.
b) Al workers are paid P20 per hour. Wage rates have been stable throughout the year.
c) ABC maintains only one raw materials account (Materials control) from which it issues both direct and indirect materials. The balance in
this account was P2,750 on April 1.
d) Other items in April: Depreciation of facttory equipment 1,375
Raw Materials purchased 11,500
Indirect Labor 2,500
Factory rent and utilities 2,700
Indirect materials used 2,790
Required: Prepare a cost of goods sold statement for April.
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