Job Order Costing

Job Order Costing

Pre-test

1.

Pink 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 process . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .P61,500 P57,500 Direct materials . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .P37,500 P 43,500 How much is the cost of goods manufactured? a. P443,500 b. P382,000 c. P386,000 d. P388,000 C 2. National Marketing Corp. uses a job-order costing system. It has three production departments, X, Y, and Z. The manufacturing cost budget for 2001 is as follows: Direct Materials Direct Labor Manufacturing overhead

Dept. X P600,000 200,000 600,000

For job No. 01-90 which completed in 2001, cost was s follows: Dept. X Dept. Y Dept. Z The corporation applies manufacturing overhead using departmental rates predetermined at the cost budget.

Dept. Y P400,000 500,000 100,000

Dept. Z P200,000 400,000 200,00

direct materials cost was P75,000 and direct labor P40,000 100,000 20,000 to each job order on the basis of direct labor cost, beginning of eh year based on the manufacturing

The total manufacturing cost of Job No. 01-90 which was completed is 2001 is: C 3.

a. P235,000

b. P310,000

c. 385,000

d. 150,000

Vat Corporation manufactures rattan furniture sets for export and uses the job order cost system an accounting for its costs. You obtained from the corporation’s books and records the following information for the year ended December 31, 2001: - The work in process inventory on January 1 was 20% less than the work in process inventory on December 31. -

The total manufacturing costs added during 2001 was P900,000 based on actual direct materials and direct labor but with manufacturing overhead applied on actual direct labor pesos

-

The manufacturing overhead applied to process was 72% of the direct labor pesos, and it was equal to 25% of the total manufacturing costs.

The cost of goods manufactured, also based on actual direct materials, actual direct labor and applied manufacturing overhead, was P850,000. The cost of direct materials used and the work-in-process inventory on December 31, 2001: Direct Materials WIP Used Inventory, 12/31/2001 a. P1,075,000 P200,090 b. 362,500 250,000 c. 312,500 250,000 d. 312,500 275,000 B 4. The Fork Corporation manufactures one product and accounts for cost by a job-order cost system. You have obtained the following information for the year ended December 31, 2001 from the corporation’s books and records: -

Total manufacturing cost added during 2001 Based on actual direct materials, actual Direct labor and applied factory overhead On actual direct labor cost

P1,000,000

Cost of goods manufactured based on actual Direct materials and direct labor and Applied factory overhead

970,000

Applied factory overhead to work in process Based on direct labor cost Applied factory overhead for the year, based On total manufacturing cost

75% 27%

Beginning work in process inventory was 80% of ending work in process inventory. Compute the cost of direct materials used for year ended December 31, 2001. a. P370,000

b. P970,000

c. P990,000

d. 970,500

A 5.

The following information were taken from the accounting records of Yanni Music Company for 2001: Increase in raw materials inventory 45,000 Decrease in finished goods inventory 150,000 Raw materials purchases 1,290,000 Direct labor payroll 600,000 Factory overhead 900,000 Freight Out 135,000 The cost of raw materials used during the period amounted to: a. P1,245,000

b. P1,290,000

c. P1,335,000

d. 1,380,000

A 6.

Handy Crafts manufactures to customers specifications. The company uses a job order cost system and, for the month of May, 2001 summarized the following information: Beginning work in process inventory (five partially completed jobs) P300,000 Orders completed (eighteen) 2,400,000 Orders shipped out (fourteen) 2,000,000 Materials requisitioned 1,700,000 Direct labor cost 800,000 Overhead = 150% of direct labor cost. The month-end work in process inventory was: a. P700,000 b. P800,000 c. P1,400,000 d. 1,600,000 D 7. Ambo, Inc. manufactured 50,000 kilos of compound Am in 2001 at the following costs: Opening work in process of P88,125. Materials of P182,500 of which 90% is direct materials. Labor of P242,500 of which 93% is direct labor Closing work in process of P67,500. Factory overhead is 125% of direct labor cost and includes indirect materials and indirect labor. The cost of goods manufactured is: a. P651,056 B 8.

b. P692,306

c. P706,906

d. 727,531

Burger Co.’s materials purchased during 2001 are P25,590 and materials put into production are indirect and direct materials, respectively, worth P18,500 and P7,090. The total factory payroll is P74,000 of which P50,000 represents direct labor. Other factory overhead costs amount to P32,000. The company applies the actual factory overhead cost to process. Sales cost of goods sold, and the cost of goods manufactured, respectively, are P128,000.

By what amount did the company’s closing goods, in process inventory exceed its opening goods in process inventory? a. P1,590 b. P3,590 c. P5,390 d. 10,590 B 9. The following data are obtained from Gianne Manufacturing Company: - Cost of goods manufactured in P187,500 - Inventory variations are as follows: raw materials ending inventory in one third based on raw materials beginning; no initial inventory of work-in-process, but at end of period P12,500 was on hand; finished goods inventory was four times as large at end of period as at the start. - Net income after taxes amounted to P26,000, income tax rate is 35% - Purchase of raw materials amounted to net income before taxes. - Breakdown of cost incurred in manufacturing cost was as follows: Raw materials consumed Direct labor

50% 30%

Overhead 20% Compute the amount raw materials beginning inventory: a. P38,571 b. P60,000 c. P90,000 d. 40,000 C 10. The following cost data were taken form the records of a manufacturing company: Depreciation on factory equipment P1,000 Depreciation on sales office 500 Advertising 7,000 Freight-out (shipping) 3,000 Wages of production workers 28,000 Raw materials used 47,000 Sales salaries and commissions 10,000 Factory rent 2,000 Factory insurance 500 Materials handling 1,500 Administrative salaries 2,000 Based upon the information, the manufacturing costs incurred during the year was a. P78,500 b. P80,000 c. P80,500 d. 83,000 B 11. 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 12. 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 13. 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 14. 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 15. 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

Job Order Costing

Post-test

1. Flor Company consumed P450,000 worth of direct materials during May, 2001. At the end of the month, the direct materials inventory of Flor was P25,000 lower than the May 1 inventory level. How much was the direct materials procured during May 2001? a. P475,000 b. P375,000 c. P400,000 d. P425,000 D 2. Last month, Pare Company placed P60,000 of materials into production. The Printing Department used 8,000 labor hours at P5.60 per hour and the Binding Department used 4,6000 hours at P6.00 per hour. Factory overhead is applied at a rate of P6.00 per labor hour in the Printing Department and P8.00 per labor hour in the Binding Department. Pare’s inventory accounts show the following balances: a. P219,600 b. P214,600 c. P108,000 d. P217,200 A 3. The following data were taken from the records of Best Company: Inventories Raw materials Work in Process Finished goods

08/31/2001

09/30/2001

P50,000 80,000 60,000

95,000 78,000

Raw materials purchases, P46,000. Factory overhead, 75% of direct labor cost, P63,000. Selling and administrative expenses, 125% of sales, P25,000 Net income for September, 2001, P25,000. What is the cost of raw materials inventory on August 31, 2001? a. P30,000 b. P40,000 c. P46,000

D 4. Fusion Company has the following data on April 30, 2001: April manufacturing overhead Decrease in ending inventories: Materials Goods in Process Increase in ending inventory: Finished Goods

d. P50,000

P30,101.80 2,430.00 590.00 1,320.40

The manufacturing overhead amounts to 50% of the direct labor and the direct labor and manufacturing overhead combined equal 50% of the total cost of manufacturing. All materials are purchased FOB shipping point What is the cost of goods manufactured? a. P180,610.80 b. P181,200.80 c. P182,300.80 d. P183,200.80 B 5. Tarzan Co. employs a job order costs system. Its manufacturing activities in July, 2001, its first month of operation, are summarized as follows:

Direct materials Direct labor cost Direct labor hours Units produced

1201 P7,000 P6,600 1,100 200

JOB NUMBERS 1202 1203 P5,800 P11,600 6,000 8,400 1,000 1,400 100 1,000

1204 P5,000 1,400 400 300

Manufacturing overhead is applied at a rate of P2 per direct labor hour for variable overhead, P3 per hour for fixed overhead. Jobs 1201, 1202 and 1203 were completed in July. What is the cost of the completed jobs? a. P62,900 b. P62,500 c. P72,900 d. 65,900 A 6. Job No. 010 has, at the end of the second week in April, an accumulated total cost of P4,200. In the third week, P1,010 of direct materials were used on the job. Twenty (20) hours of direct labor services were applied to the job at a cost of P5 per hour. Manufacturing overhead was applied at the basis of P2.50 per direct labor hour for fixed overhead and P2 per hour for variable overhead.

Job No. 010 was the only job completed during the third week. The total cost of Job Order No. 010 is: a. P5,390 b. P5,360 c. P5,350 d. 5,400 D 7. Steak Co. is a manufacturing concern using the perpetual inventory system. In following materials inventory account datais provided: Beginning balance P275,000 Other debits to the account 825,000 Excess of ending inventory over Beginning inventory 55,000 How much is the cost materials issued to production? a. P770,000 b. P1,045,000 c. P1,100,000 d. 1,155,000 A 8. 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. 273,750 A 9. Pistahan Corporation is a manufacturing company engaged in the production of a single special product known as “Marvel”. Production cost are accumulated with the use of a job-order-cost system. The following information is available as of June 1, 2001: WIP P10,710 Direct materials inventory 48,600 In analyzing the job-order cost sheets, the records disclosed that the composition of the work-inprocess inventory on June 1, 2001 were as follows: Direct materials used P 3,960 Direct labor (900 hours) 4,500 Factory overheads applied 2,250 P10,710 The following manufacturing activity occurred during the month of June 2001: Purchased direct materials costing P60,000 Direct labor worked 9,900 hours at P5 per hour Factory overhead of P2.50 per direct labor hour was applied to production At the end of June 2001, the following information was gathered in connection with the inventories: Inventory of WIP: Direct materials used P12,960 Direct labor (1,500 hours) 7,500 Factory overhead applied 3,750 P24,210 Inventory of direct materials 51,000 Compute the cost of goods manufactured: a. P142,560 b. P118,350 c. P131,850 d. P108,600 B 10. Johnson uses a job order cost system and applies factory overhead to production orders of the basis of direct-labor cost. The overhead rates for 2001 are 200% for Department A and 50% for Department B. Job 123, started and completed during 2001, was charged with the following costs: Department A B Direct Materials P25,000 P5,000 Direct Labor ? 30,000 Factory overhead 40,000 ? The total manufacturing cost associated with Job 1234 should be: a. P135,000 b. P180,000 c. P195,000 d. 240,000 A 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 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     