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:

Dept. X Dept. Y Dept. Z

Direct Materials P600,000 P400,000 P200,000
Direct Labor 200,000 500,000 400,000
Manufacturing overhead 600,000 100,000 200,00

For job No. 01-90 which completed in 2001, direct materials cost was P75,000 and direct labor
cost was s follows:
Dept. X P40,000
Dept. Y 100,000
Dept. Z 20,000
The corporation applies manufacturing overhead to each job order on the basis of direct labor cost,
using departmental rates predetermined at the beginning of eh year based on the manufacturing
cost budget.

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

a. P235,000 b. P310,000 c. 385,000 d. 150,000

C
3. 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 75%

Applied factory overhead for the year, based

On total manufacturing cost 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. P692,306 c. P706,906 d. 727,531

B
8. 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 50%

Direct labor 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:

08/31/2001 09/30/2001
Inventories
Raw materials P50,000
Work in Process 80,000 95,000
Finished goods 60,000 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. P50,000
D
4. Fusion Company has the following data on April 30, 2001:

April manufacturing overhead P30,101.80

Decrease in ending inventories:
Materials 2,430.00
Goods in Process 590.00
Increase in ending inventory:
Finished Goods 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:

JOB NUMBERS
1201 1202 1203 1204
Direct materials P7,000 P5,800 P11,600 P5,000
Direct labor cost P6,600 6,000 8,400 1,400
Direct labor hours 1,100 1,000 1,400 400
Units produced 200 100 1,000 300

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-in-
process 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