JOB ORDER AND PROCESS COSTING, and ACTIVITY BASED COSTING ASSIGNMENT

Problem 1
Aladili Company is a manufacturing firm that uses job-order costing. At the beginning of the year, the company's
inventory balances were as follows:
Raw materials ................................ P36,000
Work in process ............................. P41,000
Finished goods ............................... P104,000
The company applies overhead to jobs using a predetermined overhead rate based on machine-hours. At the
beginning of the year, the company estimated that it would work 21,000 machine-hours and incur P210,000 in
manufacturing overhead cost. The following transactions were recorded for the year:
a. Raw materials were purchased, P346,000.
b. Raw materials were requisitioned for use in production, P338,000 (P302,000 direct and P36,000 indirect).
c. The following employee costs were incurred: direct labor, P360,000; indirect labor, P68,000; and
administrative salaries, P111,000.
d. Selling costs, P153,000.
e. Factory utility costs, P29,000.
f. Depreciation for the year was P102,000 of which P93,000 is related to factory operations and P9,000 is
related to selling and administrative activities.
g. Manufacturing overhead was applied to jobs. The actual level of activity for the year was 19,000
machine-hours.
h. The cost of goods manufactured for the year was P870,000.
i. Sales for the year totaled P1,221,000 and the costs on the job cost sheets of the goods that were sold
totaled P855,000.
j. The balance in the Manufacturing Overhead account was closed out to Cost of Goods Sold.
Required:
Prepare the appropriate journal entry for each of the items above (a. through j.). You can assume that all
transactions with employees, customers, and suppliers were conducted in cash.
Problem 2
Hacken Company has a job-order costing system. The company applies manufacturing overhead to jobs using a
predetermined overhead rate based on direct labor cost. The information below has been taken from the cost
records of Hacken Company for the past year:
Direct materials used in production ..................................................... P1,250
Total manufacturing costs charged to production during the year
(includes direct materials, direct labor, and applied factory overhead) ...............6,050
Manufacturing overhead applied ......................................................... P2,800
Selling and administrative expenses.................................................... P1,000
Inventories:
Direct materials, January 1 ............................................................... P130
Direct materials, December 31 ......................................................... P80
Work in process, January 1 .............................................................. P250
Work in process, December 31 ........................................................ P400
Finished goods, January 1 ................................................................ P300
Finished goods, December 31 .......................................................... P200
Required:
a. Compute the cost of direct materials purchased during the year.
b. Compute the predetermined overhead rate that was used during the past year.
c. Compute the Cost of Goods Manufactured for the past year.
d. Compute the Cost of Goods Sold for the past year.

Problem 3
Testor Products uses a job-order costing system with a predetermined overhead rate based on machine-hours.
The company closes out any under- or overapplied overhead to Cost of Goods Sold.
Required:
If overhead is overapplied, what adjustment does the company make to Cost of Goods Sold? Is Cost of Goods
Sold increased or decreased? Why?
Problem 4
Anchor Inc. uses the weighted-average method in its process costing system. The following data concern the
operations of the company's first processing department for a recent month.
Work in process, beginning:
Units in process ........................................................... 800
Stage of completion with respect to materials ............ 60%
Stage of completion with respect to conversion.......... 10%
Costs in the beginning inventory:
Materials cost ........................................................... p1,296
Conversion cost ........................................................ p2,416
Units started into production during the month .............. 16,000
Units completed and transferred out .............................. 16,500
Costs added to production during the month:
Materials cost .............................................................. p47,076
Conversion cost ........................................................... p497,213
Work in process, ending:
Units in process ........................................................... 300
Stage of completion with respect to materials ............ 60%
Stage of completion with respect to conversion.......... 70%
Required:
Prepare a production report for the department using the weighted-average method.
Problem 5
Bae Inc. uses the weighted-average method in its process costing system. The following data concern the
operations of the company's first processing department for a recent month.
Work in process, beginning:
Units in process ........................................................... 100
Stage of completion with respect to materials ............ 70%
Stage of completion with respect to conversion.......... 90%
Costs in the beginning inventory:
Materials cost ........................................................... P182
Conversion cost ........................................................ p3,429
Units started into production during the month .............. 10,000
Units completed and transferred out .............................. 9,700
Costs added to production during the month:
Materials cost .............................................................. P27,986
Conversion cost ........................................................... P373,815
Work in process, ending:
Units in process ........................................................... 400
Stage of completion with respect to materials ............ 90%
Stage of completion with respect to conversion.......... 70%

Required:
Using the weighted-average method:
a. Determine the equivalent units of production for materials and conversion costs.
b. Determine the cost per equivalent unit for materials and conversion costs.
c. Determine the cost of units transferred out of the department during the month.
d. Determine the cost of ending work in process inventory in the department.
Problem 6
Dachuna Inc. uses the FIFO method in its process costing system. The following data concern the operations of
the company's first processing department for a recent month.
Work in process, beginning:
Units in process ................................................................ 500
Stage of completion with respect to materials ................. 60%
Stage of completion with respect to conversion............... 70%
Costs in the beginning inventory:
Materials cost ................................................................ P1,020
Conversion cost ............................................................. P8,925
Units started into production during the month ................... 10,000
Units completed and transferred out ................................... 9,600
Costs added to production during the month:
Materials cost ................................................................... P31,488
Conversion cost ................................................................ P259,548
Work in process, ending:
Units in process ................................................................ 900
Stage of completion with respect to materials ................. 60%
Stage of completion with respect to conversion............... 90%
Required:
Prepare a production report for the department using the FIFO method.
Problem 7
Ebert Inc. uses the FIFO method in its process costing system. The following data concern the operations of the
company's first processing department for a recent month.
Work in process, beginning:
Units in process ................................................................ 600
Stage of completion with respect to materials ................. 60%
Stage of completion with respect to conversion............... 70%
Costs in the beginning inventory:
Materials cost ................................................................ P1,188
Conversion cost ............................................................. P16,548
Units started into production during the month ................... 18,000
Units completed and transferred out ................................... 18,400
Costs added to production during the month:
Materials cost ................................................................... P56,234
Conversion cost ................................................................ P715,394
Work in process, ending:
Units in process ................................................................ 200
Stage of completion with respect to materials ................. 50%
Stage of completion with respect to conversion............... 20%
Required:
Using the FIFO method:
a. Determine the equivalent units of production for materials and conversion costs.

b. Determine the cost per equivalent unit for materials and conversion costs.
c. Determine the cost of units transferred out of the department during the month.
d. Determine the cost of ending work in process inventory in the department.
Problem 8
Swagg Jewelry Corporation manufactures custom jewelry. In the past, Swagg has been using a traditional
overhead allocation system based solely on direct labor hours. Sensing that this system was distorting costs and
selling prices, Swagg has decided to switch to an activity-based costing system using three activity cost pools.
Information on these activity cost pools are as follows:
Activity Cost Pool
Estimated Activity
Estimated Overhead Cost
Labor related ............ 8,000
direct labor hours
P40,000
Machine related ....... 12,500
machine hours
P50,000
Quality control ......... 800
number of inspections P12,000
Job #309 incurred P900 of direct material, 30 hours of direct labor at P40 per hour, 80 machine hours, and 5
inspections.
Required:
a. What is the cost of the job under the activity-based costing system?
b. Relative to the activity-based costing system, would Job #309 have been overcosted or undercosted
under the traditional system and by how much?
Problem 9
Duckhorn Housecleaning provides housecleaning services to its clients. The company uses an activity-based
costing system for its overhead costs. The company has provided the following data from its activity-based
costing system.
Activity Cost Pool
Total
Cost
Total Activity
Cleaning .................
P645,576
72,700 hours
Job support ............
P129,546
5,400 jobs
Client support ........
P 20,900
760 clients
Other ......................
P110,000
Not applicable
Total .......................
P906,022
The "Other" activity cost pool consists of the costs of idle capacity and organization sustaining costs. One
particular client, the Lumbard family, requested 31 jobs during the year that required a total of 62 hours of
housecleaning. For this service, the client was charged P1,620
Required:
a. Compute the activity rates (i.e., cost per unit of activity) for the activity cost pools. Round off all
calculations
to the nearest whole cent.
b. Using the activity-based costing system, compute the customer margin for the Lumbard family. Round off all
calculations to the nearest whole cent.
c. Assume the company decides instead to use a traditional costing system in which ALL costs are allocated to
customers on the basis of cleaning hours. Compute the margin for the Lumbard family. Round off all
calculations to the nearest whole cent.