Name: Boneo, RyanJay R

PreTest
True or False
False 1. Selling, general and administrative costs are part of manufacturing overhead.
False 2. Only direct manufacturing costs are assigned to inventories and cost of goods
sold.
False 3. Commissions paid to sell products are reported as part of the cost of goods sold.
True 4. Manufacturing overhead costs are also known as indirect manufacturing costs
False 5. The salary of the president of a manufacturer is part of the manufacturing overhead costs.

Multiple Choice
A 1.The Sweet Shop manufactures cookies for sale by the Girl Scouts. Joe, the company accountant, is
preparing the month end financial statement and reports for the company. The Sweet Shop records applied
(estimated) manufacturing as a percentage of Direct Labor Costs. The rate that the Sweet Shop uses is 85%
and the direct labor costs for the month of November totaled P150,000. Actual factory overhead was
P126,000. What amount should be reported as Factory Overhead Applied?
a. 127,500 b. 22,235 c. 26,470 d. 107,100

B 2. The King Company makes silk shirts for men and women. The plant manager estimates it will
manufacture 15,000 units next year. If the applied Factory Overhead rate for King Company equals 80% of
the Direct Labor; and if total factory overhead costs are estimated to be P 400,000; what are the estimated
direct labor costs?
a. 380,000 b. 500,000 c. 620,000 d. 680,000

C 3. The Jamison Corporation makes computers. Mary is the accountant who completes the job cost sheets.
Her pay is P300 per hour. How should Mary's pay be classified?
a. Direct labor b. Direct materials c. Indirect labor d. Indirect materials

A 4. The Holland Table Corporation manufactures dining tables and chairs. During the manufacturing
process, a Job Cost sheet is prepared. The cost sheet for 150 units of dining tables shows P10,500.00 for
direct materials, P5,500 for direct labor, and P8,000 for factory overhead. What is the cost per unit?
answer choices
a. 160.00 b.70.00 c. 90.00 d. 120.00

C 5. The Blue Corporation manufactures denim blue jeans. Jo, the accountant, has received several invoices.
Three of the invoices totaling P45,990 are for items that will be used in the manufacturing process. Two
additional invoices totaling P55,885 are for items that will be repairing several pieces of manufacturing
machinery. The company received a 2% discount for paying within 10-day credit term. What amount should
be recorded as direct material purchase?
a. 45,990 b. 55,885 c. 45,070 d. 101,875

B 6. The Golf House manufactures custom golf shoes. Janet, the company accountant, is preparing the
month end financial statement and reports for the company. The Golf House records applied (estimated)
overhead as a percentage of Direct Labor Costs. The rate that the Golf House uses is 80% and Factory
Overhead-Applied for the month of November totaled P220,000. How much is the Direct Labor Cost? a.
176,000 b. 275,000 c. 44,000 d. 55,000

A 7. The Coffee Cafe manufactures premium roast coffee. Daquesha, the company accountant, is preparing
the month end financial statement and reports for the company. The Coffee Cafe records applied
(estimated) overhead to Job Cost Sheets as a percentage of Conversion Cost. The rate that the Coffee Cafe
uses is 70%. Direct labor costs from the Job Cost Sheets for the month of June totaled P205,000. Actual
factory overhead was P145,000. What is the amount of applied factory overhead?
a. 143,500 b. 292,857 c. 478,333 d. 145,000
 C 8. The Best Shoe Company manufactures running shoes. During the manufacturing process, a Job Cost
sheet is prepared. The cost sheet for 300 units of running shoes shows P3,000.00 for direct materials and
P4,200.00 for direct labor. Factory overhead is estimated at 70% of direct labor. What is the unit cost of the
job?
a. 31 b. 32.70 c. 33.80 d. 48.50

A 9. Carmen's Cake Company is a bakery, which makes baked goods from scratch. In the bakery window,
Carmen has displayed cakes, pastries, breads, and pies for sale. How are these items classified?
a. Finished goods inventory b. Materials inventory
c. Perpetual inventory d. Work in process inventory

D 10. Safe Color manufactures ammonia-free hair color for hair salons. Safe Color uses a factory overhead
applied rate based upon direct labor costs to charge overhead costs to its manufactured products. The
plant manager estimates that Safe Color will manufacture 40,000
units next year. For this amount of production, the accountant estimates total factory overhead costs to be
P350,000 and estimated direct labor costs to be P450,000. What is the factory overhead rate applied for
the next year?
a. 90% b. 75% c. 85% d. 78%

C 11. The Wishy-washy Company makes industrial washing machines. During the manufacturing process, a
Job Cost sheet is prepared. The estimated direct labor cost for the year is P800,000.00. The estimated
factory overhead for the year is P600,000.00. Factory overhead is applied to jobs based on direct labor. The
total direct labor costs for Job No. 544 is P8,000.00. What is the applied factory overhead for Job No. 544?
a. 400 b. 600 c. 6,000 d. 4,000

A 12. The Mangum Steel Corporation manufactures sheet metal for the automotive industry. Each month,
Sue, the accountant, calculates and posts factory overhead. The following information was available for the
month of July; Depreciation Expense of P35,000; Utility Expense P11,350; Insurance Expense P620;
Miscellaneous Factory Expense P359; Supplies Expense P3,159; Direct Labor cost of P34,000; Cost of Goods
Manufactured of P125,000; Total Manufacturing Cost of P110,988. What is the amount of Direct Materials
Used in the production?
a. 26,500 b. 40,512 c. 84,488 d. 25,600

A 13. The EarthReady Corporation manufactures environmentally safe light bulbs. EarthReady's finished
goods ledger card for mounting brackets shows that 78 were completed at a cost of P18.75 per unit on
March 7 and 85 were completed at a cost of P19.25 per unit on March 10. If 30 units were shipped, and if
there was no beginning inventory, what is the total number of units of this item in inventory? a. 133 b. 188
c. 123 d. 150
A 14. Using the same information in No. 13, if the Company uses FIFO method, what is the
cost of ending inventory? a. 2,536.25 b. 2,521.25 c. 2,528.33 d. 2,493.75

B 15. Using the same information in No. 13, if the Company uses LIFO method, what is the
cost of ending inventory? a. 2,536.25 b. 2,521.25 c. 2,528.33 d. 2,493.75

C 16. Using the same information in No. 13, if the Company uses Weighted Average method, what is the
cost of ending inventory? a. 2,536.25 b. 2,521.25 c. 2,528.33 d. 2,493.75

Problem 1: The Jung Manufacturing Company uses a perpetual inventory system to control materials.
Data relating to Material B-1 during March 2019 are given below:
March 1: Balance, 200 units at P45.00 each
6: Received 250 units at P44 each per Purchase Order 074
12: Issued 275 units per Requisition 018
 14: Received 300 units at P43.00 each per Purchase Order 083
17: Issued 250 units per Requisition 023
31: Issued 90 units per Requisition 019
Use FIFO and Weighted Average Method of inventory costing, find the cost of inventory at month end.

FIFO Method
IN OUT BALANCE
Date Order No. of Unit Total No. No. of Unit Total No. of Unit Total
no. units Cost Cost units Cost Cost units Cost Cost
Mar. 1 200 45 9,000 200 45 9,000
6 074 250 44 11,000 200 45 20,000
250 44
12 018 275 44 12,100 175 44 7,700
14 083 300 43 12,900 175 44 20,600
300 43
17 023 250 43 10,750 225 43 9,675
31 019 90 43 3,870 135 43 5,805
TOTAL 32,900 26,720

Weighted Average Method

Ending Inventory Cost= (200*45)+(250*44)+(300*43)

Unit Cost Total Cost 750 units
= 43.87
135 43.87 5,922.45
Solutions for 1 – 16

1. 150,000*80%
150,000*.80 = 127,500

2. 400,000/.80 = 500,000

3. Indirect Labor

4.10 500+5,500+8,000 = 24,000

24,000/150 = 160

5. Repairing materials are included in indirect material

45,990*.02 = 919.80
45,990 – 919.80 = 45,070

6. 220,000/.80 = 275,000
7. 205000*.70 = 143,500

8. 4,200*.70 = 2,940 (Factory overhead)

3,000 + 4,200 + 2,940 = 10,140
10,140/300 = 33.80
9. Finished Goods
10. 350,000/450,000 = 0.78
0.78*100 = 78%

11. 600,000/800,000 =.75

0.75*100 = 75% (Overhead Rate)
8,000*0.75 = 6,000

12. 35,000 + 11,350 + 620 + 359 + 3159 = 50,488 (overhead cost)

50,488 + 34,000 = 84,488
110,988 – 8,488 = 26,500 (direct materials)

13. 78 + 85 = 163
163 – 30 = 133

14. March 7: 78*18.75 = 1,462.50

March 10: 85*19.25 = 1,636.25
78 – 30 = 48
48*18.75 = 900
900 + 1,636.25 = 2,536.25

15. March 7: 78*18.75 = 1,462.50

March 10: 85*19.25 = 1,636.25
85 – 30 = 55
55*19.25 =1,058.75
1,058.75+ 1,462.50= 2,521.25

16. March 7: 78*18.75 = 1,462.50

March 10: 85*19.25 = 1,636.25
1,462.50 + 1,636.25 = 3,098.75
3,098.75/163 = 19.01
133*19.01 = 2,535.33