Module 13 Job Order Costing

BALIWAG POLYTECHNIC COLLEGE
CPA REVIEW PROGRAM

ADVANCED FINANCIAL ACCOUNTING AND REPORTING
MODULE 10: JOB ORDER COSTING JMV,

CPA
JOB ORDER COSTING
1. The factory ledger of Diamond Corporation contains the following cost data
for the year ended December 31, 2011:
Inventories
Opening Closing
Raw materials P150,000 170,000
Work in process 160,000 60,000
Finished goods 180,000 220,000
Raw materials used 652,000
Total manufacturing costs charged to production during the year (including

raw materials, direct labor and factory overhead applied at the rate of 50%
of direct labor cost) 1,372,000
Compute the: (1) cost of raw materials purchased and (2) direct labor
charged to production during the year:
A. (1) P632,000; (2) P240,000 C. (1) P.72,000; (2) P720,000
a s
B. (1) P672,000; (2) 480,000 ew D. (1) 360,000; (2) P480,000
2. National Marketing Corp. uses a job-order costing system. It has three

production departments, X, Y and Z.
c
The manufacturing cost budget for 2011 is as follows:
ur
Dept. X Dept. Y Dept. Z

Direct Materials P600,000 P400,000 P200,000
so
Direct Labor 200,000 500,000 400,000

Manufacturing overhead 600,000 100,000 200,000
se ia re
For Job no. 01-90 which was completed in 2011, direct materials cost was
m
P75,000 and direct labor was as follows:

ur d v y
Dept. X P 40,000
Co re tud
co
Dept. Y 100,000
Dept. Z 20,000
o.
s
The corporation applies manufacturing overhead to each job order on the

basis of direct labor cost, using departmental rates predetermined at the
er
is
beginning of the year based on the manufacturing cost budget.

Th
The total manufacturing cost of Job No. 01-90 which was completed is 2011
is:
a
A. P235,000 C. P385,000
sh
B. P310,000 D. P150,000
3. The following date were taken the records of Best Company:

8/31/2011 9/30/2011
Raw materials ? 50,000
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 expenSe5 12.5% of sales, P25,000
Net income for September, 2011, P25,000
What is the cost of raw materials inventory on August 31, 2011?

A. P30,000 C. P46,000
B. P40,000 D. P50,000
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4. Wat Corporation manufactures rattan furniture sets for export and uses the
lob order cost system in accounting for its costs. You obtained from the
corporation’s books and records the following information for the year
ended December 31, 2011:
 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 2011 was P900,000
based on actual direct materials and direct labor but with
3nufacturing 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 costs 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, 2011:
s
Direct materials used WIP inventory
a
A. P1,075,000 P200,000
ew
B. 362,500 250,000
C. 312,500 250,000
D. 312,500 275,000
c
ur
5. Fusion Company has the following data on April 30, 2011:

so
April manufacturing overhead 30,101.80

Decrease in ending inventories
Materials 2,340.00
se ia re
Goods in Process 590.00

Increase in ending inventory
m
ur d v y
Finished Goods 1,320.40

Co re tud
co
The manufacturing overhead amounts to 50% of the direct labor, and the
direct labor and manufacturing overhead combined equal 50% of the total
o.
cost of manufacturing. All materials are purchased F.O.B shipping point.

s
er
is
What is the cost of goods manufactured?

A. 180,610.80 C. 182,300.80
Th
B. 181,200.80 D. 183,200.80
6. The Fork Company manufactures one product and accounts for cost by a
a
job-order cost system. You have obtained the following information for the
sh
year ended December 31, 2011 from the corporation’s books and records:
Total manufacturing cost added during 2011
Based on actual direct materials,
actual direct labor and applied factory overhead
on actual direct labor cost P 1,000,000
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 costs 75%
Applied factory overhead for
the year, based on total Manufacturing costs 27%
Beginning work-in-process inventory was 80% of ending work-in-process
inventory.
Compute the cost of direct materials used for the year ended December 31,
2011.
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a. P370,000
b. P970,000
c. P990,000
d. P970,000
7. The work-in-process account of the Malinta Company which uses a job order
cost system follow:
Work-in-process
April 1 BalanceP25,000 Finished goodsP125,450

Direct materials50,000
Direct labor40,000
Overhead applied30,000
Overhead is spoiled to production at a predetermined rate based on direct

labor cost. The work-in-process on April 30 represents the cost of Job No.
456, which has been charged with direct labor cost of P3,000 and Job No.
789 which has been charged with applied overhead of P2,400.
s
The cost of direct materials charged to Job Nos. 456 and 789 amounted to:
a
a. P8,700
b. P7,600
ew
c. P4,500
d. P4,20063.
c
8. Based on the problem above, how much is the prime cost during the month
ur
totaled:
a. P70,000
so
b. P90,000
c. P120,000
se ia re
d. P145,000
9. Pistahan Corporation is a manufacturing company engaged in the

m
ur d v y
production of a single special product known as “Marvel”. Production cost

Co re tud
are accumulated with the use of a job-order-cost system.

co
The following information is available as of June 1, 2008:

o.
s
Work – in – process P10,710

Direct materials inventory 48,600
er
is
In analysis the job order cost sheets, the records disclosed that the
Th
composition of the work-in-process inventory on June 1, 2008 were as

follows:
a
Direct materials used P 3,960

sh
Direct labor (900 hours) 4,500

Factory overhead applied 2,250
P10,710
The following manufacturing activity occurred during the month of June

2008:
Purchased direct materials costing, P60,000.
Direct labor worked 9,900 hours at P5 per hour was applied to production.
Factory overhead of P2.50 per direct labor hour was applied to production.
At the end of June 2008: The following information was gathered in
connection with the inventories:
Inventory of work-in-process:
Direct materials used P12,960
Direct labor (1,500 hours) 7,500
Factory overhead applied 3,750
P24,210
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Inventory of direct materials P51,000.
Compute the cost of goods manufactured:

a. P142,560 b. P118,350 c. P131,850 d. P108,600
10.The following data are obtained from Gianne Manufacturing Company:

 Cost of goods manufactured is P187,500
 Inventory variations are as follows: raw materials ending inventory is
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 costs incurred in manufacturing cost was as follows:
Raw materials consumed 50%
Direct labor 30%
Overhead 20%
s
Compute the amount of raw materials beginning inventory:
a
A. 38,571
B. 60,000
ew
C. 90,000
D. 40,000
c
COST OF QUALITY: SPOILAGE AND DEFECTIVE UNITS
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1. Harper Company’s Job 501 for the manufacture of 2,200 coats was
completed during August at the unit costs presented as follows. Final
so
inspection of Job 501 disclosed 200 spoiled coats, which were sold to a
jobber for 6,000.
se ia re
Direct materials 20
m
Direct labor 18
ur d v y
Factory overhead (which includes an

Co re tud
co
allowance of 1 for spoiled work) 18

56
Assume that spoilage loss is charge to all production during August.
o.
s
What would be the unit cost of the good coats produced on Job 501?
er
a. 53.00 c. 56.00
is
b. 55.00 d. 58.60
Th
2. 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
a. 55.00 c. 58.60
sh
b. 57.50 d. 61.60
3. During March, Hart Company incurred the following costs on Job 122 for
the manufacture of 200 motors:
Original cost accumulation:
Direct materials 660
Direct labor 800
Factory overhead 1,200
Direct costs of reworking 10 units:

Direct materials 100
Direct labor 160
The rework costs were attributable to the exacting specifications of

Job 122, and the full rework costs were charged to this specific job.
What is the cost per finished unit of Job 122?
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a. 15.80 c. 14.00
b. 14.60 d. 13.30
4. Using the information in No. 3, assuming the rework cost were

attributable to internal failure or charged to factory overhead. What is
the cost per finished unit of Job 122?
a. 15.80 c. 14.00
b. 14.60 d. 13.30
5. Condotti Company’s Job 205 for the manufacture of 6,600 coats was
completed during August2010 at the following unit costs:
Direct materials 1,500
Direct labor 1,000
Factory overhead (include an allowance
of P50 for spoiled work) 500
P 3,000
Final inspection of Job 205 disclosed 600 spoiled coats which were sold
to a jobber for P600,000. Assume that spoilage loss is charged to all
production during August 2010.
a s
a. P2,900 b. P2,950
ew
c. P3,000 d. P2,145
6. Using the same information in No. 5, Assuming the spoilage loss is

attributable to exacting specification or chargeable to particular job.
c
ur
a. P2,900 b. P2,950 c. P3,000 d. P2,145

so
7. Simpson Company manufactures electric drills to the exacting

specifications of various customers. During April, Job 403 for the
se ia re
production of 1,100 drills is completed at the following cost per unit:

Direct materials 10
m
Direct manufacturing labor 8

ur d v y
Manufacturing overhead allocated 12

Co re tud
co
Total manufacturing cost 30
Final inspection of Job 403 discloses 50 defective units and 100 units
o.
s
of normal spoilage attributable to this specific job. The defective drills

are reworked at a total cost of $500 and the spoiled drills are sold to
er
is
a jobber for $1,500. What is the unit cost of the good units produced
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on Job 403?
A. 33.00 C. 30.00
B. 32.00 D. 29.00
a
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SERVICE COST ALLOCATION

1. BOA Corp. distributes service department overhead costs directly to
producing department without allocation to the other service department.
Information for the month of June is as follows:
Support Department
Maintenance Utilities
Overhead Cost Incurred 20,000 10,000
Service provided to departments:
Maintenance - 10%
Utilities 20% -
Producing-A 40% 30%
Producing-B 40% 60%
The amount of maintenance department costs distributed to Producing A
department for June was:
a. 8,000 c. 10,000
b. by20,000
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2. UST allocates support department costs to its individual schools using the
step method. Information for May 2011 is as follows:
Support Department
Maintenance Power
Cost Incurred 99,000 54,000
Service Percentage provided to:
Maintenance - 10%
Power 20% -
School of Accountancy 30% 20%
School of Law 50% 70%
What is the amount of May 2008 support department costs allocated to

school of Accountancy?
a. 40,500 c. 46,100
b. 42,1201 d. 49,125
s
3. Hartwell Company distributes the service department overhead costs
a
directly to producing departments without allocation to the other service
ew
departments. Information for the month of January is presented as follows:
Maintenance Utilities
Overhead costs incurred P18, 700 P9, 000
c
Service provided to:
Maintenance department – 10%
ur
Utilities department 20% –

Producing department A 40% 30%
so
Producing department B 40% 60%

se ia re
The amount of utilities department costs distributed to producing

department B for January should be:
m
ur d v y
a. 3,600 c. 5,400
b. 4,500 d. 6,000
Co re tud
co
4. Using the same information in No.3 and assume instead that Hartwell
Company distributes the service departments’ overhead costs based on the
o.
step-down method. Which of the following methods is true?

s
A. Allocate maintenance expense to department A and B

er
is
B. Allocate maintenance expense to department A and B and to the utilities

department
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C. Allocate utilities expense to the maintenance department and

department A and B
D. None of the above
a
sh
5. Using the same information in No.3, and under the step-down method, how
much of Hartwell’s utilities department cost is allocated between
departments A and B?
A. 9,900 C. 12,740
B. 10,800 D. 27,700
6. Using the same information in No.3 and Hartwell Company distributes the
service departments’ overhead costs based on the reciprocal method. What
would be the formula to determine the total maintenance costs?
A. M=18,700+.10U
B. M=9000+.20U
C. M=18,700+.30U+.40A+.40B
D. M=27,700+.40A+.40B
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7. Using the same information in No.3 and Hartwell Company distributes the
service departments’ overhead costs based on the reciprocal method. What
would be the formula to determine the total utilities costs?
A. U=18,700+.10M
B. U=9000+.20M
C. U=18,700+.30M+.40H+.40B
D. U=27,700+.40A+.40B
8. AJD Company has two service departments (A and B) and two producing
departments (X and Y). Data provided are as follows:
Service Operating
Departments Departments
A B X Y
Direct Cost 150 300 5,000 6,000
Service performed by Dept. A 40% 40% 20%
Service performed by Dept. B 20% 70% 10%
AJD Company uses the direct method to allocate service department costs.
The service department cost allocated to Department Y is:
s
A. 50.00 C. 87.50
a
B. 60.00 D. 150.00
ew
9. Using the same information in No. 8, what is the total cost for Department
X:
c
A. 5,000.00 C. 5,087.50
ur
B. 5,295.83 D. 5,270.00
10.Using the same information in No. 8, except that step-down is used to

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allocate service department costs. Department A costs are allocated first.

The service department cost allocated to Department Y is:
se ia re
A. 60.00 C. 75.00
B. 66.00 D. 87.50
m
ur d v y
11.Using the same information in No. 8 and 10, what is the total cost for
Co re tud
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Department X:
A. 5,375.00 C. 5,087.50
B. 5,075.0 D. 5,270.00
o.
s
12.Using the same information in No. 8, except that reciprocal method is used
er
is
to allocate service department costs. The service department cost allocated

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to Department Y is:
A. 60.00 C. 85.00
B. 75.00 D. 135.00
a
sh
13.Using the same information in No. 8 and 12, what is the total cost for
Department X:
A. 5,295.83 C. 5,375.00
B. 5,087.50 D. 5,085.00
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BALIWAG POLYTECHNIC COLLEGE

CPA REVIEW PROGRAM

MODULE 10: JOB ORDER COSTING JMV,

Total manufacturing costs charged to production during the year (including

2. National Marketing Corp. uses a job-order costing system. It has three

Dept. X Dept. Y Dept. Z

Direct Labor 200,000 500,000 400,000

P75,000 and direct labor was as follows:

The corporation applies manufacturing overhead to each job order on the

beginning of the year based on the manufacturing cost budget.

3. The following date were taken the records of Best Company:

Raw materials purchases, P46,000

What is the cost of raw materials inventory on August 31, 2011?

MODULE 10: JOB ORDER COSTING JMV,

5. Fusion Company has the following data on April 30, 2011:

April manufacturing overhead 30,101.80

Goods in Process 590.00

Finished Goods 1,320.40

cost of manufacturing. All materials are purchased F.O.B shipping point.

What is the cost of goods manufactured?

MODULE 10: JOB ORDER COSTING JMV,

April 1 BalanceP25,000 Finished goodsP125,450

Overhead is spoiled to production at a predetermined rate based on direct

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, 2008:

Work – in – process P10,710

composition of the work-in-process inventory on June 1, 2008 were as

Direct materials used P 3,960

Direct labor (900 hours) 4,500

The following manufacturing activity occurred during the month of June

MODULE 10: JOB ORDER COSTING JMV,

Compute the cost of goods manufactured:

10.The following data are obtained from Gianne Manufacturing Company:

Factory overhead (which includes an

allowance of 1 for spoiled work) 18

2. Assume instead that the spoilage loss is attributable to the exacting

Direct costs of reworking 10 units:

The rework costs were attributable to the exacting specifications of

MODULE 10: JOB ORDER COSTING JMV,

4. Using the information in No. 3, assuming the rework cost were

6. Using the same information in No. 5, Assuming the spoilage loss is

a. P2,900 b. P2,950 c. P3,000 d. P2,145

7. Simpson Company manufactures electric drills to the exacting

production of 1,100 drills is completed at the following cost per unit:

Direct manufacturing labor 8

Manufacturing overhead allocated 12

Total manufacturing cost 30

of normal spoilage attributable to this specific job. The defective drills

SERVICE COST ALLOCATION

MODULE 10: JOB ORDER COSTING JMV,

What is the amount of May 2008 support department costs allocated to

Utilities department 20% –

Producing department B 40% 60%

The amount of utilities department costs distributed to producing

step-down method. Which of the following methods is true?

A. Allocate maintenance expense to department A and B