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DRILLS

1. TREASURE COMPANY consumed P450,000 worth of direct materials during May 2011. At the end of the month, the direct
materials inventory of the Company was P25,000 lower than May 1 inventory level. How much was the direct materials
procured during May 2011?

Direct materials used P450,000

Decrease in inventory (25,000)
Direct materials purchased P425,000

Or alternatively:

Direct materials, May 1 P25,000

Direct materials purchase 425,000
Direct materials available for use 450,000
Direct materials, May 31 0
Direct materials used 450,000

2. HYUNSUK 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 61,500 57,500
Direct Materials 37,500 43,500

How much is the cost of goods manufactured?

Direct materials, beginning P37,500

Direct materials purchase 160,000
Direct materials available for use 197,500
Direct materials, ending (43,500)
Direct materials used 154,000
Direct labor 120,000
Factory overhead 108,000
Total Manufacturing Costs 382,000
Work in Process, beginning 61,500
Cost of Goods put into process 443,500
Work in Process, ending (57,500)
Cost of goods manufactured 386,000

3. JIHOON COMPANY uses a job-order costing system. It has three (3) production departments X, Y and Z.

The manufacturing cost budget for 2011 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 600,000 100,000 200,000

For Job No. 01-90 which was completed in 2011, direct materials cost was P75,000 and direct labor cost was as follows:
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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 the year based on the manufacturing cost budget.

The total manufacturing cost of Job No. 01-90 which was completed in 2011 is:

Direct Materials P75,000

Direct Labor
Dept. X P40,000
Dept. Y 100,000
Dept. Z 20,000 160,000
Factory Overhead (applied)
Dept. X (6/2 x P40,000) 120,000
Dept. Y (1/5 x P100,000) 20,000
Dept. Z (2/4 x P20,000) 10,000 150,000
Total Manufacturing Costs 385,000

4. The Work in Process account of YOSHI COMPANY which uses a job order cost system follows:

Work in Process
April 1 Balance P25,000 Finished Goods P125,450
Direct Materials 50,000
Direct Labor 40,000
Overhead Applied 30,000

Overhead is applied 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.

The cost of direct materials charged to Job No. 456 and Job No. 789 amounted to:

Work in Process, April 1 P25,000

Added during April:
Materials 50,000
Labor 40,000
Overhead 30,000 120,000
Total work placed in process 145,000
Cost of goods manufactured (125,450)
Work in Process, April 30 19,550
Direct Labor
Job 456 3,000
Job 789 (2,400 ÷ 75%*) 3,200 6,200
Applied Overhead
Job 456 (3,000 x 75%*) 2,250
Job 789 2,400 4,650 (10,850)
Direct Materials charged to Job 456 & 789 8,700
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*P30,000 ÷ P40,000 = 75%

5. The following information were taken from the accounting records of JUNKYU COMPANY for 2011:
Increase in raw materials inventory P45,000
Decrease in finished goods inventory 150,000
Raw materials purchase 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:

Raw materials purchase 1,290,000

Increase in Raw Materials inventory (45,000)
Raw materials used 1,245,000

Increase in raw materials inventory have the effect of decreasing the raw materials purchases account.

6. The following cost data were taken from the records of MASHIHO 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 above information, the manufacturing costs incurred during the year was:

Depreciation on Factory Equipment P1,000

Wages of production workers 28,000
Raw materials used 47,000
Factory rent 2,000
Factory insurance 500
Materials handling 1,500
Manufacturing costs 80,000

7. JAEHYUK COMPANY has no work in process or finished goods inventories at the close of business on December 31, 2011.
The balances of the Company’s accounts as of December 31, 2011 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
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JAEHYUK COMPANY’s income before income taxes in 2011 is:

Sales P3,600,000
Cost of Goods Sold
Cost of Goods Sold normal 2,040,000
Under-applied factory overhead (P700,000 – 648,000) 52,000 (2,092,000)
Gross Profit 1,508,000
General, Selling and Administrative Expenses (900,000)
Net income before income tax 608,000

Note: The problem does not specify what account to dispose the under-applied factory overhead and when to dispose?

1. Regarding the first query, since there is no work in process and finished goods at the end of the year, logically,
allocation to COGS and inventories is not required. Therefore, disposition should be made directly to Cost of Goods
Sold account as a period cost.
2. Regarding the second query, since it is already the closing of a business year, the under-applied overhead must
therefore be disposed. Otherwise, the temporary account – under-applied overhead remains in the books.

8. ASAHI 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, 2011 with accumulated costs as follows:
Direct Materials P4,000
Direct Labor 2,000
Applied Factory Overhead 3,000
 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, 2011 was Job 104, with costs of P2,800 for direct materials and P1,800
for direct labor

The cost of goods manufactured for February 2011 was:

Work in Process, January 31, 2011 P9,000 [4,000 + 2,000 + 3,000]

Added during February:
Direct materials 26,000
Direct labor 20,000
Applied factory overhead (150% x P20,000) 30,000 76,000
Total work placed in process 85,000
Work in Process, February 28, 2011 (7,300) [2,800 + 1,800 + (1,800 x 150%)]
Cost of Goods Manufactured 77,700

9. Using the same information in No. 8, any over or under applied factory overhead should be closed to the cost of goods
sold account at February 28, 2011, in the amount of:

The amount of over or under applied overhead is the difference between the actual overhead incurred and the overhead
applied. The amount of overhead applied was P30,000 (150% x P20,000). The amount of overhead incurred was P32,000.
Therefore, under-applied overhead of P2,000 (P32,000 actual – P30,000 applied) should be closed to COGS.
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10. YEDAM COMPANY had the following information relating in 2011.

Budgeted factory overhead P74,800
Actual factory overhead 78,300
Applied factory overhead 76,500
Estimated labor hours 44,000

If the Company decides to use the actual results from 2011 to determine the 2012 overhead rate. What will the 2012
overhead rate be?

The 2011 overhead is calculated as:

Budgeted factory overhead = P74,800 = P1.7
Estimated labor hours 44,000

Since applied factory overhead is a result of actual direct labor hours times the overhead rate, the actual direct labor hours
for 2011 is P45,000 (P76,500 ÷ 1.7).

Next, the overhead rate for 2012 is P1.74 (P78,300 ÷ 45,000).

11. DOYOUNG COMPANY produces reusable Christmas cards in two departments: Printing and Laminating. These
departments are supported by two service departments: Personnel and Maintenance. Personnel uses the number of
employees as an allocation base and Maintenance uses machine hours. The expected level of activity for next quarter is
shown below:
Number of Employees Machine Hours
Personnel 40
Maintenance 60
Printing 120 60,000
Laminating 180 40,000

Allocations are made in the order shown above. Budgeted costs for next quarter are P93,000 for Personnel and P68,000
for Maintenance.

What is the total amount of service cost that should be allocated to the Printing Department under the direct method?

Direct method:
Personnel 93,000 x 120 = 37,200
300
Maintenance 68,000 x 60,000 = 40,800
100,000 78,000

12. HARUTO COMPANY has two service departments (A and B) and two producing departments (X and Y). Data provided are
as follows:
Service Departments Operating Departments
A B X Y
Direct Costs P150 P300 P5,000 P6,000
Services performed by Dept. A 40% 40% 20%
Services performed by Dept. B 20% 70% 10%

HARUTO COMPANY uses the direct method to allocate service department costs. The service department cost allocated
to Department Y is:

Department Y:
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A’s cost: P150 x 20/60 = 50

B’s cost: P300 x 10/80 = 37.50
Service Dept. Cost 87.50

13. Using the same information in No. 12, what is the total cost for Department X?

Total cost of Department X:

Direct costs P5,000
Allocated costs: [(P150 x 40/60) + (P300 x 70/80)] 362.50
Total 5,362.50

14. Using the same information in No. 12, except that step down method is used to allocate service department costs.
Department A costs are allocated first. The service department cost allocated to Department Y is:

Service Operating
A B X Y
Direct Costs P150 P300
A’s cost: 40%: 40%: 20% (150) 60 P60 P30
P360
B’s cost: 7:1 (360) 315 45
Service cost allocation P375 P75

15. Using the same information in Numbers 12 and 14, what is the total cost for Department X?

Total cost of Department X:

Direct costs P5,000
Allocated costs (refer to number 14) 375
Total 5,375

16. Using the information in Number 12, except that the algebraic method is used to allocate service department costs. The
service department cost allocated to Department Y is:

Service Operating
A B X Y
Direct Costs P150 P300
A’s cost: (40%: 40%: 20%) * (228.26) 91.30 P91.30 P45.64
(78.26) P391.30
B’s cost: 7:1 78.26 (391.30) 273.91 39.13
Service cost allocation P365.21 P84.78

Either A or B should be allocated first (Assume A).

The equation needed to determine the cost of Department A and B on an algebraic basis would be:
A = P150 + 0.20B
B = P300 + 0.40A

Using either A or B to determine their costs (assume B first):

B = P300 + 0.40 (P150 + 0.20B)
B = P300 + 60 + 0.08B
B = P360 + 0.08B
B - 0.08B = P360
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0.92B = P360
B = P391.30

To compute for A:
A = P150 + 0.20B
A = P150 + 0.20 (P391.30)
A = P150 + 78.26
A = P228.26

Now, we assume, B.

Service Operating
A B X Y
Direct Costs P150 P300
B’s cost: (20%: 70%: 10%) 78.26 (391.30) P273.91 P39.13
228.26 (91.30)
B’s cost: 7:1 (228.26) 91.30 91.30 45.652
Service cost allocation P365.21 P84.78

17. Using the same information in Numbers 12 and 16, what is the total cost for Department X?

Total cost of Department X:

Direct costs P5,000
Allocated costs (refer to number 16) 85
Total 5,085

18. JEONGWOO COMPANY has two major components with the following information:

Indoor Furniture Outdoor Furniture Total

Annual Revenue P300,000 P600,000 P900,000
Material Costs P40,000 P60,000 P100,000
Labor Costs P50,000 P75,000 P125,000

Material Hours 80,000 20,000 100,000

Number of Batches 100 100 200

The business also has overhead cost as follows:

Cost Pool Cost in Pool Cost Driver

Maintenance P200,000 Machine Hours
Setups 175,000 Number of Batches
Administrative 125,000 Labor Costs
500,000

Determine the income (loss) of each segment if the overhead costs will be allocated to segment based on labor costs
(traditional):

Annual Revenue P300,000 P600,000

Costs:
Materials (40,000) (60,000)
Labor (50,000) (75,000)
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Overhead:
Indoor [(P500,000 ÷ P125,000) x P50,000] (200,000)
Outdoor [(P500,000 ÷ P125,000) x P75,000] (300,000)
Income (Loss) P10,000 P165,000

19. Using the same information in Number 18, determine the income (loss) of each segment if the overhead costs will be
allocated to segment under ABC Costing:

Annual Revenue P300,000 P600,000

Costs:
Materials (40,000) (60,000)
Labor (50,000) (75,000)
Overhead:
Maintenance:
Indoor [(P200,000 ÷ 100,000) x 80,000] (160,000)
Outdoor [(P200,000 ÷ 100,000) x 20,000] (40,000)

Setups:
Indoor [(P175,000 ÷ 200) x 100] (87,500)
Outdoor [(P175,000 ÷ 200) x 100] (87,500)

Administrative:
Indoor [(P125,000 ÷ P125,000) x P50,000] (50,000)
Outdoor [(P125,000 ÷ P125,000) x P75,000] (75,000)
Income (Loss) (P87,500) P262,500

20. JUNGHWAN COMPANY produces three products. Production and cost information is as follows:

Model A Model B Model C

Unit Produced 2,000 6,000 12,000
Direct Labor Hours 4,000 2,000 4,000
Number of Setups 100 150 250

The consumption ratios for number of setups would be:

Ratios based on set-up:

Model A: 100 ÷ (100 + 150 + 250) = 20%
Model B: 150 ÷ (100 + 150 + 250) = 30%
Model C: 250 ÷ (100 + 150 + 250) = 50%

21. Using the same information in Number 20, compute the consumption ratios based on units produced would be:

Ratios based on units produced:

Model A: 2,000 ÷ (2,000 + 6,000 + 12,000) = 10%
Model B: 6,000 ÷ (2,000 + 6,000 + 12,000) = 30%
Model C: 12,000 ÷ (2,000 + 6,000 + 12,000) = 60%

22. EXO COMPANY manufactures two versions of a product. Production and cost information show the following:

Model X Model Y
Units Produced 100 200
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Material moves 10 40
Direct labor hours per unit 1 2

Materials handling costs total P100,000. Under ABC, the materials handling costs allocated to each unit of Model would
be:

Using the material moves under ABC Costing:

P100,000 ÷ (10 + 40) = P2,000 per material moves

Model X: P2,000 per material moves x 10 material moves = P20,000

P20,000 ÷ 100 units produced = P200

Model Y: P2,000 per materials moves x 40 material moves = P80,000

P80,000 ÷ 200 units produced = P400

23. The SEVENTEEN COMPANY uses a raw and in process (RIP) inventory account and expenses all conversion costs to the cost
of goods sold account. At the end of each month, all inventories are counted, their conversion cost components are
estimated and inventory account balances are adjusted accordingly. Raw material cost is backflushed from RIP to Finished
Goods. The following information is for the month of April:

Beginning balance of RIP account, including 1,400 of conversion cost P31,000

Raw materials received on credit 367,000
Ending RIP inventory per physical count, including P1,800 conversion cost estimate 33,000

Compute the amount to be backflushed from RIP to Finished Goods:

Beginning balance of RIP account (P31,000 – 1,400) P29,600

Raw materials received on credit 367,000
Ending balance of RIP inventory per physical count (P33,000 – 1,800) (31,200)
Amount to be backflushed from RIP to Finished Goods 365,400

24. The NEWJEANS COMPANY produces only for customer order and most work is shipped within thirty-six hours of the
receipt of an order. The Company uses a raw and in process (RIP) inventory account and expenses all conversion costs to
the cost of goods sold account. Work is shipped immediately upon completion, so there is no finished goods account. At
the end of each month, inventory is counted, its conversion cost component is estimated and the RIP account balance is
adjusted accordingly. Raw material cost is backflushed from RIP to Cost of Goods Sold. The following information is for
the month of May:

Beginning balance of RIP account, including P1,300 of conversion cost P12,300

Raw materials received on credit 246,000
Ending RIP inventory per physical count, including P2,100 conversion cost estimate 12,100

Compute the amount to be backflushed from RIP to Cost of Goods Sold:

Beginning balance of RIP account (P12,300 – 1,300) P11,000

Raw materials received on credit 246,000
Ending balance of RIP inventory per physical count (P12,100 – 2,100) (10,000)
Amount to be backflushed from RIP to Cost of Goods Sold 247,000

25. Using the same information in Number 24, compute the amount of Cost of Goods Sold after all transactions and
adjustments were made:
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Cost of Goods Sold – unadjusted P247,000

Adjustment in Conversion Cost (P2,100 – 1,300) (800)
Cost of Goods Sold – adjusted 246,200

26. KAZUHA CORPORATION’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
Total P56

Assuming that spoilage loss is charged to all production during August. What would be the unit cost of the good coats
produced on Job 501?

The unit cost of goods produced includes Direct Materials, Direct Labor and Factory Overhead. Since the spoilage is
included in the calculation of overhead, it must be considered normal and a product cost. Thus, the unit cost remains at
P56 since the amount to be deducted from the production cost is equivalent to the original cost per unit. The computation
is as follows:

Charged to Work-In-Process (P56 x 2,200) P123,200

Spoilage Cost (P56 x 200) (11,200)
Net Cost of Production 112,000
Number of Good Units produced ÷ 2,000
Unit cost P 56/unit

27. Using the same information in No. 26, 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 good coats produced on Job 501?

If the spoilage is charged to this specific job (rather than to factory overhead), the spoilage allowance should be removed
from the factory overhead rate. The overhead application rate thus drops to P17 because this job’s spoilage is not typical
and will not be averaged with other “typical” jobs. The costs of producing the 2,000 good coats include the costs incurred
in the production of the 2,200 coats less the P6,000 received for the spoiled coats. The unit cost is net cost of production
divided by the number of good coats produced (2,000).

2,200 (P20 + 18 + 17) – P6,000 = P 57.50/unit

2,000

28. Under YUNJIN CORPORATION’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
Total 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
account should it be charged?
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The rework cost includes the direct labor costs (P2/unit) and the factory overhead costs incurred (P2 x 150% per unit) to
rework the 100 defective units.

[(P2 + (P2 x 1.50)] x 100 units = P500

The rework cost should be allocated among all units by charging it to the factory overhead control.

29. During March, SAKURA CORPORATION incurred the following costs on Job 109 for the manufacture of 200 motors:

Original cost accumulation:

Direct Materials P660
Direct Labor 800
Factory Overhead (150% of Direct Labor) 1,200
Total P2,660

Direct costs of reworking 10 units:

Direct Materials P100
Direct Labor 160
Total P260

The rework costs were attributable to the exacting specifications of Job 109 and the full rework costs were charged to this
specific job. What is the cost per finished unit of Job 109?

Since the rework costs are attributable to the exacting specifications of Job 109, the full rework costs should be charged
to this specific job. Accordingly, the cost of reworking the 10 units must include P260 of direct costs and an additional
charge for overhead.

Original cost charged to WIP P2,660

Rework direct costs 260
Rework overhead (150% x P160 DL) 240
Job 109 total costs P3,160
Number of motors ÷ 200
Job 109 unit cost P15.80

30. Using the same information in No. 29, assuming the rework cost were attributable to internal failure or charged to factory
overhead. What is the cost per finished unit of Job 109?

Charged to Work-in-Process P2,660

Rework costs 0
Total 2,660
Number of motors ÷ 200
Job 109 unit cost P13.30

Rework cost should be charged to factory overhead.

31. EUNCHAE CORPORATION’S Job 205 for the manufacture of 6,600 coats was completed during August 2011 at the following
unit costs:
Direct Materials P1,500
Direct Labor 1,000
Factory overhead (include an allowance of P50 for spoiled work) 500
Total P3,000
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Final inspection at 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 2011. What would be the unit cost of the good coats produced on Job 205?

Since the spoilage loss is charged to all production/factory overhead. Therefore, the unit cost remains at P3,000 since the
amount to be deducted from the production cost is equivalent to the original cost per unit. The computation is as follows:

Charged to Work-In-Process (P3,000/unit x 6,600) 19,800,000

Spoilage Cost (P3,000/unit x 600) (1,800,000)
Total 18,000,000
Number of good units produced ÷ 6,000
Unit Cost P3,000/unit

32. Using the same information in No. 31, assuming the spoilage loss is attributable to exacting specifications or chargeable
to particular job. What would be the unit cost of the good coats produced on Job 205?

The unit cost is the net cost of production divided by the number of good coats produced.

Charged to Work-In-Process [(P3,000 – P50) x 6,600] P19,470,000

Spoilage Cost at Salvage Value 600,000
Net cost of production 18,870,000
Number of good units produced ÷ 6,000
Unit Cost P3,145/unit

33. CHAEWON CORPORATION manufactures electric drills to the exacting specifications of various customers. During April
2011, Job 403 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?

The original production of 1,100 drills cost P33,000 (1,100 drills x P30 per drill). The reworking of the defective drills (i.e.
P500) increased the cost total to P33,500. The P1,500 received from the sale of the 100 defective units should be
subtracted from the total cost incurred in producing the 1,100 drills. Therefore, the total cost for producing 1,000 good
drills equals P32,000 (P33,000 + P500 – P1,500), yielding a unit cost for good drills of P32 (P32,000 ÷ 1000 good units).

34. Some units of output failed to pass final inspection at the end of the manufacturing process. The production and inspection
supervisors determined that the incremental revenue from reworking the units exceeded the cost of rework. The rework
of the defective units was authorized and the following costs were incurred in reworking the units:

Materials requisitioned from stores:

Direct Materials P5,000
Miscellaneous Supplies 300
Direct Labor 14,000

The manufacturing overhead budget includes an allowance for rework. The predetermined manufacturing overhead rate
is 150% of direct labor cost. The account (s) to be charged and the appropriate charges for the rework cost would be?
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Charged to Factory Overhead for rework cost:

Direct Materials P5,000
Indirect Materials 300
Direct Labor 14,000
Applied Factory Overhead (P14,000 x 1.5) 21,000
Total Rework Costs P40,300

Total rework costs should be charged to Factory Overhead since the overhead budget includes an allowance for rework.

35. In a job order accounting situation, assume that there are P45,000 of charges to a given job consisting P25,000 direct
materials, P10,000 direct labor and P10,000 applied overhead. The job yields 500 units of a product of which 100 are
rejected as spoiled with no salvage value. The cost of the spoilage is determined to be P9,000. If the firm wishes to use
this job as the basis for setting a spoilage standard for comparison to future work, the conceptual superior way to express
the spoilage rate would be?

Normal spoilage is spoilage which occurs under efficient operating conditions. It is a spoilage that is uncontrollable in the
short run and therefore should be expressed as a function of good output (treated as a product cost). The rate can be
determined using the ratio of cost of spoiled units/costs units. Thus, the rate would be 25% [9,000 ÷ (P45,000 – P9,000)]
or [100 units ÷ (500 – 100) units].

36. LE SSERAFIM CORPORATION started 150 units in process on job order number 13. The prime costs placed in process
consisted of P30,000 and P18,000 for direct materials and direct labor, respectively, and a predetermined rate was used
to charge factory overhead to production at 133 1/3% of the direct labor cost. Upon completion of the job order, units
equal to 20% of the good output were rejected for failing to meet strict quality control requirements.

The company sells rejected units as scrap at only 1/3 of production cost and bills customers at 150% of production cost. If
the rejected units were ascribed to company failure, the billing price of job order number 13 would be.

Units %
Started in progress 150 120%
Spoilage (25) (20%)
Good output 125 100%

Charged to Work-In-Process
Materials 30,000
Labor 18,000
Overhead (18,000 x 133 1/3%) 24,000 P72,000
Spoilage Cost (P72,000 ÷ 150 = P480 x 25 units) (12,000)
Net Cost of Production 60,000
Billing Rate x 150%
Billing Price P90,000

37. Using the same information in No. 36 and if the rejected units were ascribed to customer action, the billing price of job
order number 13 would be.

Charged to Work-In-Process P72,000

Spoilage Cost at Salvage Value (1/3 x P12,000) (4,000)
Net Cost of Production P68,000
Billing Rate x 150%
Billing Price P102,000