1ST TRIMESTER, ACADEMIC YEAR 2019 - 2020

ICCT COLLEGES FOUNDATION, INC. – CAINTA CAMPUS

1ST TRIMESTER
ACCOUNTING203
A.Y. 2019-2020 FINAL EXAMINATION

PROBLEM. Show supporting computations in good form.

PROBLEM 1 (10 points):
The Red Crab, Inc. uses a process-costing system in its two producing departments. The following information
pertain to Department B for the month of August 2019.

Normal spoilage is 10% of output; inspection and identification of spoilage take place at the end of the process;
materials are added after inspection.

Department B received 56,000 units from Department A at a cost of P560,000. Department B costs were P48,000 for
materials and P360,000 for conversion costs.

A total of 32,000 units were completed and transferred to finished goods. At the end of the month, 20,000 units were
still in process, estimated to be 60% complete as to conversion costs.

Required:
1. Cost of Production Report for the month of August 2019.

PROBLEM 2 (5 points):
The following partially completed T-accounts summarize transactions for Sago Company during the year:

Raw Materials
Beg Bal 3,000 8,000
5,000
7,000

Finished Goods
Beg Bal 9,000 20,000
25,000

Work in Process
Beg Bal 6,000 25,000
6,500
9,000
7,000

Wages & Salaries Payable

10,000 2,000 Beg Bal
12,000

Manufacturing Overhead
1,500 7,000
2,000
750
3,000

Cost of Goods Sold

20,000

Required:
1. Compute the Cost of Goods Manufactured.
2. Compute the Direct Labor Cost.
3. Compute the Direct Materials Cost.
4. Compute the Manufacturing Overhead Applied.
5. Compute the Over- or Underapplied Manufacturing Overhead.

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PROBLEM 3 (11 points):

The books of Maricel Products Company show the following account balances as of March 1:

Finished Goods P 78,830

Work in Process P292,621
Materials P 65,000
Over-or Underapplied Factory Overhead P 12,300 (Cr.)

The work in process account is supported by the following job order cost sheets:

Direct Direct Factory

Job Item Materials Labor Overhead Total
204 80,000 Balloons P 15,230 P 21,430 P13,800 P 50,460
205 5,000 Life rafts 40,450 40,450 22,370 118,060
206 10,000 Life belts 60,875 43,860 19,366 124,101
P116,555 P120,530 P55,536 P292,691

During March, the following transactions occurred:

(a) Purchase of materials, P42,300.

(b) Purchase of special materials was P5,800 for new Job 207, which calls for 4,000 life jackets.
(c) Indirect labor cost was P12,480. Direct labor was as follows:

Job Amount Hours

204 P26,844 3,255,5
205 P22,750 3,250.0
206 P28,920 3,615.0
207 P20,370 2,910.0

(d) Materials issued:

Job 204 P 9,480

Job 205 P 11,320
Job 206 P 10,490
Job 207 P16,640*
‘* Excluding P5,800 of special materials, which are also issued at this time.

(e) Other factory overhead incurred or accrued (for brevity, credit the entire amount to Various Credits):
(f) Factory overhead is applied at the rate of P2.30 per direct labor hour. An applied factory overhead account
is used and is then closed to the overhead control account.

Insurance on factory P 830.00

Tax on real estate 845.00
Depreciation – machinery 780.00
Depreciation – factory building 840.00
Light 560.00
Coal used 1,810.00
Power 3,390.00
Repairs and maintenance 2,240.00
Indirect supplies 1,910.00
Miscellaneous 15,256.87

(g) Job 204 was shipped and billed at a contract price of P117,500.

Required:
1. In itemized form, compute the total cost of each job at the end of March.
2. Compute the amount of over- or underapplied factory overhead remaining in the overhead control account.
3. Compute the amount of work in process inventory on March 31.
4. Compute the cost of goods manufactured.
5. Compute the gross profit of Job 204.

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PROBLEM 4 (8 points):
Seashore Company produces a product which requires processing in the departments. In the second department, all
materials are added at the beginning of the process. The following date pertain to the operations of Department 2 for
June:

Units received from Department 1 65,000 units

Units completed and transferred to Department 3 45,000 units
Units in process, end 15,000 units
Stage of completion 80%
Cost from Department 1 P600,000
Cost added in the Department
Materials P240,000
Labor P171,000
Overhead P114,000

Required: Cost of Production Report for the Department 2 assumed that the lost units were classified as normal,
discovered at the beginning of the process.

PROBLEM 5 (10 points):

Diamond Company uses three departments to produce a detergent. The Finishing Department is the third stop
before the product is transferred to storage. 75% of the materials needed to give the detergent its final composition is
added at the beginning of the process and 25% when the process is ¾ completed in the Finishing Department. Any
lost units occur only at the 70% stage of completion and a spoilage rate of 6% of good units is considered normal.
The following data for the Finishing Department for October have been made available.

Production data:
Transferred in from prior department (@ P5.00 per unit) 50,000 units
Finished and transferred to storage 35,000 units
In process, Oct 31 (85% completed) 10,000 units

Additional data:
Cost added in this department
Materials P 68,250
Labor P164,500
Overhead P122,200

Required:
1. Cost of Production Report for the month of October.

PROBLEM 6 (11 points):

Juniper Company manufactures a single product in two departments, Cutting and Finishing. Units of product are
started in the Cutting Department and then transferred to the Finishing Department, where they are completed. Units
are inspected at the end of the production process in the Finishing Goods Inventory, and spoiled units are transferred
to Spoiled Goods Inventory. Spoiled units are inventoried at their salvage value of P15.00 each, and the
unrecoverable cost of spoilage is charged to Factory Overhead Control.

During July, 5,000 units were transferred from the Cutting Department to the Finishing Department and 3,800 were
transferred from the Finishing Department to Finished Goods Inventory. At the end of July, the Finishing Department
still had 800 units in process, 20% complete as to conversion costs. All materials are added at the beginning of the
process in Finishing Department. Cost data related to July operations in the Finishing Department are:

Costs from prior department P60,000

Materials P22,600
Labor P17,440
Overhead P13,080

Required:
1. Cost of Production Report for the Finishing Department.
2. Prepare the appropriate general journal entry to record the transfer of cost out of the Finishing Department
this period.

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PROBLEM 7 (25 points):

Samahan Inc. had the following inventories on July 1:

Finished Goods P75,000

Materials P50,000

The transactions for the month of July are as follows:

1. Purchased of Materials on account, P180,000.
2. Issued direct materials: Dept.1 - P90,000; Dept. 2 - P112,500.
3. The total payroll for the month amounted to P135,600 distributed as follows: Dept. 1 – P64,800; Dept. 2 –
P61,600 and the balance – indirect labor.
4. Factory overhead applied amounted to Dept. 1 – P59,400; Dept. 2 – P50,600.
5. Units completed and transferred to finished goods – 40,000.
6. Sold 25,000 units at P400,000.

Other information:
1.
Quantity Data Department 1 Department 2
Units started 60,000
Units completed 45,000 40,000
Stage of completion 60% 80%
Materials, in both departments, are added 100% at the beginning of the process.

2. The actual factory overhead incurred during the month was P112,800 excluding the indirect labor in
transaction #3.
3. The cost of goods sold at normal during the month was P369,000.

Required:
1. Journal entries to record the above transactions #1-6.
2. Cost of Production Report for both Departments.
3. Cost of units completed and transferred – Dept. 1.
4. Cost of goods manufactured – Dept. 2.
5. Materials, end.
6. Finished goods, end.
7. Work in process, end – Dept. 1 and Dept. 2
8. Gross profit at actual for the month of July.

PROBLEM 8 (20 points):

ABC Company uses two departments to produce a product. The following. The following data were taken from the
books for the month of May 2019.

Department A Department B
Units:
Started 60,000
Completed & Transferred 40,000 20,000
In process, end 20,000 10,000
Stage of Completion 75% 80%
Costs:
Materials P480,000 P245,000
Labor P330,000 P203,500
Overhead P220,000 P129,500

Additional information:
Department A – all materials added at the end of the process.
Department B:
2.1 – 50% of the materials are added at the beginning of the process, 25% added when 50% completed and
remaining 25% added at the end of the process.
2.2 – Normal spoilage rate is 25% of good units.
2.3 – Lost units are discovered when 90% completed.

Required:
1. Cost of Production Report for Department A and Department B.
2. Journalize the transactions for Department A and Department B.

END of Examination
“Don’t worry about anything. But pray and ask God for everything you need.”

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