PART IV: ADVANCED FINANCIAL ACCOUNTING AND REPORTING

1. Flor Company consumed P450,000 worth of direct materials during May, 2020. At the end Ogres of the month,
the direct materials inventory of Flor was P25,000 lower than the May 1, inventory level. How much was the
direct materials purchased during May 2020?
a. P375,000 b. P400,000 c. P425,000 d. P475,000

2. Last month Lare Company placed P60,000 of materials into production. The printing department used 8,000
direct labor hours at P5.60 per hour and the Binding department used 4,600 hours at P6.00 per hour. Factory
overhead is applied at a rate of P6.00 per labor hour in the Printing department and P8.00 per hour in the Binding
department. Lare's inventory accounts show the following balances:
Beginning Ending
Finished Goods P22,000 P17,000
Work in Process 15,000 17,600
Materials 20,000 18,000
What is the cost of goods sold?
a. P108,000 b. P214,600 c. P217,200 d. P219,600

3. The following data were taken from the records of Ilagan Company:
08/31/2020 09/30/2020
Inventories
Raw Materials P? P50,000
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 expenses, 12.5% of sales, P25,000.
What is the cost of raw materials inventory as of August 31, 2020?
a. P30,000 b. P40,000 c. P46,000 d. P50,000

4. Department III of Giron Manüfacturing Company presents the following production data for the month of May
2020:
Opening inventory 3/8 completed 4,000 units
Started in process 13,000 units
Transferred 9,000 units
Closing inventory, ½ completed 4,000 units
¾ completed 4,000 units
What are the equivalent units of production for the month of May 2020?
FIFO Method Average Method
a. 12,500 units 13,000 units
b. 12,500 units 14,000 units
c. 15,000 units 14,000 units
d. 17,000 units 12,500 units

5. Ronald, Inc. Instituted a new process in October. During this month, 20,000 units were started in Department
A. Of the units started, 2,000 were lost in the process, 14,000 units were transferred to Department B, and 4,000
units remained in work in process at October 31. The work in process at October 31, was 100% complete as to
material cost and 50% complete as to conversion costs. Material cost of P54,000 and conversion of P80,000
was charged to department A in October. What were the total costs transferred to Department B?
a. P93,800 b. P105,000 c. P112,000 d. P114,800

6. A chemical Company manufactures a joint products of Pep and VIM, and a by product, Zest. Cost are assigned
to the joint products by the market value, which considers further processing costs in subsequent operations.
For allocating cost to the by product, the market value, or reversal cost method is used.
The total manufacturing costs for 10,000 units were P172,000 during the quarter.
Production and costs data follows:
Pep Vim Zest
Units produces 5,000 4,000 1,000
Selling Price per unit P50 P40 P5
Further processing cost per unit 10 5
Selling & admin. Expenses per unit 2
Operating profit per unit 1
What is the value of Zest to be deducted from the joint cost?
a. P0 b. P2,000 c. P3,00 d. P5,000

7. Using the same information in No. 6, what is the gross profit for Pep?
a. P0 b. P70,000 c. P80,000 d. P100,000

8. Briton Manufacturing Co. Manufactures two joint product and it uses the net realizable value method for
allocating joint costs. Product A sells for P30 while product B sells for P60.
Joint costs for June, 2020 were:
Materials P30,000
Direct Labor 15,000
Factory Overhead 10,000
Further processing cost after the split off point in order to finish the products into their final forms amounted to
P24,000 for product A and P36,000 for product B. The total units produced during the month were 2,000 for
product A and 1,000 for product B. What is the allocated joint cost of Product A?
a. P22,000 b. P27,50 c. P33,000 d. P36,000

9. The following data for the month of September were taken from the cost records of Department II of D products
which uses process costing system:
Opening inventory of work in process:
Units - 500 (with all materials added and 50% of labor and overhead)
Cost - Materials P2,400
Labor 1,500
Factory overhead 760
Put into production
Units - 5,000
Costs - Materials P25,100
Labor 19,380
Factory overhead 14,900
Completed and transferred 4,800 units
Ending inventory of work in process:
Units - 700 (with all materials, and 60% of labor and overhead)
The cost per equivalent unit, order (rounded to the nearest centavo):
FIFO Average FIFO Average
a. 11.92 11.92 c. 11.92 12.00
b. 12.00 11.92 d. 12.00 12.00

10. Flare Company incurred the following cost 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?

a. P382,000 b. P386,000 c. P388,000 d. P443,500

11. The factory ledger of DIA Corporation contains the following cost data for the year ended December 31, 2020:
Inventory
Opening Closing
Raw Materials P150,000 P170,000
Work in process 160,000 60,000
Finished goods 180,000 220,000
Raw Material 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) P360,000; (2) P480,000 c. (1) P 632,000, (2) P 240,000
b. (1) P632,000; (2) P720,000 d. (1) P 672,000; (2) P 480,000

12. San Juan Marketing Corporation, uses job order costing system. It has three production X,Y, and Z. The
manufacturing cost budget for 2020, is as follows:
Dept X Dept Y Dept Z
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. 01-20 which was completed in 2020, direct materials cost was P75,000 and the direct labor cost
was as follows:
Dept X P40,000
Dept Y 100,000
Dept Z 20,000
The corporation applies manufacturing overhead to each jod 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. 01-20 which was completed is 2020 is:
a. P150,000 b. P235,000 c. P310,000 d. P385,000

13. Pist Corporation is a manufacturing company engaged in the production of a single special product know as
"Pasta". Production cost are accumulated with the use of a job order cost system.
The following information is available is a available as of June 2020:
Work in Process P10,710
Direct materials inventory 48,600
In analysing the job-order cost sheet, the records disclosed that the composition of the work in process inventory
on June 1, 2020 were as follows:
Direct materials used P 3,960
Direct labor (900 hours) 4,500
Factory overhead applied 2,250
Total P10,710
The following manufacturing activity occurred during the month of June 2020:
Purchased direct materials costing P60,000
Direct labor worked 9,900 hours at P5 per hour
Factory overhead of P2.50 per direct labor hour was applied to production
At the end of June 2020, the following information was gathered in connection with the
inventories:
Inventories of the work in process:
Direct material used P12,960
Direct labor 7,500
Factory overhead applied 3,750
Total P24,210
Inventory Raw Materials P54,000
What is the cost of goods manufactured?
a. P108,600 b. P118.35 c. P131,850 d. P142.560

14. Goldilocks Company manufactures products Ma, Ri, Sa, and Co with product Co classified as a by-product
and sold at a lower price. Sales, including that for product Co, totaled P49,200 while production cost costs
amounted to P99,638. Selling expenses amounted to P2,460. The following information concerning the
companies operations for 2020 are obtained from the company's records:
Products Sales price per kilo Produced Units in Kilos Sold On hand
Ma P100 610 264 346
Ri 100 274 166 108
Sa 100 44 20 24
Co 35 340 120 220
Compute the ending inventory (at lower of cost or Net realizable value) at December 31, 2020 using joint cost
method of accounting with the cost apportionment on a unit cost per kilo basis:
a.P44,838.00 b. P53,275.15 c. P54,793.00 d. P56,159.00

(Using the information 15-45)

D Company contained the following account balances:
Cash P100,000
Accounts receivable 60,000
Finished goods 35,000
Work in process 18,000
Materials 50,000
Accounts payable 10,000
Accrued Payroll 8,000
Common Stock 200,000
Retained earnings 45,000
During January, 2022 the following transactions were completed.
A. Materials purchased on account P200,000
B. Factory overhead incurred on account P35,000
C. Payroll for the period consist of: direct labor 140,000; indirect labor P30,000; sales salaries-P25,000;
and administrative salaries P15,000. Deductions from payroll were as follows:
Withholding tax P18,520
SSS premiums 8,400
Phil Health contributions 1,125
Pag-ibig Funds 6,300
D. P175,000 was paid for payroll
E. Computation of employer's payroll tax is as follows:
Factory Selling Administrative
SSS Premiums P8,500 P1,250 P750
Phil Health 600 375 150
Pag-ibig 5,100 750 450
F. Materials issued: Direct Materials P185,000; Indirect-35,000.
G. Factory overhead was charged to production.
H. Work finished and placed in stock-P410,000
I. Cost of goods sold -P385,000. The markup was 40% of cost.
J. Cash collected customer, P405,000.
K. Payment for liabilities amounted to P220,000, other than payroll.

Prepare the following: Write your answer at the back of this questionnaire.
15-25. Journal entries to record the above transactions.
26-35. Cost of goods sold statement for January, 2022.
36-40. Income statement for January 2022.
41-45. Statement of financial position for January 2022.

46. Factory overhead can be charged on the basis of

a. direct expenses b. labor cost c. material cost d. prime cost

47. Fixed asset turnover ratio is a

a. long-term solvency ratio. c. short-term solvency ratio.
b. profitability ratio. d. turnover ratio.

48. Break-even point occurs at 40% of total capacity, margin of safety will be
 a. 40% b. 60% c. 80% d. 85%

49. What type of budget is designated to take into account forecast change in costs, prices, etc?
a. Flexible budget b. Functional budget c. Master budget d. Rolling budget

50. Costing refers to the techniques and processes of

a. allocation of costs. c. ascertainment of costs.
b. apportion of costs. d. distribution of costs.