Académique Documents
Professionnel Documents
Culture Documents
PROBLEM 1
Compute the equivalent units of production of conversion cost for each of the following independent
cases
PROBLEM 2
IDOL Inc. adds materials at the beginning of the process in department USB conversion costs were 70%
complete as to the 9,500 work-in-process units on September 1 and 40% incomplete as to the 7,000
work-in-process units on September 30. During September, 12,000 units were completed and
transferred to the next department. An analysis of the cost relating to work-in-process on September 1
and to production activity for September is as follows: (2 decimal places)
Costs
Materials Conversion
3. The total cost per equivalent unit for September under FIFO
4. The total cost per equivalent unit for September under average
PROBLEM 3
The following information is available for Updharmadown Corporation for the current month:
Started this month 120,000 units
Beginning WIP (3/5 incomplete) 11,250 units
Total spoilage 3,000 units
Abnormal spoilage 1,350 units
Ending WIP (30% to be done) ?
Transferred out 108,750 units
Current Costs:
Material P180,000
Conversion P525,915
All materials are added at the start of production and inspection point is at the end of the process. Using
the more accurate method representing the physical flow of units.
PROBLEM 4
Housemartins Corporation has the following information for the current month
Current Costs:
Material P170,625
Conversion P265,335
All materials are added at the start of the production process. Housemartins Corporation inspects goods
at 100 percent completion as to conversion. Using the method that does not commingle the beginning
and the current period production activity.
8. What are the equivalent units of production for the conversion cost?
9. Total costs of transferred out units
10. The amount of work-in-process, end
PROBLEM 5
The Fantastic Decorations Corporation makes wreaths in two departments: Forming and Decorating.
Forming began the month with 500 wreaths in process that were 100 percent complete as to material
and 40 percent complete as to conversion. During the month, 6,500 wreaths were started and 4,900
units were completed. At month end, Forming had 1,200 wreaths that were still in process that were
100 percent complete as to material and 50% complete as to conversion. The company expects spoilage
of no more than 10% of the units started in process. Assume Forming uses the weighted average
method of process costing. Costs in the Forming Department are as follows:
Current Costs:
Material P14,820
Conversion P20,125
The Decorating Department had 600 wreaths in process at the beginning of the month that is 90%
incomplete as to conversion. The department had 800 units in ending Work In Process that were 85%
complete as to conversion. Inspection is done when the wreaths are 80% complete. After this, the
ribbons are added to the units. 4,100 units were completed during the month. Spoilage of no more than
3% of the units started and completed in considered to be normal. Decorating uses the FIFO method of
process costing and costs associated with Decorating are:
Current Period:
Transferred In ?
Ribbon P26,980
Conversion P95,820
Answer Key
1. 57 450
2. 16 875
3. 10
4. 6.49
5. 645 690
6. 88 627.50
7. 7 897.50
8. 192 675
9. 469 606
10. 52 696
11. 31 850
12. 5 460
13. 1 625
14. 4 900
15. 5 200
UNIVERSITY OF SANTO TOMAS
ALFREDO M. VELAYO COLLEGE OF ACCOUNTANCY
SOCIETY OF BUSINESS MANAGERIAL ACCOUNTANTS
A.Y. 2016-2017
Problem Solving
A. The Fantastic Decorations Corporation makes wreaths in two departments: Forming and Decorating.
Forming began the month with 500 wreaths in process that were 100 percent complete as to
material and 40 percent complete as to conversion. During the month, 6,500 wreaths were started
and 4,900 units were completed. At month end, Forming had 1,200 wreaths that were still in
process that were 100 percent complete as to material and 50 percent complete as to conversion.
The company expects spoilage of no more than 10 percent of the units started in process. Assume
Forming uses the weighted average method of process costing. Costs in the Forming Department
are as follows:
The Decorating Department had 600 wreaths in process at the beginning of the month that is 90
percent incomplete as to conversion. The department had 300 units in ending Work in Process
that were 75 percent complete as to conversion. Inspection is done when the wreaths are 60
percent complete. Ribbons are added at 65 percent completion. Other materials are assumed
to be added evenly throughout the decoration process. 4,100 units were completed during the
month. Spoilage of no more than 15 percent of the units started and completed is considered
to be normal. Decorating uses the FIFO method of process costing, and the costs associated
with
Decorating are:
Other materials Chemical X and Chemical Y are added at the beginning, 45 percent and 90 percent
completion respectively.
C. Sheldon Inc. purchases logs from independent timber contractors and processes them into three
types of lumber products as follows:
a. Studs for residential construction (walls and ceilings)
b. Decorative pieces (fireplace mantels and beams for cathedral ceilings)
c. Posts used as support braces (mine support braces for exterior fences around ranch
properties)
These products are the result of a joint process that involves removing bark from the logs,
cutting the logs into a workable size and then cutting the individual products from the logs,
depending upon the type of wood (pine, oak, walnut, or maple) and the size (diameter) of the
log.
Total joint costs amounted to P5,000,000. Product yield and sales value on a per-unit basis are
as follows:
Product Monthly output Fully processed sales price Cost to sell
Studs P243,750 P8 P2
Decorative pieces 68,900 100 10
Posts 48,750 20 3
The studs and posts require no further processing whereas the decorative pieces must be
planed and further sized after emerging from the sawmill. This additional processing costs
P1,378,000 per month. Without this planning and sizing process, there is still an active market
for the unfinished decorative pieces where the sales and prices averages P50 per unit. The cost
that the company will incur to be able to sell the product will be the same regardless of their
decision ti sell as is or process further. The company uses the relative sales value method of
allocating joint cost and plans to maximize their profit for the period.
D. A pharmaceutical company processes a material which is to yield three outputs, Product D, E, and F.
The company has purchased P850,000 worth of raw materials and incurred conversion costs of
P350,000.
E 23,000 30 150,000 35
F 25,000 55 120,000 59
14. By how much will the profit decrease if the company chooses to process all the products
further?
E. Quartz Company manufactures three different products from using a single raw material. Pertinent
information is presented below:
Materials P1,500,000
Direct Labor P250,000 P340,000 P690,000 1,280,000
Variable factory overhead 123,750 173,250 198,000 495,000
Fixed factory overhead 297,000 202,000 101,000 600,000
All the units produced were also sold during the year except 46,200 units of sapphire. There was no
finished goods inventory beginning.
Assume the use of relative sales value method of allocating joint cost (no rounding off for the
percentage to be used for allocation):
18. How much of the total joint cost was allocated to Sapphire?
19. How much is the cost per unit of Turquoise?
20. What is the amount to be reported as operating expense for the year?
21. How much is the net income of Quartz for the year?
F. The following information relating to the cost of quality if Hansen Company is presented below:
Recruiting P350,000
Continuing supplier verification 250,000
Packaging inspection 50,000
Litigation 50,000
Quality training 275,000
Marketing research 125,000
Quality audits 134,000
Warranty costs 35,600
Discounts due to defects 45,000
Rework costs 37,800
Lost profit from selling defective units 69,800
26. How much is the lost from profit from selling defective units?
27. How much is the total cost of noncompliance?
Answer Key
1. 3 882
2. 25 235
3. 8 240
4. 144 075
5. 11 922
6. 6.05
7. 8 550
8. 133 530
9. 1 359 324
10. 6.28
11. 765 306
12. 5 673 605
13. Product E and F
14. 55 000
15. 4 243 220
16. 2 592 230
17. 248 050
18. 392 211
19. 6
20. 1 650 990
21. 2 565 671
22. 884 000
23. 300 000
24. 107 600
25. 130 600
26. 11 200
27. 121 775
UNIVERSITY OF SANTO TOMAS
ALFREDO M. VELAYO COLLEGE OF ACCOUNTANCY
SOCIETY OF BUSINESS MANAGERIAL ACCOUNTANTS
A.Y. 2016-2017
Problem 1
Compute for the missing items: nos. 1-12 are based on the foregoing:
CASE I (2-Way)
CASE II (3-Way)
Standard Factory Overhead P 9,800
Spending Variance P 1000 - F
Volume Variance P 500 - UF
Variable Efficiency Variance P 200 - UF
The standard cost of one unit of a manufactured product of JUGGERNAUT Company follows:
Problem 3
The PSYLOCKE Company manufactures one product and provides you with the follwingin formation for
the year 2012:
Normal direct labor hours - 155,000 Actual direct labor hours - 148,000
Actual Variable OH - P475,000 Actual fixed OH - P632,500
Standard fixed OH - P4.00/hr Units manufactured - actual 60,000
Total Budgeted factory OH - P1,085,000
Problem 4
21. Calculate the actual hours worked rounded to the nearest hour.
22. How much is the total labor variance?
Problem 5
During August 2012, WAR MACHINE Company produced 1,000 units of a product. Actual material cost is
P2.20 per pound. The direct material standard requires 4 pounds of material per unit of product at a
standard price of P2.00 per pound. The material price variance is P720. Assume the quantity purchased
and used is the same.
Problem 6
The BLACKHEART HOSPITAL performs blood tests in its laboratory. The following standards have been
set for each blood rest performed.
Item Std. Price or Quantity Std. Rate or hours
Direct Materials 2 plates P2.75 per plate
Direct Labor 0.2 hours P15.00 per hour
Variable overhead 0.2 hours P7.00 per hours
During October, the laboratory performed 1,500 blood tests. On October 1, there were plates
on hand; after a plate is used for a blood test it is discarded. Variable overhead is assigned to blood tests
on the basis of direct labor hours.
Answer Key
1. 8 000
2. 8 500
3. 1 000 UF
4. 10 300
5. 10 500
6. 9 500
7. 300 F
8. 18 500
9. 800 UF
10. 1 500 F
11. 1 767
12. 500 UF
13. 1 000 UF
14. 7 000 F
15. 7 800 F
16. 2 000 UF
17. 31 000 UF
18. 6 000 F
19. 12 500 UF
20. 20 000 UF
21. 7 420
22. 2 255 F
23. 800 F
24. 360 F
25. 550 UF
26. 0
27. 600 UF
28. 120 UF