1.

A company has two service departments (X and Y) and two production departments
(A and B). Departmental data for January were as follows:

X Y
Costs incurred P27,000 P18,000
Services provided to:
X 20%
Y 10%
A 50% 30%
B 40% 50%

What are the total allocated service department costs to Y if the company uses the reciprocal
method of allocating its service department costs?
P23,051

2. Hinata Company uses activity-based costing to determine unit product costs for external
reports. The company has two products: A and B. The annual production and sales of
Product A is 10,000 units and of Product B is 4,000 units. There are three overhead
activity centers, with estimated overhead costs and expected activity as follows:

Product B
Activity center Estimated overhead costs Product A activity
activity
 Activity 1 P25,000 150 100
Activity 2 65,000 800 200
Activity 3 90,000 1,000 2,000

What is the overhead cost per unit of Product A under activity-based costing (ABC)?
P9.70

Hinata Company

Activity 1 (25,000 / 250) = 100

Activity 2 (65,000 / 1000) = 65

Activity 3 (90,000 / 3000) = 30

Applied Overhead to Production A

Activity 1 (150 x 100) = 15,000

Activity 2 (800 x 65) = 52,000

Activity 3 (1000 x 30) = 30,000

Total P 97,000

Units divided by 10,000

Overhead unit P 9.70

3. Mamshy Corporation's production cycle starts in the Filtering Department. The

following information is available for January:

WIP, January 1 (50% complete) 40,000 units

Started in January 240,000 units
WIP, January 31 (60% complete) 25,000 units

Materials are added at 55% stage of completing in the Filtering Department. What are
the equivalent units of production for the month of January?

280,000 units

Mamshy corporation

Beg. 40,000
Started 240,000

UTAF P280,000

4. Sasha Co. makes a single product in two departments. The production data for
Department 2 for November 2019 follows:

Quantities:
In process, November 1 (40% done) 4,000 units
Received from Department 1 30,000 units
Completed and transferred 25,000 units
In process, November 30 (60% done) 6,000 units
Production Costs: November 1 November 30
Transferred In P16,300 P89,100
Materials 3,800 67,500
Conversion Cost 1,940 81,000

Materials are added at the start of the process, and losses normally occur during the
early stages of the operation.
How much is the cost of goods manufactured using the FIFO method?
P214,040
5. Ino Company uses a budgeted overhead rate in applying overhead to production
orders on a labor cost for Department A and on a machine hour basis for Department
B. The company made the following projections:
 BUDGET DEPARTMENT A DEPARTMENT B TOTAL
Factory overhead P72,000 P75,000 P147,000
Direct labor cost 64,000 17,500 81,500
Machine hours 500 10,000 10,500

During the month of January, the cost record for a job order no. 501 (consisted of 30
units of product), which was processed through both departments, shows the following:

ACTUAL DEPARTMENT A DEPARTMENT B TOTAL

Materials issued P30 P45 P75
Direct labor cost 36 25 61
Machine hours 6 15 21

Assuming that Department A applies overhead based on direct labor peso and that
Department B applies overhead based on machine hours, what is the unit cost of the
job?

P9.63

Actual (Department A)

Applied FOH (36 x 112.5%) P 40.5

Materials 30

DL Cost 36

Total cost P 106.5

Add: DEPT. B

Applied FOH (15 x 7.5) 112.5

Materials 45.00

DL cost 25.00

Total GIT, Job 501 P 289

Unit cost

(289 / 30 units ) = P9.63

6. Ginger Company, which had 6,000 units in work-in-process at May 1 that were 60%
complete as to conversion costs. During May, 20,000 units were completed. At May 31,
 8,000 units remained in WIP which were 40% complete as to conversion costs.
Materials are added at the beginning of the process.
How many units were started in May?
22,000

Ginger Company

Beg. 6,000

Started 22,000 (28,000 – 6,000)

UAF P28,000

Completed 20,000

End 8,000

UAF P28,000

7. For the month just ended, the following data were generated by Xiao Corporation:

Physical Units:
Work-in-process, beginning inventory 4,000 gallons
Direct materials, chemicals ("?" complete)
Direct materials, cans (0% complete)
Direct labor (25% complete)
Overhead (25% complete)
Started during the month 21,000 gallons
Transferred to Shipping Department during the month 20,000 gallons
Work-in-process, ending inventory
Direct materials, chemicals (100% complete)
Direct materials, cans ("?" complete)
Direct labor (25% complete)
Overhead (80% complete)

Costs for the month:

 Work-in-process, beginning inventory:
Direct materials, chemicals P456,000
Direct labor (P100 per hour) 62,500
Overhead 18,750
The month's cost added:
Direct materials, chemicals P2,284,000
Direct materials, cans 70,000
Direct labor (P100 per hour) 350,000
Overhead 105,000

The company manufacture high-quality paints. Production begins with the blending of
various chemicals, which are added at the beginning of the process and ends with the
canning of the paint. Canning occurs when the mixtures reach the 90% stage of
completion. The gallon cans are then transferred to the Shipping Department for crafting
and shipment. Direct labor and overhead are added continuously throughout the
process. Overhead is allocated on the basis of direct labor hours at the rate of P30 per
hour.
Using the weighted-average method, the cost per equivalent unit is

P135.44

8. On March 1, Zhongli Company had 20,000 units of WIP in Department 1 which

were 100% complete as to material costs and 20% complete as to conversion
costs. During March, 160,000 units were started in Department 1 and 170,000
units were completed and transferred to Department 2. WIP on March 31 was
 100% complete as to material and costs and 40% complete as to conversion
costs. By what amount would the equivalent units for conversion costs for the
month of March differ if the weighted average method were used instead of FIFO?
4,000 increase

Zhongli Company

Beg. 20,000

Started 160,000

P 180,000

FIFO WEIGHTED AVE.

Completed 170,000 100% ------- 100% 170,000

Beg -20,000 80% 16,000 ----------

Started -150,000 100% 150,000 ----------

End 10,000 40% 4,000 40% 4,000

P 180,000 P 170,000 P 174,000

4,000 increase

9. The managers of Ayaka Manufacturing are discussing ways to allocate the cost of
service departments such as Quality Control and Maintenance to the production
departments. To aid them in this discussion, the controller has provided the following
information:

Quality Maintenanc
Machining Assembly
Control e
Budgeted overhead costs before
P350,000 P200,000 P400,000 P300,000
allocation
Budgeted machine hours 50,000
Budgeted direct labor hours 25,000
Budgeted hours of service:
Quality control 7,000 21,000 7,000
Maintenance 10,000 18,000 12,000

If Ayaka uses the direct method of allocating service department costs, the total service
costs allocated to the assembly department would be
 P167,500

Ayaka Manufacturing Assembly

Quality Control (350,000 x 7/28) 87,500

Maintenance (200,000 x 12/30) 80,000

Allocated service cost P 167,500

10. T.I.P. allocates support department costs to its individual schools using the step
method. Information for April 2019 is as follows:

Maintenance Power
Costs incurred P99,000 P54,000
Services provided to:
Maintenance 10%
Power 20%
School of Education 30% 20%
School of Technology 50% 70%

What is the amount of April 2019 support department costs allocated to School of
Education?
P46,100

TIP

School of Education Power

Maaintenance (99,000 x 30%) 29,700 54,000

Power (33,800 x 2/9) 16,400 (99,000 x 20%) 19,800

P 46,100 P 73,800
11. Ganyu Corporation manufactures a product in three departments. The product is
cut out of sheet metal in the Cutting Department, then transferred to the Forming
Department where it is bent to shape and certain parts purchased from outside
vendors are added to the unit. The product is finally transferred to the Painting
Department, where it is printed, painted, and packaged. Since only one product
is manufactured by the company, a process cost system is used. Data related to
December operations in the Forming Department are:

Units in beginning inventory (75% labor and overhead) 1,400

Units received from the Cutting Department this period 4,600
Units transferred to Painting Department this period 5,000
Units in ending inventory (60% materials and 30% labor
1,000
and overhead

Beginning Added this

Costs charged to the department:
Inventory period
Costs from preceding department P21,120 P70,380
Materials 5,880 20,440
Direct labor 2,614 17,526
Factory overhead 5,228 35,052

By what amount would the cost per equivalent unit of conversion costs for the month of
March differ if the weighted average method were used instead of FIFO?
P0.97 decrease
 12. Shino Company has identified the following overhead costs and cost drivers
for the coming year:

Budgeted cost Budgeted activity level

Machine setup P 20,000 200
Inspection 130,000 6,500
Material handling 80,000 8,000
Engineering 50,000 1,000
Job ‘JR’ Job ‘SR’
Direct materials P 5,000 P 12,000
Direct labor P 2,000 P 2,000
Units completed 100 50
Number of setups 1 2
Number of inspections 20 10
Number of material
30 10
moves
Engineering hours 10 50
The company prices all its products at 50% above full production cost. Budgeted direct
labor cost was P 100,000 and budgeted direct material cost was P 280,000. Under ABC,
what would be the price of Job ‘SR’ per unit?
P510

Shino company

FOH rate

Setup (20,000/200) @100

Inspection (130,000/6500) @20

Handling (80,000/8,000) @10

Engineering (50,000/ 1000) @50

Applied Overhead Cost to SR

Setup (100 x 2) = 200

Inspection (20 x 10) = 200

Handling (10 x 10) = 100

Engineering (50 x50)= 2500

Total OH cost P 3,000

Add: direct materials 12,000

Direct labor 2,000

Total cost P17,000

Divided units completed ____50

Total P 340

Multiply by 150%

Price per unit P 510

13. Sakura Company makes two products X and Z. X is being introduced this period whereas Z
has been in production for 2 years. For the next period, 1,000 units of each product are to be
manufactured. Assume that the only relevant overhead item is the cost of engineering
change orders; that X and Z are expected to require eight and two orders, respectively; that X
and Z are expected to require 2 and 3 machine hours, respectively; and that the cost of a
change order is P 600. If Sakura applies engineering change order costs on the basis of
machine hours, what is the cross-subsidy per unit arising from this peanut-butter approach?
P2.40
 14. The following data for the month of April were taken from the cost records of
Department I of Hany Products which uses process costing system.

Opening inventory of work-in-process:

Units (All materials added and 50% of labor and overhead) 500 units
Cost - Materials P2,400
Labor 1,500
Factory Overhead 760
Put into production:
Units 5,000 units
Cost - Materials P25,100
Labor 19,380
Factory Overhead 14,900
Completed and transferred 4,800 units
Ending inventory of work in process:
Units (All materials and 60% of labor and overhead) 700 units

How much is the cost per equivalent unit using the FIFO method?
P11.92

Hany Products

Beg. 500

Started 5,000

UTAF P 5,500

Completed M CC

Beg. 500 ----- 50% 250

Started 4300 100% 4300 100% 4300

End 700 1005 700 60% 420_

UAF P5,500 P5,000 P4,970

Cost charged to dept.

Beg Materials 2,400

Labor 1,500

FOH 760

Total P4,660

Cost added

Materials (25,100 / 5000) @5.02

Labor (19,380/4970) @3.90

OH (14900/4970) @3

Current unit cost 11.92

15. Materials are added at the start of the process in Xiangling Company's
blending department, the first stage of the production cycle. The following
information is available for October:

Work-in-process, October 1 (60% complete as to conversion costs) 60,000 units

Started in October 150,000 units
Lost in production 30,000 units
Work-in-process, October 31 (50% complete as to conversion costs) 70,000 units

Under Xiangling's cost accounting system, the costs incurred on the lost units are
absorbed by the remaining good units. By what amount would the equivalent units for
materials for the month of October differ if the FIFO method were used instead of the
weighted average method?
60,000 decrease

Xiangling Company

Beg. 60,000

Started 150,000

Total 210,000

FIFO METHOD WEIGHTED AVERAGE

Completed 10,000

Beg -60,000 ----- 100% 10,000

Started -50,000 100% 50,000

End 70,000 100% 70,000 100% 70,000

Lost units 30,000 ___ ___

P120,000 P180,000

60,000 decrease