PROBLEMS

1. Department of Hope Manufacturing Company presents the following production data for the
month of May, 2013:

Opening inventory 3/8 completed 4,000 units

Started in process 13,000 units
Transferred 9,000 units
Closing inventory, 1/2 completed 4,000 units
3/4 completed 4,000 units

What are the equivalent units of production for the month of May, 2013.

FIFO AVERAGE
a.12,500 units 13,000 units
b.17,000 units 12,500 units
C. 12,500 units 14,000 units
d. 15,000 units 14,000 units

2. Rose Co, bad 3,000 units in work in process at April 1, 2013, which were 60% complete as to
conversion cost, During April, 10,000 units was completed. At April 30, 4,000 units remained in
work in process which were 40% complete as to conversion cost. Direct materials are added at
the beginning of the process.

How many units were started during April?

a. 9,000
b. 9,800
c. 10,000
d. 11,000

3. The Ilang-llang Corporation, engaged in a manufacturing business and using process costing,
gave the following production data for three different situations. Stages of completion of the
inventories apply to all cost elements.

(1) Started in process, 6,500 units; transferred, 5,500 units; in process, 400 units
50% completed and 600 units 25% completed.

(2 ) Beginning inventory, 6,250 units 40% completed; started in process, 25,000 units;
transferred, 26,250 units; in process at the end, 3,000 units 50% completed and 2,000 units
25% completed.

(3) Beginning inventory, 6,000 units 30% completed; started in process. I3,000
units; lost in processing, 500 units from production started this period (loss was normal and
occurred throughout the production process); transferred, 14,000 units; in process at the end,
3,000 units 50% completed and 1,500 units 75% completed.

What are the equivalent production of the three different situations under FIFO and average
costing?

FIFO AVERAGE
1 2 3 1 2 3
a.5,850 25,750 14,825 5,850 28,250 16,625
b. 5,850 27,550 18,425 5,580 22,850 15,662
c.8,550 20,575 15,428 5,508 28,025 16,265
d. 5,058 20,775 12,524 5,850 28,250 16,625

4. Orchids Company has a process cost system using the FIFO cost flow method. All materials
are introduced at the beginning of the process in Department One. The following information is
available for the month of January 2012:
Units
Work in process, 1/1/08 (40% complete as to conversion 500
costs)
Started in January 2,000
Transferred to Department Two during January 2,100
Work in process, 1/31/08 (25% complete as to 400
conversion costs)

What are the equivalent units of production for the month of January 2013?

Materials Conversion
a.2,500 2,200
b.2,500 1,900
c.2,000 2,200
d.2,000 2,000

5. Anahaw Company's production cycle starts in the Mixing Department. The following
information is available for the month of April 2013?
Units
Work inprocess, April 1 (50% complete) 40,000
Started in April 240,000
work-in-process, April 30 (60% complete) 25,000

Materials are added in the beginning of the process in the Mixing Department. Using the
weighted average method, what are the equivalent units of production for the month of April
2013?
Materials Conversion
a.240,000 250,000
b.255,000 255,000
c.270,000 280,000
d.280,000 270,000

6. Materials are added at the start of the process in Jasmin company's cutting department, the
first stage of the production cycle. The following information is available for the month of
March 2013.
units
Work in process, March 1 (60% complete as to 60,000
conversion costs)
Started in March 150,000
Transferred to the next department 110,000
Lost in production 30,000
Work in process, March 31 (50% complete as to 70,000
conversion costs

Under Jasmin's cost accounting system, the costs incurred on the lost units are absorbed by the
remaining good units. Using the First in, First out method, what are the equivalent units for the
materials unit cost calculation?

a. 120,000
b.145,000
c. 180,000
d. 210,000

7. Bayani Manufacturing Company, using the FIFO process cost system, has the following data
for the month of April:
Percent Complete
Actual Units Materials Conversion cost
Beginning Inventory 15,000 * I 00% 40%
Transferred in 150,000
Transferred out 120,000
Ending Inventory 45,000 100% 30%

What are the equivalent units of production for the month of April?

Materials Conversion Costs

a.150,000 127,500
b.165,000 139,500
C. 135,000 124,500
d. 150,000 133,500
8. Eastern Products Inc., Input all materials at the start of operations in Process 1. The inventory
is process at the beginning of January consisted of 4,000 units with a total cost of materials of
P100,000 and labor and overhead of P20,000 . In January, 20,000 units were started in process
with material cost of P500,000. Labor and overhead in January cost P280,000. As of end of
January., the inventory was 100% complete in materials but only 60% in labor and overhead.
The ending inventory consisted of 10,000 units. The equivalent units of labor and overheard for
the month of January amounted to:

a.20,000
b.10,000
C. 26,000
d. 30,000

9. Yakal Company computed the flow of physical units completed for Department M for the
month, of March 2013 as follows:
Units completed:
From work-in process on March 1, 2008 15,000
From March production 45,000

No. 9 – Continued

Materials are added at the beginning of the process. The 12,000 units of work in process at
March 31, 2013, were 80% complete as to conversion costs. The work in process at March 1,
2043 was 80% complete as to conversion costs. Using the FIFO method, the equivalent units for
March conversion costs were:

a. 55,200
b. 57,000
C. 60,600
d. 63,600

10. Mataba Company sells food processors and manufactures them in a single continuous
process. At the end of August there were 200 units valued at P30,095, which consists of
P25,200 in materials cost and P4,895 in conversion cost. These were 100% complete as to
materials and 25% complete as to conversion cost 1200 units were added to production during
September, and these had materials costs of P168,000. Processors which have not been
completed at the end of September total 200 units and were 100% complete as to materials
and 50% complete as to conversion cost. Conversion cost during September were P158,125.
There were no units lost in process.

What are the equivalent units of production for September?

Materials Conversion Cost

a.1,400 1,350
b.1,200 1,100
c.1,200 1,150
d.1,200 1,250

11. The Wiring Department is the second stage of Acacia Company's production cycle. On May
1, the beginning work-in process contained 25,000 units which were 60% complete as to
conversion costs. During May, 100,000 units were transferred-in from the first stage of Acacia's
production cycle. On May 31, the ending work in Process contained 20,000 units which were
80% complete as to conversion costs. Material costs are added at the end of the process, using
the weighted-average method, the equivalent units were:

Materials Conversion costs

a.125,000 100,000
b.105,000 105,000
c.105,000 121,000
d.125,000 121,000

12. Dhalia Company adds materials at the beginning of the process in Department A
Information concerning the materials used in April 2013 production is as follows:

Units
Work-in-process at April 10,000
Started during April 50,000
Completed and transferred to next 36,000
department during April
Normal spoilage incurred 3,000
Abnormal spoilage incurred 5,000
Work in process at April 30 16,000

Under Dhalia's cost accounting system, costs of normal spoilage are treated as part of the costs
of good units produced. However, the costs of abnormal spoilage are charged to factory
overhead. Using the weighted-average method, what are the equivalent units for the materials
unit cost calculation for the month of April?

a.47,000
b.52,000
C. 55,000
d. 57,000

13. The following information pertains Lanao's First Department for the month of
April:
 Number of units Cost of Materials
Beginning work-in-process 15,000 P 5,000
Started in April 40,000 18,000
Units completed 42,000
Ending work-in-process 12,000

All materials are added at the beginning of the process. Using the weighted average method,
the cost per equivalent unit for materials is:

a.P0.59
b.P0.55
C. P0.45
d. P0.43

14. Information concerning Dept. B of Simon Co. follovvs:

Units
Beg. work in process 5,000 P6,300 P2,90 P- P 3,400
Units transferred in 35,000 58,000 17,500 25,500 15,000
40,000 P64,300 P20,400 25,500 P18,400

Units completed 37,000

End. work in process 3,000

Conversion costs were 20% complete as to the beginning work in process and 40% complete as
to the ending work in process. All materials are added at the end of the process. Simon Co. uses
the weighted average method.

The unit cost for conversion costs and for transferred-in cost rounded to the nearest centavo
are:

a. P0.44 and P0.48

b. P0.46 and P0.51
c.P0.48 and P0.51
d. P0.50 and P0.53

15. Reyna Company manufactures product X in a two-stage production cycle in Departments A

and B, Materials are added at the beginning of the process in Department B. Roy uses the
weighted-average method. Conversion costs for department B were 50% complete as to the
6,000 units in the beginning work-in- process and 75% complete as to the 8,000 units in the
ending work-in-process,12,000 units were completed and transferred out of Department B
during February 2013. An analysis of the costs relating to work-in-process and production
activity in Department B for February 2013 is as follows:
 Transferred Cost
In Materials Conversion
Work-in-process,
February 1:
costs attached P12,000 P2,500 P1,000
February activity:
costs added 29,000 5,500 5,000

The total cost per equivalent unit transferred out for February 2013 of product X, rounded to
the nearest centavo, was:

a. P2.75
b. P2.78
c. P2.82
d. P2.85

16. On April 1,2013, the Hari Company had 6,000 units of WIP in Department B, the second and
last stage of their production cycle. The costs attached to these 6,000 units were P12,000 of
costs transferred in from Department A, P2,500 of material cost added in department B and
P2,000 of conversion cost added in Department B. Materials are added in the beginning of the
process in Department B. Conversion was 50% complete on April 1,2013. During April, 14,000
units were transferred in from Department A at a cost of P27,000; and a materials costs of
P3,500 and conversion costs of P3,000 were added in Department B. On April 30, 2011,
Department B had 5,000 units were added in Department B. On April 30,2011 Department B
had 5,000 units of WIP 60% complete as to conversion costs. The costs attached to these 5,000
units were P 1 0,500 of costs transferred in from Department A, P1,800 of material costs added
in Department B and P800 of conversion costs added in Department B.

Using the weighted-average method, what are the unit costs?

Transferred Materials Conversion
in cost
a.P1.95 P.25 P.27
b.P1.95 P.30 P.28
c.P1.80 P.30 P.27
d. P1.70 P.25 P.28

I 7. Department CC has the following April production information:

Beginning work in process 24,000 units

Units started during the month 780,000 units
Units transferred to next operation in April 744,000 units
Ending work in process (40% complete) 60,000 units
Beginning work in process cost P 120,000
April's production cost 5,256,000
No 17 Continued
The unit cost of production is:

a.P 7.00
b. P20.22
c. P 6.89
d. P 6.69

I 8. For the month of March, Payaso Inc. registered the following information:

Beginning work in process (70% complete) 40,000 units

Started in March 300,000 units
Ending work in process (80% complete) 60,000 units

The cost of beginning work in process was FP 140,000 while the production costs for the month
registered at P 1 ,172,000. Using the average method, what is the unit cost of production for
March?

a.P4.00
b.P3.86
C. P3.91
d. P4.69

I 9. The Masaya Corporation manufactures only one product, and the raw materials must pass
through Processes A, B, and C, in that order, before completion.

On October 1, the inventories of Process C and Finished Goods were:

Process C -- 1,200 units, 2/3 completed, P4,200.

Finished Goods -- 1,000 units, at P3.00 per unit.

During October, 2,000 units valued at P5,000 were transferred in from Process B.
Direct labor cost in Process C was P3,100 and the overhead cost applied to Process C was
P3,200.

The inventories on October 31 were:

Process C -- 660 units, 1/2 completed.
Finished Goods -- 1,300 units
The conversion cost per equivalent unit for October is:

No. 19 --- continued

a.P1.50
b.P2.75
C. P3.00
d. P3.50

20. Materials are added at the start of the process in Arce Company's Blending Department, the
first stage of the production cycle. The following information is available for the month of July,
2013.
Work-in-process, July 1 (60% complete as to conversion 60,000 units
costs)
Started in July 150,000 units
Transferred to the next department 110,000 units
Lost in production 30,000 units
'Work-in-process, July 31 (50% complete as to 70,000 units
conversion costs)

Under Arce's cost accounting system, the costs incurred on the lost units are absorbed by the
remaining good units. Using the weighted-average method, what are the equivalent units for
the materials unit cost calculation?

a. 120,000
b. 145,000
c. 180,000
d. 210,000

21. Information for the month of May concerning Department A, the first stage of Pinay
Corporation's production cycle is as follows:

Conversion
Materials Costs
Work-in-process, beginning P 4,000 P 3,000
Current costs 20,000 16,000
Total costs P24,000 P19,000
Equivalent units based on
Weighted-average method 100,000 95,000
Average unit costs P 0.24 P 0.20
Goods completed 90,000 units
Work in process, end 10 000 units
No. 21 --- Continued

Material costs are added at the beginning of the process. The ending work-in process is 50%
complete as to conversion costs. How would the total costs accounted for be distributed, using
the weighted-averaged method?

Goods Completed Work-in Process, End

a P39,600 P3,400
b. P39,600 P4,400
C. P43,000 P0
dr. P44,000 P3,400

22. Samahan, Inc. manufactures a highly sensitive smoke alarm and uses the first-in, first-out
method for process costing and finished goods costing. In costing finished goods, the unit cost
for units completed from the work in process at the beginning of the period is kept separate
from the unit cost of those started and completed during the period.

The total manufacturing costs for the month of June is P264,000 and 2,750 units are completed
during the month.

The inventories at the beginning of

June area
Smoke alarms in process (8O% 1,250 units P128,000
complete)
Smoke alarms on hand (complete) 600 units 76,800
The inventories at the end of June are:
Smoke alarms in process (50% 500 units
complete)
Smoke alms on hand (complete) 700 units

How would the total costs accounted for be distributed?

Work-in Process Finished Goods

a. P33,000 P92,000
b. P33,000 P79,000
c. P32,000 P92,000
d. P66,000 P52

23. China, Inc. manufactures a product which goes through three consecutive Processes,
Process I , Process 2 and Process 3. Data for the month of September, 2013 are as follows:
Process 1 Process 2 Process 3
P8,000 P13,000 P2,000
Opening Work in Process 20,000 4,000 5,000
Materials added 10,000 10,000 16,000
Conversion Costs 6,000 9,000 4,000

What was the value of the output transferred from Process 3 to the finished goods warehouse
for the month of September?

a. P63,000
b. P65,000
c. P67,000
d. P69,000

24. Lucas Company adds materials in the beginning of the process in the 'Forming Department,
which is the first of two stages of its production cycle. Information concerning the materials
used in the Forming Department in October 2013 are as follows:

Units Material Costs

Work in process at October 1, 2013 6,000 P3,000
Units started during October 50,000 50,000
Units completed and transferred to
the next department during October 40,000

Using the weighted-average method, what was the materials cost of work in process at October
31, 2013?

a. P3,060
b. P5,520
C. P6,000
d. P6,120

25. During March 2013 Binata Co.'s Department Y equivalent unit product costs, computed
under the weighted-average method, were as follows:

Materials P1
Conversion 3
Transferred-In 5

Materials are introduced at the end of the process in Department There were 4,000 units (40%
complete as to conversion cost) in work-in-process at March 31, 2013, The total costs assigned
to the March 31, 2013, work-in-process inventory should be

a. P36,000
b. P28,800
c. P2 7,200
d. P24,800
26. The following data pertains to Finishing Department for the month of May, 2013:
I. Opening Inventory 4,000 units

Percentage of completion Value

Material 100% P1,992
Labor 50% 1,074
Overhead 50% 826

Put in process 20,000 units

Materials value - P 12,000
Labor --- P9,984
Overhead is 100% of labor cost.

2, Units completed and transferred to store a 21,000 units

3. In process at the end - 3,000 units
Materials - all
Labor and overhead - 60%

No. 26 Continued

What is the cost of the work-in process at the end for the month of May?

Average Method FIFO Method

a. P3,577 P3.500
b. P3,477 P3,228
c. P3,528 13,477
d. P3,500 P3,577

27. For the month of May, the Cutting Department of Damit Co had 80% complete as to the
beginning work in process and 50% complete as to the ending work in process. Related data
follow:
Units Conversion Costs
Work in process, 1 May 50,000 P88,000
Units started and costs incurred in May 270,000 572,000
Units completed and transferred to
the next department in May 200,000

If the company were using FIFO method, the conversion cost of the work in process in the
Cutting Department at the end of May would amount to

a.P156,000
b.P254,000
C. P132,000
d. P176,000

28. Matalino, Inc. instituted a new process in October 2013. During October, 10,000 units were
started in Department A. Of the units started, 1,000 were lost in the process, 7,000 were
transferred to Department B and 2,000 remained work-in-process at October 31, 2013. The
work-in-process at October 31, 2013 was 100% complete as to material costs and 50%
complete as to conversion costs. Material costs of P27,000 and conversion costs of P40,000
were charged to Department A in October. What were the total costs transferred to
Department B?

a. P46,900
b.P5.3,600
c. P56,000
d. P57,120

29. The following data for September were taken from the cost records of the Mixing
Department of Love Manufacturing Company, which uses average costing method:

Work in process, August 31:

(all materials, 50% converted) 1,000 units
Put into process during the month of September 10,000 units
Work in process, September 30:
(all materials, 60% converted) 1,400 units
Costs:
Work in process, August 31:
Materials P 24,000
Labor 15,000
Factory overhead 7,000
Put into process during September
Materials 251,000
Labor 193,000
Factory overhead 149,000

The total cost of the units completed and transferred was:

a. P576,000
b. P605,400
c. P640,400
d. P693,800`

30. The Forming Department is the first of a two stage production process. Spoilage is identified
when the units have completed the forming process. Cost of spoiled units are assigned to units
completed and transferred to the second department in the period spoilage is identified. The
following information concerns Forming 's conversion costs in May 2013.
 Units Conversion Cost
Beginning work-in-process (50% complete) 2,000 P10,000
Units started in May 8,000 75,000
Spoilage-Normal 500
Units completed and transferred 7,000
Ending work in process (80% complete) 2,500

No. 30 Continued

Using the weighted-average method, what was Forming's conversion cost transferred to the
second production department?

a. P59,850
b. P64,125
C. P67,500
d. P71,250

31. Manuel Company uses process cost system with average costing to account for the
production of its only product The product is manufactured in two departments. Units are
started in Assembling Department, and then transferred to the Finishing Department, where
they are completed. Units are inspected at the end of the production process in the Assembling
Department, and the cost of abnormal lost is charged to Factory Overhead Control account.
Data related to June operations in the Assembling Department are:

Quantity:
Units in beginning inventory (60% materials,
35% labor, and 25% overhead) 1,000
Units started in process this period 59,000
Units transferred to the Finishing Department this 8,000
period
Units in ending inventory (100% materials, 75% labor,
Aand 50% overhead) 1,500
Cost data:
Beginning Inventory Added This Period
Costs charged to the Department:
Materials P 1 ,260 P36,240
Direct labor 770 10,780
Factory overhead 1,400 21,725
What is the total cost transferred to the Finishing Department?

a. P56, 752
b. P59,600
C. P59,452
d. P58,000 or less

32. Datu Chemical Industries, Inc. produces a product through a continuous process in different
departments. Each department has an independent cost accountant who prepares cost of
production report. You have been assigned as cost accountant for Department A.

Production data of Department A for the month of July, 2013 were as follows:

Work in process, July 1 (70% completed) 14,000 units

Started in process 70,000 units
Work in process, July 31 (60% completed) 12,000 units
Lost units (normal) at end of process 2,000 units
In this department, costs are applied as follows:
Materials --- added at the start.
Labor and overhead --- evenly applied
Department costs incurred in July were:
Materials P56,000
Labor 17,000
Overhead 13,000
Work in process, July 1 8,000

What is the cost of?

Units transferred Work in process-July 31

a. P82,390 P 9,600
b. P81,890 P 9,600
c. P72,000 P12,840
d. P82,3 90 P12,840

33. The Classmate Company manufactures a single product in a continuous process in two
departments. Cost and production data for the finishing department, the last department for
the month of April, 2013 are shown below:

Costs:
Cost from preceding department P135,000
Work in process, April 1 18,000
Materials -
Labor 85,800
Factory overhead 47,200
No. 33 Continued
Quantity:
Units in process, April 1
(All materials, 50% converted) 4,000
Units received from preceding department 30,000
Units in process, April 30
(All materials, 60% converted) 6,000
Loss during the process 3,000

In the Finishing Department, what is the total cost transferred to finished goods?

a. P250,000
b. P286,000
C. P238,000
d. P210,000

34. Adonis Manufacturing Company makes a single product in two departments. The
production data for Department 2 for May 2013 follows:
Quantities:
In process, May I, (40% completed) 4,000 units
Received from Department 1 30,000 units
Completed and transferred 25,000 units
In process, May 31, (60% completed) 6,000 units
Production Costs:
May 1 May 31
Received from Department 1 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 stage
of the operation.

Using the Average Costing Method, what is the inventory cost of the ending work in process?

a. P44,640
b. P45,460
c. P45,600
d. P46,000

Numbers 35 to 37 are based on the following information

Air Force Inc. manufactures their product in two departments in a continuous process.
Production data for the month of October 2013 are as follows:
Beginning work in process, 40% completed 500 units
Received from preceding department 2,000 units
Normal spoilage 200 units
Abnormal spoilage 300 units
Units completed and transferred out 1,700 units
Ending work in process, 1/3 completed 300 units
Conversion costs in beginning inventory P610
Current period conversion costs P3,990

All spoilage occurs at the end of the process.

35. What is the conversion cost per equivalent unit?

FIFO Method Average Method

a. P1.90 P1.73
b. P2.19 P2.00
c. P2.00 P1.90
d. P1.90 P2.00

36. What is the conversion cost of normal spoilage?

FIFO Method Average Method

a. P438 P400
b. P380 P346
c. P400 P380
d. P380 P400

37. What is the conversion cost of abnormal spoilage?

FIFO Method Average Method

a. P570 P519
b. P657 P600
c. P570 P600
d. P600 P570

Use the following data in answering Numbers 38 to 41

The Cooking Department of Red Crab, Inc., uses process system Direct materials are added at
the beginning of the cooking process. Conversion costs are added evenly during the cooking
process. Consider the following data for the Cooking Department for January:
Physical Units Direct Materials Conversion
costs
Work in process, January 1:
25% conversion costs
Started in January 74,000 250,000 30,000
Good units completed and
transferred
out during January 61,000
Spoiled units 8,000
Work in process, January 31 15,000
Costs added during January P1,480,000 P942,000
Cost per equivalent unit of
work
done in January P20 P12

Red Crab uses the FIFO method of process costing. Inspection occurs when production is 100%
complete, normal spoilage is 11% of good units completed during the period.

38. What is the total cost of the units completed and transferred-out?

a. P1,632,000
b. P1,972,000
c. P2,186,720
d. P2,228,000

39. What is the total cost of the units in ending work in process?

a. P444,000
b. P685,280
C. P658,720
d. P300,000

40. What is the cost of abnormal spoilage?

a. P256,000
b. P214,720
c. P 41,280
d. 41,000

Questions 41 and 42 are based on the following information:

A sporting goods manufacturer buys wood as a direct material for baseball bats. The Fanning
Department processes the baseball bats, and the bats are then transferred to the Finishing
Department where a sealant is applied. The Forming Department began manufacturing 10,000
"Casey sluggers" during the month of May. There was no beginning inventory.

Costs for the Forming Department for the month of May were as follows:
Direct materials P33,000
Conversion costs 17,000
Total P50,000

A total of 8,000 bats were completed and transferred to the Finishing Department; the
remaining 2,000 bats were still in the forming process at the end of the month. All of the
Forming Department's direct materials were placed in process, but, on average, only 25% of the
conversion cost was applied to the ending work-in- process inventory.

41. The cost of the units transferred to the Finishing Department is:

a. P50,000
b. P40,000
C. P53,000
d. P42,400

42. The cost of the work-in-process inventory in the Forming Department at the end of May is:

a. P10,000
b. P 2,500
c. P20,000
d. P 7,600

Question 43 and 44 are based on the following information:

A manufacturer began operations on October 1. It buys wood as a direct material for the
production of floor lamps. The company’s Forming Department processes the lamp frames, and
the frames are then transferred to the Finishing Department where a sealant is applied. The
Forming Department began manufacturing 10,000 lamps during the month of October. Costs
for the Forming Department for the month of October were as follows:

Direct materials P66,000

Conversion cost 34,000

43. The cost of the units transferred to the Finishing Department (after rounding each
calculation to the nearest cent) is:

a. P68,760
b. P60,000
c. P39,600
d. P29,160

44. The cost (after rounding each calculation to the nearest cent) of the work-in-process
inventory in the Forming Department of October is:
a. P11,460
 b. P26,400
c. P31,260
d. P45,840

Question 45 and 44 are based on the following information:

A company employs a process costing system for its two-department manufacturing operation
using the first-in, first-out (FIFO) inventory method. When units are completed in Department
1, they are transferred to Department 2 for completion. Inspection takes place in Department
2 immediately before the direct materials are added, when the process is 70% complete with
respect to conversion. The specific identification method is used to account for lost units.

The number of defective units (that is, those failing inspection) is usually below the normal
tolerance limit of 4% of units inspected. Defective units have minimal value, and the company
sells them without any further processing for whatever it can.

Generally, the amount collected equals, or slightly exceeds, the transportation cost. A summary
of the manufacturing activity for Department 2, in units for the current month, is presented
below:

Physical Flow(output units)

Beginning inventory (60% complete with respect to conversion) 20,000
Units transferred from Department 1 180,000
Total units to account for 200,000
Units completed in Department 2 during the month 170,000
Units found to be defective at inspection 5,000
Ending inventory (80% complete with respect to conversion) 25,000
Total units accounted for 200,000

45. The equivalent units for direct materials for the current month would be:

a. 175,000 units
b. 181,500 units
c. 193,000 units
d. P200,000 units

46. The units that failed inspection during the current month would be classified as:

a. abnormal spoilage
b. normal scrap
c. normal rework units
d. normal waste

47 to 50 are based on the following data:

DXR Compamy employs process cost system. A unit of product passes through two department.
Assembly and Finishing before it is complete. Information regarding Assembly Department
follow:

BWIP, Aug. 1 4,000 units

Spoiled units 3,000
Suited in Production 26,000
Transffered out 24,000

Raw materials are added at the beginning of processing in the Assembly Department without
changing the number of units being processed. Work-in-process on August 1 was 90% complete
as to conversion while 80% converted on August 31. In the Assembly Department, inspection
takes place when the units are 75% converted. The company usually experienced a 5% loss
based on the completed units,

Cost data for the month of August follow:

Materials Labor Overhead

BWIP P32,400 P26,400 P28,500
Current cost 111,600 88,200 114,750

Using Weighted Average Costing: Assuming that the allocation of cost of normal lost units is
based on EUP.

47. What the cost of units transferred-out?

a. P331,200
b. P331,400
c. P343,684
d. P343,860

48. What is the cost of units of ending work-in-process?

a. P37,376
b. P37,500
c.P36,200
d. P37,400

Using FIFO Costing: Assuming that the allocation of the cost of normal lost units is based on
actual units.

49. What is the cost of units transferred out?

a. P349,136
b. P258,067
c. P339,267
d. P368,069

50. What is the cost of units of ending work-in-process?

a. P33,850
b. P32,310
c. P31,580
d. P33,580