1. Which of the following statements is true?

a. When materials are purchased in a process costing system, a work in process account
is debited with the cost of the materials.
b. Any difference in the equivalent units calculated under the weighted-average and the
FIFO methods is due to the units in the ending work in process inventory.
c. Under the FIFO method of product costing, equivalent units of production consider
units in beginning inventory as if they were started and completed during the current
period.
d. The equivalent units in beginning work in process inventory plus the equivalent units
for the work done during the period equals the units transferred out plus the
equivalent units in ending work in process inventory.

2. Globe Electronics manufactures wireless mouses for computers. In January, the two
production departments had budgeted allocation bases of 5,000 machine hours in
Department 1 and 2,500 direct labor hours in Department 2. The budgeted manufacturing
overheads for the month were P23,000 and P25,000, respectively. For Job 143, the actual
costs incurred in the two departments were as follows:
Department 1 Department 2
Direct materials purchased on account P44,000 P71,000
Direct materials used 13,000 5,400
Direct manufacturing labor 21,000 21,400
Indirect manufacturing labor 4,400 3,600
Indirect materials used 3,000 1,900
Lease equipment 6,500 1,500
Utilities 400 500
Job 143 incurred 500 machine hours in Department 1 and 150 direct labor hours in
Department 2. The company uses a budgeted departmental overhead rate for applying
overhead to production. What is the total cost of Job 143?
a. P60,800
b. P64,600
c. P74,350
d. P82,600

3. An assembly plan accumulates its variable and fixed manufacturing overhead costs in a
single cost pool, which is then applied to work in process using a single application base.
The assembly plant manager wants to estimate the magnitude of the total manufacturing
overhead costs for different volume levels of the application activity base using a flexible
budget formula. If there is an increase in the application activity base that is within the
relevant range of activity for the assembly plant, which one of the following relationships
regarding variable and fixed costs is correct?
a. The variable cost per unit is constant, and the total fixed costs decrease.
b. The variable cost per unit is decreases, and the total fixed costs increase.
c. The variable cost per unit is constant, and the total fixed costs remain constant.
d. The variable unit cost per unit increases, and the total fixed costs remain constant.

4. Agila Manufacturing currently produces 1,000 pencils per month. The following per unit
data apply for sales to regular customers:
Direct materials P30
Direct labor 5
Variable overhead 10
Fixed overhead 40
Total manufacturing costs P85

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 Agila Manufacturing has capacity for 2,000 pencils and is considering expanding
production to 1,500 pencils. What is the total cost of producing 1,500 pencils?
a. P 85,000
b. P102,500
c. P107,500
d. P170,000

5. Katherine provided the following information for last month:

Sales P10,000
Variable costs 3,000
Fixed costs 5,000
Operating income P 2,000
If sales double next month, what is the projected operating income?
a. P 4,000
b. P 7,000
c. P 9,000
d. P12,000

6. When 10,000 units are produced, fixed costs are P14.00 per unit. Therefore, when 20,000
units are produced, fixed costs:
a. will increase to P28.00 per unit
b. will remain at P14.00 per unit
c. will decrease to P7.00 per unit
d. will total to P280,000

7. Jerry uses the weighted-average method in its process costing system. The first
processing department, the Welding Department, started the month with 20,000 units in
its beginning work in process inventory that were 10% complete with respect to
conversion costs. The conversion costs in the beginning work in process inventory was
P7,000. An additional 63,000 units were started into production during the month. There
were 10,000 units in the ending work in process inventory of the Welding Department
that were 10% complete with respect to conversion costs. A total of P237,600 in
conversion costs were incurred in the department during the month. What would be the
cost per equivalent unit for conversion costs for the month?
a. P3.771
b. P3.500
c. P3.305
d. P3.225

8. Which of the following is an example of direct labor cost for an airplane manufacturer?
a. salary of plant supervisor
b. cost of jet engines
c. wages of assembly line workers
d. cost of oil lubricants for factory machinery

9. Which of the following is an example of direct materials cost for an automobile

manufacturer?
a. cost of interior upholstery
b. wages of assembly line workers
c. salary of production supervisor
d. cost of oil lubricants for factory machinery

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10. The four steps necessary to determine the cost of goods completed and the ending
inventory valuation in a process cost system are:
1. Allocate costs to transferred and partially completed units
2. Determine the units to be assigned costs
3. Determine the cost per equivalent unit
4. Calculate equivalent units of production
The correct order of the steps is:
a. 4, 2, 3, 1
b. 2, 3, 1, 4
c. 2, 3, 4, 1
d. 2, 4, 3, 1

11. At the end of July, the first month of the current fiscal year, the factory overhead account
had a debit balance. Which of the following describes the nature of this balance and how
it would be reported on the interim balance sheet?
a. overapplied, deferred credit
b. underapplied, deferred debit
c. underapplied, deferred credit
d. overapplied, deferred debit

12. At the end of the year, the overhead applied was P35,000. The actual overhead was
P34,200. Closing over/under- applied overhead into the cost of goods sold would cause
net income to:
a. increase by P800
b. decrease by P800
c. decrease by P200
d. be not affected

13. Which of the following would most likely be a period cost?

a. depreciation of factory lunchroom furniture
b. salary of telephone receptionist in the sales office
c. salary of a security guard in the factory parking lot
d. cost of electricity used in fixing plant air-conditioning units

14. Sea Corporation uses the FIFO method in its process costing system. Data concerning the
first processing department for the most recent month are listed below:
Beginning work in process inventory:
Units in beginning work in process inventory 900
Materials costs P 9,800
Conversion costs P 9,200
Percentage complete with respect to materials 55%
Percentage complete with respect to conversion 30%
Units started into production during the month 8,400
Materials costs added during the month P130,400
Conversion costs added during the month P220,600
Ending work in process:
Units in ending work in process inventory 2,200
Percentage complete with respect to materials 65%
Percentage complete with respect to conversion 25%

How many units were started and completed during the month in the first department?
a. 9,300 units
b. 8,400 units

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 c. 7,100 units
d. 6,200 units

15. Bollywood Company uses the weighted-average method in its process costing system.
The beginning work in process inventory in a particular department consisted of 12,000
units, 100% complete with respect to materials cost and 40% complete with respect to
conversion costs. The total cost in the beginning work in process inventory was P25,000.
During the month, 50,000 units were completed to be P1.50 for materials and P3.20 for
conversion costs. What is the total costs of the units completed and transferred out of the
department?
a. P235,000
b. P226,640
c. P210,000
d. P201,640

16. Simple company employs actual costing for its production. The entity provided the
following data concerning its production during the year:
Decrease in materials inventory during the year P500,000
Labor cost during the year 400,000
Actual factory overhead during the year 300,000
Increase in work in process during the year 100,000
Decrease in finished goods during the year 100,000
What is the cost of goods manufactured during the year?
a. P1,400,000
b. P1,200,000
c. P1,100,000
d. P1,000,000

17. Surigao Company employs normal costing for its production. The following data are
provided during the current year:
Net purchases of raw materials during the year P500,000
Total labor costs during the year 800,000
Depreciation of factory assets during the year 100,000
Utilities on the factory during the year 300,000
Beginning Ending
Raw materials inventory P200,000 P300,000
Work in process inventory 500,000 200,000
Finished goods inventory 600,000 300,000
The entity uses a single account for its direct materials and indirect materials. Indirect
materials is 1/4 of raw materials used. The indirect labor cost is 1/8 of the total labor
costs. The overhead application rate is 80% of direct labor costs. Any over- or under-
application of overhead is considered material.

What is the total manufacturing cost during the current year?

a. P1,740,000
b. P1,640,000
c. P1,560,000
d. P1,500,000

18. Refer to #17 above, what is the cost of goods manufactured during the year?
a. P2,040,000
b. P1,940,000
c. P1,860,000

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 d. P1,800,000

19. Refer to #17 above, what is the over- or under- application of overhead?
a. P 40,000 underapplied
b. P140,000 overapplied
c. P 60,000 overapplied
d. P160,000 overapplied

20. Siargao Company is choosing between traditional costing and activity-based costing. The
following data are provided:
Activity-based costing
Activity center Cost driver Activity Center cost
Materials handing Kilos handled 1,000 kilos P200,000
Painting Units painted 50,000 units 300,000
Assembly Machine hours 10,000 hours 500,000

Traditional costing
Traditional Labor hours 100,000 hours P1,000,000

Job 1 contains 3,000 units. It weighs 10,000 kilos and uses 300 machine hours. The direct
labor hours on Job 1 totaled 7,000 hours.

What is the applied overhead under traditional costing?

a. P80,000
b. P70,000
c. P60,000
d. P50,000

21. Refer to #20 above, what is the applied overhead under activity-based costing?
a. P56,000
b. P53,000
c. P45,000
d. P43,000

22. Boracay Company is employing process costing regarding its production cycle.
Conversion costs are added uniformly during the production process, while direct
materials are added 10% at the start of the production process, 50% in the middle of the
production process, and the remainder at the end of the production process.

The production data of the entity during the year are:

Beginning work in process inventory 10,000 units 30% incomplete as to CC*
Units started during the year 30,000 units
Ending work in process inventory 5,000 units 75% incomplete as to CC*
*CC = conversion costs

1. There is no spoilage during the period.

2. The costs of beginning inventory consist of P103,000 costs of direct materials and
P107,500 conversion costs.
3. The total manufacturing costs consist of P252,000 costs of direct materials and
P146,250 conversion costs.

What is the cost per unit of conversion costs under FIFO process costing?
a. P5.00

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 b. P7.00
c. P8.00
d. P9.00

23. Bohol Company uses a job-order cost system and has two production departments.
Budgeted information for the year is as follows:
Department A Department B
Machine hours 500 25,000
Direct materials P400,000 P600,000
Direct labor 350,000 100,000
Factory overhead 455,000 300,000
Both departments apply factory overhead to production orders through the use of
predetermined factory overhead application rates, which are based upon the yearly
budget. Department A applies factory overhead on a direct labor cost basis, while
Department B does so on a machine hour basis. Actual information relating to Job 1982
during the year was as follows:
Department A Department B Total
Machine hours 150 2,500 2,650
Direct materials P18,000 - P18,000
Direct labor P11,000 P 4,500 P15,500
Overhead control P14,500 P24,600 P39,100
If Bohol Company contracted to sell Job 1982 for P100,000 and if estimated selling and
administrative expenses are 5% of the selling price, what is the estimated profit on Job
1982?
a. P17,200
b. P22,400
c. P28,600
d. P33,700

24. Ilocos Company is a manufacturing company engaged in the production of a single

special product known as “bagnet.” Production costs are accumulated with the use of a
job-order costing system. The following information is available as of June 1, 2024:

Work in process P10,710

Direct materials inventory 48,600
In analyzing the job order cost sheets, the records disclosed that the composition of the
work in process inventory on June 1, 2024 were as follows:
Direct materials used P 3,960
Direct labor (900 hours) 4,500
Factory overhead applied 2,250
The following manufacturing activities occurred during June 2024:
Purchased direct materials costing P60,000
Direct labor worked 9,900 hours at P5 per hour
The factory overhead of P2.50 per direct labor hour was applied to production
At the end of June 2024, the following information was gathered in connection with the
inventories:
Inventories of work in process
Direct materials used P12,960
Direct labor (1,500 hours) 7,500
Factory overhead applied 3,750
P23,210
Inventory of direct materials P51,000
How much is the cost of goods manufactured?

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 a. P142,560
b. P131,850
c. P118,350
d. P108,600

25. Bolina, Inc. adds materials at the beginning of the process. 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 the production activity for September is as follows:
Materials Conversion
Work in process, September 1 P10,000 P 7,500
Costs incurred during September 42,740 52,525
What is the total cost per equivalent unit for September under FIFO and WA,
respectively?
a. P11.84 and P5.49
b. P10.00 and P5.49
c. P11.84 and P6.49
d. P10.00 and P6.49

26. Albay Corporation manufactures rattan furniture sets for export using the job-order cost
system. For the year that ended December 31, 2023, you obtained from the corporation’s
books and records the following information:
 Work in process inventory January 1, 2023 was 20% less than the work in process
inventory December 31, 2023.
 Total manufacturing costs added during 2023 was P900,000 based on actual direct
materials and direct labor, while manufacturing overhead was applied on actual
direct labor cost.
 Manufacturing overhead applied to work in process was 72% of direct labor cost.
Applied manufacturing overhead for this year is 25% of total manufacturing costs.
 Cost of goods manufactured, also based on actual direct materials, actual direct
labor and applied manufacturing overhead was P850,000.

How much is the direct materials used?

a. P212,500
b. P225,500
c. P312,500
d. P362,500

27. Refer to #26 above, how much is the work in process inventory December 31, 2023?
a. P200,000
b. P225,000
c. P250,000
d. P275,000

28. Refer to #26 above, how much is the cost of goods placed in process during 2023?
a. P1,075,000
b. P1,100,000
c. P1,260,000
d. P1,498,000

29. In a cost of production report, transferred in costs are similar to:

a. direct materials added at a point during the process
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 b. conversion costs added during the process
c. costs transferred to the next process
d. costs included in beginning inventory

30. Kervin had 3,000 units in work in process inventory at April 1 that were 60% complete as
to conversion costs. During April, 10,000 units were completed. At April 30, the 4,000
units in work in process inventory were 40% complete as to conversion costs. Direct
materials are added at the beginning of the process. How many units were started during
April?
a. 9,000 units
b. 9,800 units
c. 10,000 units
d. 11,000 units

31. Assume that there is no beginning work in process inventory, and that the ending work in
process inventory is 50% complete as to conversion costs, the number of equivalent units
as to conversion costs would be:
a. the same as the units completed
b. the same as the units placed in process
c. less than the units completed
d. less than the units placed in process

32. On November 1, Kokey Company had 20,000 units of work in process in Department 1
which were 100% complete as to material costs and 20% complete as to conversion costs.
During November, 160,000 units were started in Department 1 and 170,000 units were
completed and transferred to Department 2. Work in process on November 30 was 100
complete as to material costs and 40% complete as to conversion costs. By what amount
would the equivalent units for conversion costs for the month of November differ if the
FIFO method were used instead of the weighted-average method?
a. P20,000 decrease
b. P16,000 increase
c. P 8,000 increase
d. P 4,000 decrease

33. Cancer Corp., produced 280,000 complete units of product plus 10,000 incomplete units
which were half done. Direct materials, which were introduced at the start of the
processing. Direct material costs were P435,000 while conversion cost amounted to
P142,500. There were no beginning inventories. The equivalent units that were
completed as to conversion costs were:
a. 142,500
b. 280,000
c. 285,000
d. 290,000

34. Pieces, Inc., inputs all materials at the start of processing in Department 1. The inventory
in process on May 1 is 4,000 units which had material costs of P75,000 and conversion
costs of P25,000. During May, 20,000 units are started in process with material costs of
P375,000 and conversion costs of P150,000. On May 31, the inventory in process of
10,000 units have 100% material but are only 60% converted. The equivalent production
for conversion cost for the month of May was:
a. 10,000 units
b. 14,000 units
c. 20,000 units

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 d. 26,000 units

35. Hobbit Corporation manufactures one product and accounts for costs by a job order cost
system. You have obtained the following information for the year-ended December 31,
2023 from the corporation’s books and records:
 Total manufacturing costs added during 2023 was P1,000,000 based on actual
direct material, actual direct labor, and factory overhead applied based on actual
direct labor costs.
 Cost of goods manufactured was P970,000 also based on actual direct material,
actual direct labor, and applied factory overhead.
 Factory overhead was applied to work in process at 75% of direct labor costs.
Applied factory overhead for the year was 27% of the total manufacturing costs.
 Beginning work in process inventory, January 1, was 80% of ending work in
process inventory, December 31.

How is the amount of overhead applied determined by cost personnel at Hobbit

Corporation given no direct labor cost figure?
a. multiply 27% by total manufacturing costs
b. multiply 27% by cost of goods manufactured
c. multiply 75% by direct labor costs
d. multiply 75% by total labor costs

36. Refer to #35 above, if factory overhead applied direct labor was incurred?
a. P385,700
b. P360,000
c. P350,000
d. P346,150

37. Refer to #35 above, what is the ending work in process inventory?
a. P150,000
b. P140,000
c. P120,000
d. P 30,000

38. Refer to #35 above, what is the beginning work in process inventory?
a. P150,000
b. P140,000
c. P120,000
d. P 30,000

39. Refer to #35 above, what are the total manufacturing costs to account for (costs of goods
placed in process)?
a. P1,150,000
b. P1,140,000
c. P1,130,000
d. P1,120,000

40. Department Z uses the average cost method, and the department’s production data for
May 2024 follows:
Opening work in process (50% complete) 2,000 units
Placed in process during the month 20,000 units
Closing work in process (60% complete) 2,500 units

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 Direct labor cost per equivalent unit is:
a. P30.00
b. P34.50
c. P37.50
d. P40.00

41. The following production information for Department B for the month of April follows:
Received from Department A 600,000 units
Completed and transferred to Department C 500,000 units
Additional information:
 No beginning work in process
 Ending work in process is 75% complete
 May’s production costs totaled P2,760,000
What is Department B’s unit cost of production for May 2024?
a. P4.60
b. P4.80
c. P5.02
d. P5.52

42. The plant manager of Geosang Products gathered production statistics for October 2024
as follows:
 Work in process, opening: 8,000 units (all materials but only 1/2 converted);
material costs, P7,968; labor and overhead costs, P8,592.
 Placed in process, October: 40,000 units; material costs, P48,000; labor and
overhead costs, P79,872.
 Completed and transferred to stock during October: 42,000 units.
 Work in process, closing: 6,000 units (all materials but only 3/5 converted).
Using FIFO costing method, the cost of the completed units would be:
a. P130,320
b. P130,660
c. P131,000
d. P131,040

43. Refer to #42 above, using weighted-average method, the cost of the completed units
would be:
a. P130,000
b. P130,452
c. P131,000
d. P131,668

44. Samdal Ri’s production process begins in the Extruding Department. Data for this
department for October 2023 are shown below:
Opening work in process (50% complete) 40,000
Started in production during the month 240,000
Closing work in process (60% complete) 25,000
Direct materials are added at the start of operation. Assuming weighted-average method
was used, what was the Extruding Department’s equivalent units of production for
conversion costs?
a. 240,000
b. 250,000
c. 260,000
d. 270,000

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45. Pure Spring Water Co. bottles spring water. The spring water first undergoes filtration in
Department 1 and is eventually bottled in Department 2. A quantity schedule for 2024
follows:
Department 1
Units started in process 110,000
Units transferred to Department 2 80,000
Units in process, end 30,000
Department 2
Units received from Department 1 80,000
Units transferred to finished stock 61,400
Units in process, end 18,600
Units in process at the end in both departments are 72% complete through the process. In
Department 2, what is the equivalent production units for conversion costs?
a. 61,400
b. 68,929
c. 74,792
d. 80,000

46. Rewind Corp. uses job order costing. Factory overhead is applied to production at a
predetermined rate of 150% of direct labor costs. Any over- or under- applied factory
overhead is closed to the cost of goods sold account at the end of each month. Additional
information is available as follows:
 Job 201 was the only job in process at January 31, 2024, with accumulated costs
as follows:
Direct materials P4,000
Direct labor 2,000
Applied factory overhead 3,000
P9,000
 Jobs 202, 203, and 204 were started during February.
 Direct material requisitions for February totaled P26,000.
 Direct labor costs of P20,000 was incurred for February.
 Actual factory overhead was P32,000 for February.
 The only job still in process at February 29, 2024 was Job 204, with costs of
P2,800 for direct materials and P1,800 for direct labor costs.

What is the cost of goods manufactured for February 2024?

a. P77,700
b. P78,000
c. P79,700
d. P85,000

47. Refer to #46 above, over- or under- applied factory overhead should be closed to the cost
of goods sold account at February 29, 2024 in the amount of:
a. P 700 overapplied
b. P1,000 overapplied
c. P1,700 underapplied
d. P2,000 underapplied

48. During March 2024, Paolo’s Department Y’s equivalent unit product costs, computed
under the weighted-average method were as follows:
Materials P1.00

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 Conversion 3.00
Transferred in 5.00
Materials are introduced at the beginning of the process in Department Y. There were
4,000 units (40% complete as to conversion costs) in work in process at March 31, 2024.
The total costs assigned to the March 31, 2024 work in process inventory should be:
a. P36,000
b. P28,800
c. P27,200
d. P24,800

49. During April, Trump Company’s Department X equivalent unit product costs, computed
under the weighted-average method were as follows:
Materials P1.00
Conversion 3.00
Transferred in 5.00
Materials are introduced at the end of the process in Department X. There were 2,000
units (40% complete as to conversion costs) in work in process at April 30. The total
costs assigned to April 30 work in process inventory should be:
a. P12,400
b. P13,600
c. P14,400
d. P18,000

50. Beginning work in process has 10,000 units, 80% complete as to materials and 60%
complete as to conversion costs. Ending work in process has 15,000 units, 75% complete
as to materials and 50% complete as to conversion costs. 30,000 units were completed
and transferred during the period. What are the equivalent units under FIFO for materials
and conversion costs?
a. materials, 37,000; conversion costs, 35,500
b. materials, 33,250; conversion costs, 31,500
c. materials, 34,000; conversion costs, 32,500
d. materials, 41,250; conversion costs, 37,500

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