12. Multiple Choice and Questions (Phil.

CPA Board Examination)

October 1988
Trial balances for the home office and the branch of the Toby Company show the following accounts before
adjustment, on December 31, 1987. The home office policy of billing the branch for merchandise is 20%
above cost.
Home Branch
Office
Unrealized intercompany inventory profit P10,800
Shipments to branch 24,000
Purchases (outsiders) P 7,500
Shipments from home office 28,800
Merchandise inventory, December 1, 1987 45,000

1. What part of the branch inventory as of December 1, 1987 represent purchases from outsiders and what part
represent goods acquired from the home office?
Outsiders Home Office Outsiders Home Office
(a) P12,000 P33,000 (c) P15,000 P30,000
(b) P16,500 P28,500 (d) P 9,000 P36,000

May 1989
The Mahiyain Manufacturing Co. of Quezon City opened a branch at Davao City on January 1, 1988, to
expand the market of its product. Merchandise shipped during 1988 to the Davao branch totalled P104,000,
and this included a profit of 25% based on cost. At the end of the year, the inventory was P12,500, at billed
price. The branch extend credit, makes collections and pay expenses from cash received. The company
applied the periodic inventory method. Other transactions affecting the branch are as follows: Sales on
account P117,000; expenses P20,000, of which P1,300 were unpaid on December 31, 1988; cash received
from customers' accounts, P84,000, after allowing cash discounts of P1,480; cash remitted to the home
office during the year P65,000.

2. In the book of the branch, the income or loss was:

(a) P19,300; (b) P8,300; (c) P4,020; (d) (P6,220); (e) None of these.

3. In so far as the home office is concern, the true income or loss of the branch operation was:
(a) P24,300; (b) P22,320; (c) (P18,300); (d) P24,320; (e) None of these.

October 1989
The Neneng Corporation established its San Pedro branch in March, 1988. During the first year of
operation the home office shipped to the branch merchandise which had cost P120,000. Three-fourth of this
merchandise was sold by the branch for P141,000. Operating expenses of the branch amounted to P27,000
during 1988.

4. How much is the net income the branch will report if merchandise is billed to the branch at 25% above cost?
(a) P1,500; (b) P8,000; (c) P800; (d) P1,200; (e) None of these.

The Chibas Regal, owns the Royal Crown in Quezon City. There is a branch in Davao City. During 1988,
the home office shipped supplies costing P120,000 to the branch at a billed price of 20% above cost. The
inventories of supplies at the branch were as follows: Jan. 1, 1988, P90,000; December 31, 1988,
 P108,000. The home office holds inventories of P160,500 which include P10,500 held on consignment.
Both locations use the periodic inventory method.

5. How much is the inventories in a combined balance sheet as of December 31, 1988?
(a) P270,000; (b) P210,000; (c) P300,000; (d) P240,000; (e) None of these.

May 1990
The Goldie Bunch Co. has a branch in Davao City on July 3, 1988. During 1988 the home office shipped
goods to the branch at billed price totalling P250,000, which was 25% above cost. The branch on December
31, 1988 showed an inventory of P50,000 at billed price. A net profit of P66,000 for 1988 operations was
reported by the branch.

6. How much is the true net profit of the branch?

The home office bills its Cebu branch at 125% of cost. During the year 1988, goods costing P300,000 were
shipped to the branch. The account entitled "Allowance for Valuation of Branch inventory" has a balance
of P14,000 at the end of the year after adjustment.

7. How much is the amount of ending inventory at billed price?

8. How much of ending inventory at cost?

October 1990
The following account balances were taken from the books of Goldielock Co. and its Davao branch on
December 31, 1989. Book of Davao Branch: Sales, P1,200,000; Shipments from home office, P720,000;
Expenses, P400,000. Book of Goldielock Co: Allowance for overvaluation of branch inventory, P145,000.
All merchandise of the branch came from the home office. The inventories of the branch at billed price are
as follows: January 1, 1989, P150,000 and December 31, 1989, P168,000.

9. Compute the percentage of profit on cost that the home office use to bill merchandise shipped to branch.

10. How much is the adjusted profit of Davao branch?

The Rose Company of Manila established a branch in Cebu. During 1989, the home office shipped supplies
costing P80,000 to the branch at a billed price of 20 percent above cost. The inventories of supplies at the
branch were as follows: January 1, 1989, P60,000; December 31, 1989, P72,000. The home office holds
inventories of P107,000 which include P7,000 held on consignment. Home office and branch use the
periodic inventory method.

11. How much is the inventories in a combined balance sheet at December 31, 1989?
October 1991
The National Home Company ships and bills its Provincial branch merchandise at cost. The branch carries
its own accounts receivable, makes its own collections the pays its expenses. The transactions in 1990 are
reflected in the branch trial balance as follows:

Debit Credit
Cash P 11,900
National Home Co. Current P 90,000
Shipment from National Home Co. 120,000
Accounts Receivable 62,500
Expenses 8,100
Sales . 112,500
P202,500 P202,500

Branch inventory, December 31, 1990, P30,000.

12. How much is the net profit of Branch?

(a) P22,500; (b) P14,400; (c) P21,900; (d) Not given.

13. The Branch current account in the home office books should be:
(a) P134,400; (b) P90,000; (c) P104,400; (d) Not given.

On December 31, 1990, the following are data in the records of the branch in Angeles City of Big and Small
Company:

Petty Cash P 4,500

Accounts Receivable, Dec. 31, 1990 88,800
Merchandise Inventory, Dec. 31, 1989 75,500
Accounts Receivable, Dec. 31, 1989 85,200
Merchandise Inventory, Dec. 31, 1990 81,000
Sales 272,700
Sales Return 4,800
Accounts Receivable written off 2,000
Shipments from home office 220,500
Expenses (Paid by home office) 22,500

14. If all cash collections in 1990 were remitted to the home office, the remittance amounted to:
(a) P262,300; (b) P266,800; (c) P264,300; (d) P267,100
May 1992
Following is the Income Statement of XYZ Branch in Cebu City for the six months period ending June 30,
1991:

Sales P620,000
Cost of Sales:
Shipments from Home Office P550,000
Branch purchases 50,000
Total P600,000
Inventory, June 30:
From Home Office P 75,000
Branch purchases 10,000 85,000
Cost of Sales 515,000
Gross Profit P105,000
Less Expenses 85,000
Net Profit P 20,000

The Head Office ships merchandise and bills the Branch Office at 125% of cost. The rent of the Branch
Office for six (6) months at P1,000 per month was paid by the Home Office.

15. The Head Office net profit in its Branch Office in Cebu City for the six (6) months ending June 30, 1991:
(a) P125,000; (b) P124,000; (c) P139,000; (d) P109,000.

16. The inventory of the XYZ Branch Office as of June 30, 1991 at cost is:
(a) P85,000; (b) P70,000; (c) P60,000; (d) P75,000.

October 1992
J. C. Penny, Philippines has two merchandise outlets, its main store in Manila and its Cebu City branch. For
control purposes, all purchases are made by the main store and shipped to the Cebu City branch at cost plus
10%. On January 1, 1992, the inventories of the main store in Manila and the Cebu City branch are P13,600
and P3,960, respectively. During 1992, the main store purchased merchandise costing P40,000 and shipped
40% of it to the Cebu City branch. At December 31, 1992, the following journal entry to prepare the books
for the next accounting period was prepared:

Sales 32,000
Inventory 4,840
Inventory 3,960
Shipments from main store 17,600
Expenses 10,480
Main store 4,800

17. What was the actual branch income for 1992 on a cost basis assuming the use of the provisions of the
statement of financial accounting standards?
(a) P4,800; (b) P6,320; (c) P6,480; (d) P6,840.

18. If the main store has P11,200 worth of inventory unsold at the end of 1992, the inventory of the main store
and the branch that should appear on the combined balance sheet as at December 31, 1992 is:
(a) P15,160; (b) P15,600; (c) P16,040; (d) P17,200.
May 1993
Selected balances from the Amorsolo Company's Branches A and B are as follows:

Branch A Branch B
Inventory, Jan. 1, 1992 P 21,000 P19,000
Imprest branch fund 2,000 1,500
Inventory, Dec. 31, 1992 19,000 12,000
Accounts receivable, Jan. 1, 1992 55,000 43,500
Accounts receivable, Dec. 31, 1992 70,000 53,500
Merchandise from Home Office 61,000 47,000
Cash collections 85,000 70,000
Sales 100,000 80,000
Cash expenses 21,000 14,300

All sales, collections, and expenses are handled at the branch. All cash received from sales and collections
are sent directly to the Home Office. Expenses are paid by the branch from the imprest fund and
immediately reimbursed by the Home Office and credited to the Home Office account. All expenses paid
by the branch are recorded in the branch books.

19. The net profit of Branch A is:

(a) P16,000; (b) P21,000; (c) P15,000; (d) P18,000.

20. The balance of the Home Office account of Branch A on January 1, 1992 is:
(a) P80,000; (b) P64,000; (c) P78,000; (d) P75,000.

21. The balance of the Home Office account of Branch B on January 1, 1992 is:
(a) P80,000; (b) P64,000; (c) P78,000; (d) P95,000.

22. The balance of the Branch current account of Branch B on December 31, 1992 is:
(a) P70,000; (b) P64,000; (c) P67,000; (d) P65,000.

23. The entry in Branch B records to update the reciprocal account Home Office current on December 31, 1992
is:
a. Dr. - Home Office / Cr. - Profit and Loss
b. Dr. - Profit and Loss / Cr. - Branch Current
c. Dr. - Branch Current / Cr. - Profit and Loss
d. Dr. - Profit and Loss / Cr. - Home Office Current

October 1993
The following were found in your examination of the interplant accounts between the Home Office and the
Butuan Branch:

a. Transfer of fixed assets from Home Office amounting to P53,960 was not booked by the branch.
b. P10,000 covering marketing expense of another branch was charged by Home Office to Butuan.
c. Butuan recorded a debit note on inventory transfers from Home Office of P75,000 twice.
d. Home office recorded cash transfer of P65,700 from Butuan branch as coming from Davao branch.
e. Butuan reversed a previous debit memo from Cagayan de Oro branch amounting to P10,500. Home office decided
that this charge is appropriately Davao branch's cost.
f. Butuan recorded a debit memo from Home office of P4,650 as P4,560.
24. The net adjustment in the Home Office books related to the Butuan Branch current account is:
(a) P75,700; (b) P65,700; (c) P86,200; (d) P94,820.

25. The net adjustment in Butuan's books related to the Home Office account is:
(a) P33,335; (b) P31,450; (c) P20,950; (d) P10,450.

26. Before the above discrepancies were given effect, the balance in the Home Office books of its Butuan
branch current account was a debit balance of p165,920. the unadjusted balance in the Butuan branch books
of its home office current account must be:
(a) P92,336; (b) P98,230; (c) P104,500 (d) P111,170.

27. The adjusted balance of the reciprocal accounts is:

(a) P84,807; (b) P90,220; (c) P99,200; (d) P109,120.
PROCESS COSTING POST-TEST

1. department G had 3,600 units, 1/3 completed at the beginning of the period, 12,000 units were
completed during the period, 2,000 units were 1/5 completed at the end of the period, and the following
manufacturing costs were debited to the department work in process account during the period:

Work in process, beginning of the period P30,000

Costs added during the period:
Direct materials (10,400 at P8) 83,200
Direct labor 62,000
Factory overhead 24,800
Assuming that all direct materials are placed in process at the beginning of production and that the first-
in, first-out method of inventory costing is used, what is the total cost of the department work in process
inventory at the end of the period?
a. P19,100 b. P26,000 c. P23,200 d. P22,300

2. The debit to Work in Process-Assembly Department for April, together with concerning production, are
as follows:

April 1, work in process:

Materials cost, 3,000 units P 7,500
Conversion costs, 3,000 units, 2/3 completed 6,000
Materials added during April, 10,000 units 26,000
Conversion costs during April 31,000
Goods finished during April, 11,500 units -
April 30 work in process, 1,500 units, ½ completed -

All direct materials are placed at the beginning of the process and the first-in, first-out method is used to
cost inventories. The materials cost per equivalent unit for April is:
a. P2.60 b. P2.26 c. P2.50 d. P5.50

3. Bruno Company adds materials at the beginning of the process, in department M, conversion costs
were 75% complete as to the 8,000 units in work in process at May 1, 2005, and 50% complete as to the
6,000 units in Work in Process at May 31. During May, 12,000 units were completed and transferred to
the next department. An analysis of the costs relating to Work in Process at May 1 and to the production
activity for May is as follows:
Costs
Materials Conversion
Work in Process, May 1 P 9,500 P 4,800
Costs added in May 15,600 14,400
Using the weighted average method, the total cost per equivalent unit for May was
a. P2.47 b. P2.50 c. P2.68 d. P3.16

4. Brando Company adds materials at the beginning of the process in Department N. Data concerning the
materials used in March, 2005 production are as follows:
Units
Work in process at March 1 16,000
Started during March 34,000
Completed and transferred to next department during March 36,000
Normal spoilage incurred 4,000
Work in process at March 31 10,000
Using the weighted average method, the equivalent units for the materials unit calculation are
a. 30,000 b. 34,000 c. 40,000 d. 46,000

Numbers 5, 6 and 7 are based on the following information:

The Cute Ka, Guapo Ko Inc. 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 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 600 units, ½ completed
Finished goods 1,300 units
5. The processing cost per equivalent unit for October is:
a. P1.50 b. P3.50 c. P4 d. P3

6. The value of the work in process inventory is:

a. P2,400 b. P4,200 c. P3,500 d. P5,400

7. The number of units transferred to finished goods is:

a. 2,000 b. 2,500 c. 2,600 d. 3,200

8. Materials are added at the start of the process in Cedar Company’s blending department, the first stage
of the production cycle. The following information is available for July:
Units
Work in process, July 1 (60% complete as to conversion costs) 60,000
Started in July 150,000
Transferred to the next department 110,000
Lost in production 30,000
Work in process, July 31 (50% complete as to conversion costs) 70,000

Under Cedar’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

9. A Company produces plastic drinking cups and uses a process cost system. Cups go through three
departments – mixing, molding, and packaging. During the month of June the following information known
about the mixing department:
Work in process at June 1 10,000 units
An average of ¾ complete
Units complete during June 140,000 units
Work in process at June 30 20,000 units
An average of ¼ complete
Materials are added at two points in the process; material A is added at the beginning of the process and
Material B at the midpoint of the mixing process. Conversion costs are incurred uniformly throughout the
mixing process. Under the FIFO costing flow, the equivalent units for Material A, Material B, and
conversion costs respectively for the month of June (assuming no spoilage) would be:
a. 150,000; 130,000; and 137,500 c. 160,000; 130,000; and 135,000
b. 150,000; 140,000; and 135,000 d. 160,000; 140,000; and 137,500

10. The Wilson Company manufactures the famous ticktock watch on an assembly line basis. January 1,
work-in-process consisted of 5,000 units partially completed. During the month an additional 110,000
units were started and 105,000 units were completed, the ending work-in-process was 3/5 complete as to
conversion costs. Conversion costs are added evenly throughout the process. The following conversion
costs were incurred.
Beginning costs for WIP P 1,500
Total current conversion costs 273,920

The conversion costs assigned to ending work-in-process totaled P15,360 using the FIFO method of
process costing. What was, the percentage of completion, as the conversion costs on the 5,000 units in
BWIP?
a. 20% b. 40% c. 60% d. 80%
For items 11 and 12
JAO Mfg. Corp., makes single Product in two departments. The production data for Department 123 for
May, 2003 follows:

Quantities:
In process, May 1 (40%) 4,000 units
Received from department 678 30,000 units
Completed and transferred 25,000 units
In process, May 31 (60%) 6,000 units

Production Costs: May 1 May 31

Transferred in P16,300 P89,100
Materials added 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.
11. Assuming average costing, the closing work in process was:
a. P44,640 b. P46,800 c. P45,600 d. P51,680

12. Assuming FIFO costing, the cost of goods manufactured was:

a. P187,250 b. P195,250 c. P193,040 d. P214,040

13. POGIKOCUTEKA had the following HAD THE FOLLOWING PRODUCTION FOR THE MONTH OF June:
Work in process at June 1 10,000 units
Started during June 40,000 units
Completed and transferred to finished Goods during June 33,000 units
Abnormal spoilage incurred 2,000 units
Work in process at June 30 15,000 units
Materials are added at the beginning of the process. As to conversion cost, the beginning work in process
was 70% completed and the ending work in process was 60% completed. Spoilage is detected at the end
of the process. Using the weighted average method, the equivalent units for June, with respect to
conversion costs, were
a. 42,000 b. 44,000 c. 45,000 d. 46,000

14. Assuming 550 units were worked on during a period in which a total of 500 good units were
completed. Normal spoilage consisted of 30 units; abnormal spoilage, 20 units. Total production costs
were P2,200. The company accounts for abnormal spoilage separately on the income statement as loss
due to abnormal spoilage. What is the cost of the good units produced?
a. P2,000 b. P2,120 c. P2,080 d. P2,200

15. A Company produces small pencil erasers. Two percent of normal inputs are expected to be spoiled in
the process. Inspection occurs at the end of the process and rejected units are disposed of as scrap with
no cost recovery. In a recent period, the following data were obtained:
Units
Total units started 750,000
Defective units rejected (including normal and abnormal spoilage) 20,000
Costs
Materials P14,750
Conversion 7,750
Total P22,500
The cost for the units transferred to finished good during this 24hour period, assuming no ending work-in
progress, is
a. P21,900 P22,350 c. P22,050 d. P22,500
Process Costing Pre-test

1. Department II of Charity Manufacturing Company presents the following production

data for the month of May, 2001:

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, 2001 using
average?
a. 13,000 units b. 12,500 units c. 14,000 d. 15,000

2. Walden Company has a process cost system. All materials are introduced at the
beginning of the process in Department One. The following information is available
for the month of January 2001:

Work-in-Process, 1/1/2001 (40% complete as to conversion costs) … 500

Started in January ……………………………………………. 2,000
Transferred to Department Two during January …………….. 2,100
Work-in-process, 1/31/2001 (25% complete as to conversion costs) ……
400

What are the materials equivalent units of production for the month of January 2001
using average method?
a. 1,900 b. 2,000 c. 2,200 d. 2,500

3. Department A is the first stage of Mann Company’s production cycle. The following
information is available for conversion costs for the month of April 2001:

Units
Work-in-process, beginning (60% complete) …… 20,000
Started in April ……………………………………………………….. 340,000
Completed in April and transferred to department B ……320,000
Work-in-process, ending (40% complete) ……………… 40,000

Using fifo method, the equivalent units for the conversion cost calculation are:
a. 324,000 b. 336,000 c. 340,000 d. 360,000

4. Bart Co. adds materials at the end of the process in Department M. The following
information pertain to Department M’s work-in-process during April:

Units
Work in process, April 1 …(60% complete as to conversion cost) ………………………….
3,000
Started in April ……………………………………………………… 25,000
 Completed………………………………………………………… …
20,000
Work-in-process, April 30
(75% complete as to conversion cost) …………………………..
8,000

What are the equivalent units of production for the month of April using average?
Materials Conversion Materials Conversion
a. 28,000 28,000 c. 20,000 26,000
b. 26,000 26,000 d. 26,000 20,000

5. Sussex Corporation’s production cycle starts in the Mixing Department. The following
information is available for April:

Units
WIP, April 1 (50% complete) ………………………………….. 40,000
Started in April …………………………………………………. 240,000
WIP, April 30 (60% complete) …………………………………. 25,000

Materials are added at 55% stage of completion in the Mixing Department. What are
the equivalent units of production for the month of April using fifo?
Materials Conversion Materials Conversion
a. 280,000 250,000 c. 280,000 280,000
b. 250,000 280,000 d. 270,000 270,000

6. On September 30, work-in-process totaled 9,000 units 60% complete (based on

conversion costs added uniformly throughout the department and material added at
the start of the process). A total of 100,000 units were transferred to the next
department during October. On October 31, a total of 8,000 units 40% complete
(based on conversion costs) were still in process in Department A.

Using the weighted – average cost flow method, which of the following equivalent
units should be used in the calculation on costs for October?

Equivalent Units
Transfer Materials Conversion
Costs
a. 108,000 100,000 103,200
b. 108,000 100,000 100,000
c. 108,000 108,000 103,200
d. 109,000 101,000 104,200

7. BWIP was 60% complete as to conversion costs, and EWIP was 45% complete as to
conversion costs. The peso amount of the conversion cost included in EWIP (using the
weighted average method) is determined by multiplying the average unit conversion
cost by what percentage of the total units in EWIP?

a. 100% b. 60% c. 55% d. 45%

8. The following data refer to the units processed by the grinding department for a
recent month.

Beginning WIP ………………………………………………….. 12,000

Units started …………………………………………………….. 200,000
Units completed …………………………………………………. 192,000
Ending WIP ……………………………………………………… 20,000

The beginning work-in-process was 60% complete and the ending work-in-process is
70% complete. What are the equivalent units of production for the month?

FIFO Average FIFO Average

a. 206,000 198,800 c. 206,000 206,000
b. 198,800 206,000 d. 198,800 198,800

9. Kew Co. had 3,000 units in work-in-process at April 1 which were 60% complete as
to conversion cost. During April, 10,000 units were 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

10. If 100 units are 70% complete, 30 units 60%, complete, 200 units 40% complete,
and 60 units 5% complete, how many EUP have been produced?
a. 70 b. 171 c. 175 d. 390

11. On November 1, Yankee Company had 20,000 units of WIP in Department No. 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 No. 1 and
170,000 units were completed and transferred to Department No. 2. WIP 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. 20,000 decrease b. 16,000 decrease

c. 80,000 decrease d.4,000 decrease

12. Barnet Company adds materials at the beginning of the process in Department M.
Conversion costs were 75% complete as to the 8,000 units in WIP at May 1 and 50%
complete as to the 6,000 units in WIP at May 31. During May, 12,000 units were
completed and transferred to the next department. An analysis of the costs relating
to WIP at May 1 and to production activity for May is as follows:
Cost
Materials Conversion
WIP, May 1 …………………………………………….. P9,600 P4,800
Costs added in May ……………………………………. 15,600 14,400

The total cost per equivalent unit for May was:

 FIFO Average FIFO Average
a. P2.68 P2.68 c. P3.16 P3.16
b. 3.16 2.68 d. 2.68 3.16

13. The following information pertains to Top Co.’s Division D for the month of May:

Number of Units Cost of Materials

Beginning WIP 30,000 P11,000
Started in May 80,000 36,000
Units completed 85,000
Ending WIP 25,000

All materials are added at the beginning of the process.

The cost per equivalent unit for materials is:

FIFO Average FIFO Average

a. P.45 P.43 c. P.43 P.45
b. .43 .43 d. .45 .45

14. The following production information for Dept. B of Zenith Products is for the
month of May, 2001:

Received from Dept. A …………………………………… 600,000 units

Completed and transferred to Dept. C. …………………… 500,000 units

Additional information:
a. No beginning work in process
b. Ending work in process is 75% complete
c. May’s production costs total P2,760,000.

Dept. B’s unit cost of production for May, 2001 is:

a. P4.60 b. P4.80 c. P5.02 d. P5.52

15. The Glorious Corporation manufactures only one product in which the raw material
must pass through Processes A, B and C, in that order, before completion.

Inventories of Process C and of Finished Goods on Oct. 1 were as follows:

Process C – 1,200 units, 2/3 completed P4,200

Finished goods – 1,000 units at P3.00 per unit

During October the following transactions were completed:

2,000 units with a value of P5,000 were transferred from Process B.

Direct labor applied to Process C during October was P3,100.
Overhead costs for October applied to Process C were P3,200.

Inventories on October 31 are as follows:

 Process C – 600 units ½ completed
Finished goods – 1,300 units

Using FIFO method, the value of Process for October 31 is:

a. P4,200 b. P3,500 c. P5,400 d. P2,400

CHAPTER QUIZ
Use the following information for questions 1–10.
Top That manufactures baseball-style hats. Material is introduced at the beginning of the process in Cutting
Department. Conversion costs are incurred (and allocated) uniformly throughout the process. As the cutting of
material is completed, the pieces are immediately transferred to the Sewing Department. Data for the Cutting
Department for the month of February 2003 follow:

Work in process, January 31 - 50,000 units

100% complete for direct materials, 40% completed for conversion costs
actual costs of direct materials, $70,500; actual costs of conversion, $34,050
Units started during February, 225,000
Units completed during February, 200,000
Work in process, February 28 - 75,000 units
100% complete for direct materials, 20% completed for conversion costs
Direct materials added during February [actual costs] $342,000
Conversion costs added during February [actual costs] $352,950

1. Assuming Top That uses the weighted-average method to account for inventories, the equivalent units of
work for the month of February are
Direct Materials Conversion Costs
a. 225,000 225,000
b. 200,000 200,000
c. 275,000 215,000
d. 225,000 200,000

2. Assuming Top That used the weighted-average method to account for inventories, the cost per equivalent
whole unit produced during February is

a. $3.30. b. $3.55. c. $3.77. d. $4.00.

3. Assuming Top That uses the weighted-average method to account for inventories, the assignment of costs to
work in process at the end of February is

a. $300,000. b. $266,250. c. $166,525. d. $139,500.

4. If Top That uses the first-in, first-out (FIFO) method to account for inventories, the equivalent units of work
for the month of February are
Direct Materials Conversion Costs
a. 225,000 225,000
b. 225,000 195,000
c. 275,000 200,000
d. 200,000 195,000
5. If Top That uses the FIFO method to account for inventories, the costs per equivalent unit for February are
Direct Materials Conversion Costs
a. $1.50 $1.76
b. $1.83 $1.72
c. $1.71 $1.81
d. $1.52 $1.81
6. Assuming Top That uses the first-in, first-out (FIFO) method to account for inventories, the assignment of
costs to units completed and transferred to the Sewing Department during February is

a. $658,350. b. $636,450. c. $666,000. d. $652,000.

CHAPTER QUIZ SOLUTIONS: 1.c 2.a 3.d 4.b 5.d 6.a