Module 8: Introduction to Manufacturing Operation

(New Account Titles and Financial Statements)

1.The following selected information pertains to Ajax Processing Co.: direct materials, ₱62,500; indirect materials,
₱12,500; factory payroll, ₱75,000 of direct labor and ₱11,250 of indirect labor; and other factory overhead incurred,
₱37,500. The total conversion cost was ________.

2.The following cost data were taken from the records of Ravaaan manufacturing company:
Depreciation of factory equipment ₱ 1,000
Depreciation of sales office 500
Advertising 7,000
Freight-out (shipping) 3,000
Wages of production workers 28,000
Raw materials used 47,000
Sales salaries and commissions 10,000
Factory rent 2,000
Factory insurance 500
Administrative salaries 2,000

Based upon the above information, the manufacturing costs incurred during the year was: ________.

3.Pink Company incurred the following costs during the month: direct labor, ₱120,000; factory overhead, ₱108,000; and
direct materials purchases, ₱160,000. Inventories show the following costs:
Beginning Ending
Finished goods ₱27,000 ₱30,000
Work in process 61,500 57,500
Direct materials 37,500 43,500
a. How much is the cost of goods manufactured?
b. How much is the cost of goods sold?

4.Given are the selected inventory data of Khuyhaphan Handling Factory for the month of January 2018.

2018
Inventories: January 1 January 31
Work in Process ₱310,000 ₱240,000
Finished Goods 520,000 405,000
Additional Information:
Sales ₱1,050,000
Sales Returns & Allowances 25,000
Factory Costs:
Direct Materials 120,000
Direct Labor 85,000
Manufacturing Expenses:
Indirect Materials ₱90,000
Indirect Labor 75,000
Allocated Amortization of Patents 25,000
Depreciation Expenses 10,000
Total ₱200,000
Selling and Administrative Expenses ₱165,000
a. How much is the Cost Placed in Process?
b. How much is net profit?

The following are the information obtained from the Kitchen section of Big Diet Island for the months of January,
February and March 2018:
January February March
Sales 345,000 375,000 415,000

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 Raw materials, beg. 0 ? ?
Raw materials, purchases 30,000 28,500 31,500
Inventory, ending 5,000 4,000 6,000
Direct Labor 60,000 57,000 63,000
Manufacturing Overhead 120,000 114,000 126,000
Work-in-process, beg. 0 ? ?
Work-in-process, end 13,000 12,000 14,000
Finished goods, beg. 0 ? ?
Finished goods, end 30,000 40,000 50,000

5. Compute the following:

January February March
Raw materials, beginning
Raw materials, used (direct
materials)
Manufacturing costs
Work-in-process, beginning
Cost of goods manufactured
Finished goods, beginning
Cost of goods sold
Gross profit

6. Manufacturing cost is the sum of –

a. Direct materials, direct labor and manufacturing overhead
b. Indirect materials, direct labor and manufacturing overhead
c. Indirect materials, indirect labor and manufacturing overhead
d. Direct materials, indirect labor and manufacturing overhead

7. The following information is taken from the records of TegGama Manufacturing for the year ending December 31,
2018: Direct materials, 5,000; Manufacturing overhead, 6,000; Total manufacturing costs, 17,000; Beginning work in
process inventory, 1,000; Cost of goods manufactured, 15,000. What are the correct amounts for direct labor and
ending work in process inventory? Direct Labor / Ending Work in Process
a. 12,000 / 2,000
b. 11,000 / 2,000
c. 6,000 / 1,000
d. 6,000 / 3,000

8. The schedule of cost of goods manufactured of BumbleGum Company shows the following balances for the year
ended December 31, 2018: Raw materials used in production, 900,000; Direct labor, 560,000; Total overhead costs,
750,000; Ending work in process inventory, 460,000; Cost of goods manufactured, 2,250,000. The beginning work in
process inventory was:
a. 500,000
b. 420,000
c. 1,250,000
d. 40,000

9. The following information is taken from the records of Datum Company for the year ended May 31, 2000: Direct
materials, 8,000; Direct labor, 3,000; Manufacturing overhead, 11,000; Ending work in process inventory, 5,000; Cost of
goods manufactured, 19,000. The amount of beginning work in process inventory is:
a. 0
b. 2,000
c. 3,000

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 d. 8,000

10. The following information appears on the income statement of Teddy, Inc. for the year ended June 30, 2018:
Beginning finished goods inventory, 150,475; Ending finished goods inventory, 145,750; Sales, 400,000; Gross margin,
120,000. The cost of goods manufactured for the year was:
a. 115,275
b. 284,725
c. 275,275
d. 124,725

11. The manufacturing operations of Barton, Inc. had the following inventory balances for the month of March, 2018:
Inventories 3/1/18 3/31/18
Raw Materials 10,000 12,000
Work in process 6,000 7,000
Finished goods 30,000 22,000
a. If Barton purchased 18,000 of raw materials during March, the cost of raw materials used in production would be:
a. 16,000
b. 20,000
c. 41,000
d. 19,000
b. If Barton transferred 38,000 of completed goods from work in process to finished goods during March, what was the
amount of the cost of goods sold?
a. 38,000
b. 43,000
c. 30,000
d. 46,000
12. The following account balances were taken from Dragon Tables Factory for the quarter ending March 31, 2012.

Inventories
March 31 January 1
Raw Materials P120,000 P105,000
Work In Process 250,000 275,000
Finished Goods 170,000 290,000

Purchases – Raw Materials P110,000

Freight in 5,000
Direct Labor 308,000
Indirect Labor 45,000
Indirect Materials 65,000
Amortization of trademark 98,000
Rent expense – factory 25,000
Depreciation – factory 40,000
Depreciation – office 48,000

a) How much is prime cost?

a. P438,000 c. P490,000
b. P408,000 d. P495,000

b) How much is conversion cost?

a. P594,000 c. P590,000
b. P581,000 d. P533,000

c) How much is factory cost?

a. P681,000 c. P663,000
b. P648,000 d. P690,000

d) How much is cost of goods manufactured?

a. P688,000 a. P826,000
b. P638,000 b. P862,000
c. P706,000 c. P525,000
d. P690,000 d. P518,000

e) How much is cost of goods sold?

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13. The following data (in thousands of dollars) have been taken from the accounting records of Casey Corporation for the just
completed year.
Administrative expense 30
Direct labor 40
Finished goods inventory, beginning 24
Finished goods inventory, ending 32
Manufacturing overhead 46
Purchases of raw material 24
Raw materials inventory, beginning 8
Raw materials inventory, ending 14
Sale 198
Selling expense 28
Work in process inventory, beginning 14
Work in process inventory, ending 10

a. The cost of the raw materials used in production during the year (in thousands of dollars) was:
A) 180.
B) 300.
C) 320.
D) 380.
b. The cost of goods manufactured (finished) for the year (in thousands of dollars) was:
A) 1,000.
B) 1,040.
C) 1,080.
D) 1,180.

c. The cost of goods sold for the year (in thousands of dollars) was:
A) 1,000.
B) 1,160.
C) 1,320.
D) 1,400.

d. The net income for the year (in thousands of dollars) was:
A) 300.
B) 400.
C) 500.
D) 980.
1. Prime cost is arrived at by –
a. Adding direct materials and indirect labor c. Adding indirect materials and manufacturing
b. Adding direct materials and direct labor overhead
d. Adding manufacturing overhead and indirect labor

2. Which of the following elements of manufacturing cost fits the description of a “direct material”?
a. Cost of nails in making chairs
b. Lumber to be used in making chair
c. Wages paid to a mechanic servicing the engine of a factory
d. Amortization of patents

3. Which of the following costs that do not fit the description of a “direct labor”?
a. Salaries of a carpenter in making tables c. Salary of a supervisor in a factory
b. Salaries of a painter in painting chairs d. Salary of a mechanic in installation of car tires

4. Which of the following items can be classified as manufacturing overhead?

a. Flour to make bread c. Depreciation of office building
b. Salaries of janitor and tool keeper d. Salaries of salesman

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