1

CHAPTER 16
Answers to Multiple Choice Theoretical
1.
2.
3.
4.
5.

a
b
d
a
a

6.
7.
8.
9.
10.

c
c
a
a
C

Solutions to Multiple Choice Computational

1.

b
Materials and In Process Inventory (MIP), June 1
Materials received
Materials and In Process Inventory (MIP), June 30
Materials used to be backflushed to finished goods

2.

a
Raw materials purchased
Raw materials used
Balance of MIP, end

3.

4.

5.

P 10,000
205,000
( 12,500)
P202,500

P880,000
(850,000)
P 30,000

c
MIP inventory, beginning
Raw materials purchased
MIP inventory, ending
Materials to be backflushed to finished goods

P 38,700
680,000
( 41,900)
P676,800

Conversion costs to be backflushed to finished goods

P 5,300

c
Raw materials purchased
Materials used: (21,000 x P25)
MIP inventory, ending

P550,000
(525,000)
P 25,000

Raw materials used

Conversion costs (21,000 x P20)
Finished goods
Cost of goods sold (20,000 x P45)
Finished goods inventory, ending

P525,000
420,000
945,000
(900,000)
P 45,000

a
Raw materials purchased
Materials standard cost: (192,000 x P26)
MIP Inventory, ending

P5,300,000
( 4,992,000)
P 308,000

2
Cost of goods sold: (192,000 x P41)
6.

P7,872,000

d
Materials in April 1 MIP inventory balance: (31,000 P1,400) P 29,600
Materials received during April
367,000
Materials in April 30 MIP, per physical count (P33,000P1,800) ( 31,200)
Amount to be backflushed
P 365,400

7.

c
Materials in May 1 MIP balance: (P12,300 P1,300)
Materials received during May
Materials in May 31 MIP balance: (P12,100 P2,100)
Amount to be backflused

8.

c
Applied conversion costs
Actual conversion costs incurred:
Direct labor
Factory overhead
Overapplied conversion costs

9.

P1,300,000
P200,000
995,000

1,195,000
P 105,000

c
Materials used
Applied conversion costs
Cost of goods sold

10.

P 11,000
246,000
( 10,000)
P 247,000

P 300,000
1,300,000
P1,600,000

a
Materials backflushed from Finished Goods to Cost of Goods Sold:
Materials in June 1, MIP balance (P29,250 P3,000)
P 26,250
Materials received
562,500
Materials in June 30, MIP balance (P32,000 P4,500)
( 27,500)
Materials backflused to Finished Goods from MIP
561,250
Materials in June 1, Finished Goods (P30,000 P10,000)
20,000
Materials in June 30, Finished Goods (P26,250 P8,750)
( 17,500)
Materials backflused to Cost of Goods sold
P 563,750
Adjustment of conversion cost to Cost of Goods Sold:
In MIP: (from P3,000 to P4,500)
P1,500
In FG: (from 10,000 to P8,750)
1,250
( 2,750)
Cost of Goods Sold, June 30
P 561,000

11.

a
Materials in MIP, June 30
Materials in MIP, June 1
Materials used
Raw materials purchased during June

P 12,500
(10,000)
202,500
P 205,000

Solutions to Problems
Problem 16-1
(a)

(b)

(c)

(d)

Materials and in Process inventory (MIP)

Accounts payable
To record materials purchased.

440,000

Conversion costs
Various accounts
To record conversion costs incurred

211,000

Finished goods inventory

Materials and in Process inventory (MIP)
Applied conversion costs
To record cost of finished goods.

625,000

Cost of goods sold

Finished goods inventory
To record cost of goods sold.

595,000

440,000

211,000

425,000
200,000

595,000

Problem 16-2
(a)

(b)

(c)

(d)

Materials and in Process inventory (MIP)

Accounts payable
To record materials purchased.
Conversion costs
Various accounts
To record actual conversion costs incurred.

2,754,000
2,754,000
723,600
723,000

Finished goods inventory (26,800 x P130)

MIP inventory (26,800 x P102)
Applied conversion costs (26,800 x P28)
To record cost of finished goods

3,484,000

Cost of goods sold (26,500 x P130)

Finished goods

3,432,000

2,733,600
750,400

3,482,000

Problem 16-3
(a)

(b)

(c)

(d)

Conversion costs
Various accounts
To record actual conversion costs incurred.

723,600

Finished goods inventory

Accounts payable
Applied conversion costs
To record cost of finished goods.

4,234,400

Cost of goods sold

Finished goods
To record cost of finished goods.

3,432,000

Applied conversion costs

Conversion costs
Cost of goods sold
To record disposition of under/over applied
conversion costs.

723,600

3,484,000
750,400

3,432,000
750,400
723,600
26,800

Problem 16-4
(a)

(b)

(c)

(d)

Materials and In Process Inventory

Accounts payable
To record materials purchased.

550,000

Conversion costs
Various accounts
To record actual conversion costs incurred.

440,000

Finished goods inventory (21,000 x P45)

MIP inventory (21,000 x P25)
Applied conversion costs (21,000 x P20)
To record cost of finished goods.

945,000

Cost of goods sold (20,000 x P45)

Finished goods inventory
To record cost of goods sold.

900,000

550,000

440,000

525,000
420,000

900,000

Problem 16-5
(a)

(b)

(c)

(d)

Materials inventory
Accounts payable
To record materials purchased.

550,000

Conversion costs
Various accounts
To record actual conversion costs incurred.

440,000

Cost of goods sold

Materials inventory
Applied conversion costs

900,000

Applied conversion costs

Cost of goods sold
Conversion costs
To closed under or over-applied conversion costs.

400,000
40,000

550,000

440,000

500,000
400,000

440,000

Problem 16-6
(a)

No entry for materials purchased

(b)

Conversion costs
Various accounts

440,000

Finished goods inventory

Accounts payable
Applied conversion costs
To record cost of finished goods.

945,000

Cost of goods sold

Finished goods inventory
To record cost of goods sold.

900,000

Applied conversion costs

Cost of goods sold
Conversion costs
To dispose under/over-applied conversion costs.

420,000
20,000

(c)

(d)

(e)

440,000
525,000
420,000

900,000

440,000

Problem 16-7
(1)

(a)

Equivalent Production: [5,000 + (40 x 50%) = 5,000

P250,525 5,020 =

P49.905 per unit

(b)

P250,000 5,000 =

P50

(c)

Units started : (5,000 + 40 - 35) = 5,005

P250,000 5,005 =
=
=
=

per unit

P49.950 per unit

(2)

40 x .50 x P49.905
40 x .50 x P50
40 x .50 x P49.950

P990
P1,000
P999

(3)

Considering that the results of Requirement (2) were within two pesos of each other,
then method (b) would be recommended because of its simplicity.