ADAMSON UNIVERSITY

Intermediate Accounting 1 – Midterms Assignment 7

Prof. Judith Francisco – Luna

Name _________________________________________ Section _____________ Date ____________________

A. Inventory at the end of the current fiscal year was understated. State whether each of the following will be
overstated, understated, or not affected:
1. Cost of merchandise sold reported on the income statement for the current year __________________
2. Gross profit reported on the income statement for the current year ....... __________________
3. Assets reported on the balance sheet at the end of the current year........ __________________
4. Owner’s equity reported on the balance sheet at the end of the current year __________________
5. Net income reported on the income statement for the current year........... __________________
6. Current assets reported on the balance sheet at the end of the current year __________________
7. Liabilities reported on the balance sheet at the end of the current year.... __________________

B. Write the answer for each of the following items.

PROBLEM A
The following are data from Kick Buttowski Manufacturing Corporation:
For the year ended 2018 2019
Raw Materials ? 12,800
Work in Process 46,980 41,000
Finished Goods (2,400 units) 31,200

Net Purchases 332,000

Total Cost Put Into Process 999,360
Direct Labor Paid 176,700
Direct Labor Payable 180,000
Manufacturing overhead 288,000
Freight in 18,000
Advertising Expenses 24,000
Indirect Materials 26,000
Indirect Labor 30,000
Monthly Insurance Cost – Store 3,500
Monthly Insurance Cost – Office 2,800
Expense for Delivery Hotline 1,700
Sales Personnel Salaries 46,000
Showroom Rent 22,000
Professional fees – Accounting 30,000
Legal Fees 47,600
During the year 72,450 units were sold for P1,449,000.
1. How much is the Raw Materials at the end of 2018? _____________________
2. How much is the Prime Cost? _____________________
3. How much is the Total Manufacturing Cost? _____________________
4. How much is the Net Income? _____________________
5. How much is the Selling Expense? _____________________

PROBLEM B
 Star Wars Company has the following data on April 30, 2019:
April Manufacturing overhead P 30,101.80
Decrease in ending inventories:
Materials 2,430.00
Goods in Process 590.00
Increase in ending inventory:
Finished Goods 1,320.40
The manufacturing overhead amounts to 50% of the direct labor, and the direct labor and
manufacturing combined equal 50% of the total cost of manufacturing. All materials are purchased F.O.B.
shipping point.
6. How much is the conversion cost? ________________
7. How much is the prime cost? ________________
8. What is the cost of goods manufactured? ________________
9. How much is the cost of goods sold? ________________
10. How much are the total goods placed into process? ________________
11. How much is the purchases for April? ________________

12. After one year of operations, CAMILLE CO. had the following data in its operating results: Net income is
P150,000. Selling expenses is 12.5% of sales and 25% of cost of sales. General and administrative expenses and
other expenses are 17.5% and 5% of sales, respectively.

What is the amount of gross profit? ________________

_____ 13. Direct material cost is a (an)

Conversion Cost Prime Cost Conversion Cost Prime Cost
A. No No C. Yes Yes
B. No Yes D. Yes No

_____ 14. Direct labor cost is a (an)

Conversion Cost Prime Cost Conversion Cost Prime Cost
A. No No C. Yes Yes
B. No Yes D Yes No

_____ 15. The ABM Company’s cost of goods manufactured was P240,000. Its total sales amounted to
P720,000 and gross profit was P440,000. If the ending inventory of finished goods was P60,000, how much is
beginning inventory of finished goods?
A. P20,000 B. P100,000 C. P260,000 D. P300,000
_____ 16. For the first three months of the year 2019, CDN Company reported total sales of P1,400,000 and
gross profit of P650,000. Finished goods at the beginning of the period amounted to P120,000 while finished
goods at the end of the period amounted to P70,000. How much is cost of goods manufactured?
A. P600,000 B. P700,000 C. P460,000 D. P560,000
_____ 17. During the month of April, EFO Company reported direct labor of P72,000 and direct labor was
equal to 60% of total prime cost. If total manufacturing cost during April amounted to P170,000, how much is
total factory overhead?
A. P48,000 B. P50,000 C. P98,000 D. P120,000