PRE-FINALS QUIZ

Name: __________________________________________ Date: ____________

Problem No. 1: Inventory Valuation using FIFO-periodic

ZK Manufacturing Company had the following purchases and usage of materials X for the month of
August:

Units Unit Cost

Inventory, 8/1 5,000 P2.00
Purchases:
8/7 6,000 2.50
12 8,000 2.30
15 9,000 2.25
22 10,000 2.40
29 10,000 2.35
Issuance:

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8/7 9,000
14 9,000

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21 9,000
28 9,000

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Supply the answer to the following questions:
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1. The cost of raw materials issued to production using FIFO-periodic is _______________.

2. The cost of raw materials inventory using FIFO-periodic is _______________.

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Problem No. 2: EOQ computation

AC Company's annual material requirement used in production is 144,000 units. This material costs
P200 per unit from a supplier and it requires 5 days lead time from date of order to date of delivery. The
ordering cost is P150 per order and the carrying costs is 5% of inventory investment per unit.
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Supply the answer to the following questions:

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(1) The Economic Order Quantity is _______________.

(2) The number of orders in a year is _______________.

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(3) The frequency of orders is _______________.

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(4) The total ordering costs for the year is _______________.

(5) Assuming a safety stock equal to days requirement, the reorder point _______________.
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 PRE-FINALS QUIZ

Problem No. 3: EOQ computation

Rose Manufacturing Company uses 84,375 units of Material Y each year. The cost of placing an order
is P120 and the carrying cost for one of material Y is P3.00. It takes 20 days to receive the order once
placed.
Required: Determine the following:
1. The Economic Order Quantity is _______________.

2. The Frequency of orders is _______________.

3 The reorder Point is _______________.

4. The annual ordering cost is _______________.

Problem No. 4: Just-in-time & Backflush accounting

Lily Manufacturing Company had the following transactions:

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 Raw materials were purchased on account for P200,000

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 Materials were placed into production

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 Actual direct labor costs were P130,000

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 Actual overhead costs, P150,000

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The raw materials purchased were immediately charged to Raw and In Process account while direct
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labor and actual overhead costs were charged to Cost of Sales. The inventories were as follows at the
beginning and end of the period.
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Raw and in process:

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Beginning were P75,000 of which P45,000 is conversion costs.

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Ending were P50,000 of which P30,000 is conversion costs.

Finished goods:
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Beginning were P80,000 of which P35,000 is conversion costs.

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Ending were P90,000 of which P30,000 is conversion costs.

1. Entry to backflush materials from RIP to Finished Goods (show supporting computation)
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2. Entry to backflush RIP to Cost of Sales (show supporting computation to).

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3. Entry to adjust the balances of the following accounts: RIP, FG and Cost of Sales (show
supporting computation)

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 PRE-FINALS QUIZ

Problem No. 5: Step, Direct and Algebraic Method

GARD Company has two producing departments and two service departments. The producing
departments, Assembly & Finishing receive services from Personnel and Administration. Personnel
keep all employee records and handles payroll; Administration handles all other administrative tasks.
Each service department provides services to the other service department as well as to the two
operating departments, Data for the most recent month follow:

Department Direct Costs # of employees

Personel P 200,000 10
Administration 500,000 30
Assembly 1,800,000 100
Finishing 3,000,000 300
Total P5,500,000 440

GARD Company allocates Administration costs based on direct costs of the departments and

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Personnel costs based on the number of employees. Start with the department that serves the most
other service departments.

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(1) Using direct method, the total service costs allocated to Assembly is _______________.

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(2) Using step method, the total service costs allocated to Finishing is _______________.
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(3) Using algebraic method, the administration costs allocated to Finishing Department is ___________.
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(4) Using algebraic method, the personnel costs allocated to Assembly is _______________.
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Problem No. 6: Service Cost Allocation using the three methods

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Baywalk Company has departmentalized its operations into two service departments, General Factory
Office and Employee Relations, and three producing departments, Mixing, Fabricating and Finishing.
General Factorv office is allocated first on the basis of labor hours, and Employee Relations is allocated
second on the basis of number of employees. The company provides the following estimated data:
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General Employee
Mixing Fabricating Finishing
Factory Office Relations
Dept. OH costs P43,000 P79,000 P233,000 P266,000 P320,000
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DLH 10,000 12,000 23,200 25,600 19,200

# of employees 60 30 144 228 168
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MH 63,540 105,800 85,725

The company estimates that indirect costs will be insurance expense, P32,200; and heating and
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lighting expense, P48,600. It will use the following bases to allocate indirect expenses:
Insurance expenses: On the bases of equipment book values
Heating and Lighting expense: On the basis of space occupied

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 PRE-FINALS QUIZ

Departments Equipment Book Values Space Occupied

General factory office P20,000 1,000 sq ft
Employee Relations 25,000 800 sq ft
Mixing 130,000 4,000 sq ft
Fabricating 175,000 2,000 sq ft
Finishing 110,000 3,000 sq ft

REQUIRED: Prepare a schedule showing how the service department costs are allocated to the
different departments using:
(a) Direct method
(b) Step method
(c) Algebraic method

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Problem No. 7: Plant wide rate versus departmental rate
Universal Manufacturing Company produced variety of products all of which is processed in two

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departments. The company presented to you the fallowing budgeted information for the current year to
help the production manager in determining the cost of its prime products.

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Budgeted overhead P486,000 P564,000
Budgeted labor hours 27,000 3,000
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Budgeted machine hours 4,200 65,800

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Actual cost information for each unit of product is presented below:

Department 1 Department 2
Direct materials P35.00 P10.00
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Direct labor hours 1.5 hours 30 min

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Direct labor rate P40 per hour P50 per hour

Machine hours 0.2MH 1.5MH
Overhead incurred P148,000 P210,000
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During the year, the company produced 5,000 units.

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Required: Determine the following

A. If Plant wide-rate is used
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(1) Total overhead applied based on direct labor hours

(2) The total costs of producing 5,000 units

B. If Departmental rate is used

(1) Total overhead applied using the most appropriate basis
(2) Total costs of producing 5,000 units

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