University of Santo Tomas

AMV – College of Accountancy

CA5101
Quiz on Manufacturing
1st Term, Academic Year 2019-2020

NAME: ________________________________________ SECTION: _____

PART I. THEORIES (1.5 points each). On your scantron cards, choose the letter that corresponds to
the best answer.

1. The three basic elements of the cost of a manufactured product are

a. Indirect materials, indirect labor and manufacturing overhead
b. Raw materials inventory, work in process inventory and finished goods inventory
c. Direct materials, work in process and finished goods inventory
d. Direct materials, direct labor and manufacturing overhead

2. Manufacturing costs consist of

a. Direct materials
b. Conversion cost
c. Period cost
d. Only a and b

3. As production takes place, all manufacturing costs are debited to the

a. Work in process inventory account
b. Manufacturing overhead account
c. Cost of goods sold account
d. Finished goods account

4. To transfer work in process inventory to finished good inventory

a. Debit finished goods and credit work in process
b. Debit work in process and credit finished goods
c. Add direct labor to the work in process inventory
d. Add direct labor and direct materials to the finished goods inventory

BONUS 5. Uratex Company manufactures bed frames and mattresses that are custom-made to a
person’s height and weight. Last week, an employee which assembles bed frames spent 35
hours working on a number of bed frames, including 5 hours of overtime. The employee is
normally paid P200 per hour and P300 per hour when working overtime. Overtime hours
are normally charged by the company as Factory Overhead. Which of the following is the
correct entry to record the incurrence of labor?
a. Debit WIP P7,500; Credit Wages Payable P7,500
b. Debit WIP P8,500; Credit Wages Payable P8,500
c. Debit WIP P7,000, Debit Factory Overhead P500; Credit Wages Payable P7,500
d. Debit WIP P7,000, Debit Salaries Expense P1,500; Credit Wages Payable P8,500

6. If the work in process inventory has increased during the period, which of the following
statements is definitely true?
a. Cost of goods sold will be greater than the cost of goods manufactured
b. Cost of goods manufactured will be greater than the cost of goods sold
c. Total manufacturing costs for the period will be greater than the cost of goods
manufactured
d. Total manufacturing costs for the period will be less than the cost of goods manufactured

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 7. Manufacturing overhead
a. Consists of direct material and direct labor cost
b. Is easily traceable to jobs
c. Includes indirect production costs
d. All of the above.

8. Cost of goods sold is closed into the income summary account

a. At the end of the production cycle
b. When the product is sold
c. At the end of the accounting period
d. At any given time during the year

9. Which comprises the prime cost?

a. Direct costs and manufacturing overhead
b. Direct materials and direct labor
c. Direct labor and manufacturing overhead
d. Depreciation expense of the factory building

10. Which of the following would not be an element of factory overhead?

a. Salary of the marketing manager
b. Depreciation of plant equipment
c. Salary of the pant supervisor
d. Property taxes on the plan building

For numbers 11 to 20, shade A when the statement is TRUE and B if FALSE.

11. Selling, general and administrative costs are part of manufacturing overhead. B

12. Only direct manufacturing costs are assigned to inventories and cost of goods sold. B

13. The process flow of a manufacturing company is: B

Raw materials Work in Process  Finished goods  Cost of goods sold.

14. The salary of a manufacturing company’s President is part of product cost. B

15. Cost of goods manufactured = WIP beg + Total Manufacturing Cost – WIP end. A

16. Work-in process inventory are goods partially worked on but not yet done. A

17. Commissions paid to sell products are reported as part of cost of goods sold. B

18. Conversion cost includes all direct manufacturing cost. B

19. To be in compliance with generally accepted accounting principles, selling and administrative
expenses and interest expense should be allocated to the cost of products manufactured. B

20. Inventoriable costs are expensed when incurred in the year of production, regardless of when the
product is sold. B

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PART II. PROBLEM SOLVING (2.5 points each). On the answer sheet provided, write your answer
to the following short problems.

PROBLEM A

CHABI-YO Company produces and sells rubber shoes. The following costs are taken from its year-end
records:

o Direct materials: P42,000

o Direct labor: P97,000
o Overhead: P61,000
o Selling expenses: P27,000
o General and administrative expenses: P41,000

The company had no unfinished products at either the beginning of the year or the end of the year. The
company produced 50,000 units during the year and sold 48,000 for P2500 each.

1. What is the journal entry to record the use of direct materials to the production process?

Work in Process 42,000

Direct Materials 42,000

PROBLEM B

NONOY Athletic Gear produces and sells basketballs. The company, which had no unfinished production
at the start of the year, put P156,000 in raw materials into production. Payroll payments included the
wages of the factory workers at P248,000 and salary of the plant manager at P50,000. Other overhead
items necessary to complete the basketballs cost P81,000. All basketballs were finished. Sales
commissions of P33,250 were paid to the sales force, who sold 95% of the basketballs.

2. What is the journal entry to record the incurrence of labor to the production process?

Work in Process 248,000

Factory Overhead 50,000

Cash 298,000

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 PROBLEM C

Selected account balances of SUBIDO Company for 2019 are as follows:

BEGINNING ENDING
Finished Goods Inventory P 25,000 P 32,000
Work in Process Inventory 30,000 35,000
Raw Materials Inventory 46,000 26,000
Sales 360,000
Direct labor 45,000
Factory supervisor salary 18,000
Income tax expense 25,000
Factory insurance 12,000
Raw material purchases 75,000
Administrative expenses 17,000
Sales returns and allowances 15,000
Factory depreciation 22,000
Indirect labor 11,000
Selling expenses 35,000

REQUIRED: Compute for the following

3. Direct materials used 95,000

4. Total manufacturing cost 203,000
5. Cost of goods manufactured 198,000
6. Cost of goods sold 191,000
7. Profit during the year 77,000

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 PROBLEM D

ABANDO Manufacturing uses a periodic inventory system and made the following closing entries on
December 31, 2019

Manufacturing Summary 747,100

Raw Materials Inventory 15,200
Work in Process Inventory 43,100
Raw Materials Purchases 116,400
Freight in 3,600
Direct Labor 316,000
Factory Overhead 252,800

Raw Materials Inventory 17,200

Work in Process Inventory 42,800
Manufacturing Summary 60,000

Profit or Loss Summary 904,550

Finished Goods Inventory 38,650
Selling Expenses 86,500
Administrative Expenses 92,300
Manufacturing Summary 687,100

Finished Goods Inventory 38,550

Sales 986,000
Profit or Loss Summary 1,024,550

Profit or Loss Summary 120,000

Abando, Capital 120,000

REQUIRED: Compute for the following

8. Direct Materials Used 118,000

9. Total Manufacturing Cost 686,800
10. Cost of Goods Manufactured 687,100
11. Cost of Goods Sold 687,200
12. Total inventories at December 31, 2019 98,550

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 PROBLEM E

You were auditing the books of PARAISO Manufacturing and found out that some accounts are missing.
Your task is to determine the balances of the missing accounts.

Beginning Work In Process P 12,000 Beginning Finished Goods ?

Ending Work In Process ? Ending Finished Goods 22,000
Direct Materials Cost 75,000 Cost of Goods Available for Sale 219,000
Direct Labor 65,000 Cost of Goods Sold ?
Factory Overhead 55,000 Gross profit ?
Total Manufacturing Cost ? Operating expenses 38,500
Cost of Goods Manufactured 180,000 Net Profit ?
Sales 270,000

REQUIRED: Compute for the following

13. Total Manufacturing Cost 195,000

14. Ending Work In Process 27,000
15. Beginning Finished Goods 39,000
16. Cost of Goods Sold 197,000
17. Gross profit 73,000
18. Net Profit 34,500

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 PROBLEM F

A partially completed Cost of Goods Sold statement for AYO Manufacturing, Inc. for the year ended
December 31, 2019 is presented below:

AYO Manufacturing, Inc.

Cost of Goods Sold Statement
For the year ended December 31, 2019

Direct materials, beginning of year 2,795,600

Purchases during the year (#19) 9,990,000
Total direct materials available for use 12,785,600
Direct materials, end of year 2,990,000
Direct materials used 9,795,600
Direct labor (#20) 14,693,400
Factory overhead (#21) 3,673,350
(#22) Total Manufacturing Costs (#23) 28,162,350
Work in process, beginning of year 3,455,600
Total cost of work in process 31,617,950
Work in process, end of year 4,290,000
(#24) Cost of Goods Manufactured (#25) 27,327,950
Finished goods, beginning of year 5,700,000
Cost of goods available for sale (#26) 33,027,950
Finished goods, end of year 4,950,000
(#27) Cost of Goods sold (#28) 28,077,950

Sales (#29) 36,501,335

Gross profit (#30) 8,423,385

Additional information:

a. Direct labor is 60% of total prime cost.

b. Factory overhead is 20% of total conversion cost.
c. Products are sold to yield a gross profit of 30% based on cost.

REQUIRED: For numbers 19 to 30, complete the missing information as indicated in the schedule.

“SUCCESS STARTS WHEN EXCUSES STOP.”

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