COST ACCOUNTING

PROBLEM 1
The comparative inventory data for MBC Manufacturing Corporation for the year ended December 31, 20x6 is
summarized below:
January 1 December 31
Materials control P750,000 P760,000
Work in process - material 200,000 190,000
Work in process - labor 190,000 200,000
Work in process - overhead 280,000 240,000
Finished goods control 700,000 730,000
During the year 20x6, the corporation completed, among others, the following transactions:
a) Purchases, all on account, direct materials, P3,000,000; indirect materials, P 600,000.
b) The total materials requisitioned for use during the year included P540,000 for indirect materials, P63,000
for shipping of finished goods deliveries, and P52,500 for general office repairs.
c) The payroll for the year was broken down as follows: direct labor, P2,500,000, indirect labor, P825,000;
sales salaries, P1,260,000, and office salaries, P690,000.
d) Other manufacturing expenses vouchered amounted to P1,380,000, and depreciation charges were P375,000
on plant assets, P180,000 on delivery trucks and P120,000 on office equipment.
e) Manufacturing expenses were applied to production at predetermined rate equal to 130% of direct labor
cost.
f) Completed goods were transferred to the finished goods warehouse.
g) All sales are made on terms 2/10, n/30; billing price is at 150% of cost.
h) At the end of the year, any overapplied or underapplied manufacturing expenses is treated as an adjustment
to the cost of goods sold.
Required:
1. Prepare entries in general journal form, to record the above transaction of MBC Manufacturing Corporation
for the year 20x6.
2. Prepare the statement of cost of goods manufactured and sold for the year ended Dec 31, 20x6.
3. Determine the following amounts:
a. Prime cost c. Product cost
b. Conversion cost d. Period cost

PROBLEM 2
For the year just ended, Royal Corporation reported total manufacturing costs of P3,600,000 and cost of goods sold
of P3,750,000. For the past periods, the factory overhead had been about 1/2 of materials costs and 2/5 of the
conversion costs. Raw materials on January 1 of P240,000 was 6/5 of the December 31 inventory, while work in
process of P160,000 on January 1 increased by 1/4 at the year-end. The finished goods inventory decreased by 1/3.

Required: Prepare a statement of cost of goods sold for the year just ended, giving as much details as can be
determined from the information given.

PROBLEM 3
ABC Company manufactures finger splints for kids who get tendonitis from playing video games. The firm had the
following inventories at the beginning and end of the month of January.
January 1 January 31
Finished goods P125,000 P117,000
Work in process 235,000 251,000
Raw materials 134,000 124,000
The following additional manufacturing data pertains to January operations:
Raw materials purchased P191,000
Direct labor 300,000
Actual manufacturing overhead 175,000
ABC Company applies manufacturing overhead at the rate of 60 percent of direct labor cost. Any overapplied or
underapplied manufacturing overhead is accumulated until the end of the year.
Required: Compute for the following:
1. ABC Co’s prime cost for January.
2. ABC Co’s total manufacturing cost for January.
3. ABC Co’s cost of goods manufactured for January.
4. ABC Co’s cost of goods sold for January.
5. ABC Co’s balance in Manufacturing Overhead account on January 31. Debit or Credit.

JOB ORDER COSTING

PROBLEM 1
TV Company uses a job-order costing system and the following information is available from its records. The
company has three jobs in process: #1, #2, and #3.
Raw material used P300,000
Direct labor per hour P20.00
Overhead applied based on direct labor cost 120%
Of the raw materials used, total of 85% were traceable to the specific jobs (Job #1: 25%; Job #2: 30%; Job #3: 30%)
and the balance of the requisitions was considered indirect. Direct labor hours per job are 2,800; 3,300; and 4,000;
respectively. Indirect labor is P100,000. Other actual overhead costs totaled P150,000.
1. Assuming all of the jobs were completed and the company used actual costing, what is the
total cost of goods manufactured?
2. Assuming only Jobs No. 2 and 3 were completed and sold, what is the cost of goods sold at
year end?
3. What is the under (DR) or over (CR) applied overhead?

PROBLEM 2
During the month of August, MM Company started production of job orders 160, 170 and 180. Job order 150 was in
process at the beginning of the month with direct materials cost of P35,000, direct labor cost of P21,000 and applied
factory overhead of P25,300. During the month, direct materials were requisitioned and direct labor was identified
with the job orders as follows:
Job order no. Direct Materials Direct Labor
150 P- P26,000
160 39,000 45,000
170 53,000 47,000
180 47,000 16,000
Factory overhead is applied to the orders at 120% of direct labor cost. Job orders 180 was incomplete by the end of
the month.
1. What is the total manufacturing cost for August?
2. What is the cost of work in process on August?
3. What is the cost of goods manufactured for August?

POBLEM 3
ABC Company uses a job-order costing system. At the beginning of January, the company had two jobs in process
with the following costs:
Direct Material Direct Labor Overhead
Job 001 P3,400 P510 P255
Job 002 1,100 288 ?
ABC pays its workers P9.00 per hour and applies overhead on a direct labor hour basis.
1. What is the overhead application rate per direct labor hour?
2. How much overhead was included in the cost of Job 002 at the beginning of January?
3. During January, ABC’s employees worked on Job 003. P714 of overhead had been applied to this job.
Total manufacturing cost was P6,800 including the total cost of all other jobs in the amount of P3,981.
What amount of direct material is included in Job 003?

PROBLEM 4
MOBC Company is currently working on three jobs. The breakdown of the jobs are as follows:
Total
Units Produced Manufacturing Cost per unit
Cost
Job 1 100 200,000 2,000
Job 2 50 50,000 1,000
Job 3 75 225,000 3,000
1. Assume that 10 units of Job 1 is spoiled. The units could be sold for P1,100 per unit.
Determine the total manufacturing cost charged to Job 1 and cost per unit of the good units of job 1 and total
manufacturing cost if:
a. The spoiled goods were due to internal failure.
b. The spoiled goods were due to exacting specifications.

2. Assume that 5 units of job 2 is defective. The cost to rework the defective units of Job 2 were the following
(per unit): P50 for raw materials, P30 for direct labor, applied overhead at 150% of direct labor.
Determine the total manufacturing cost charged to Job 1 and cost per unit of the good units of job 1 and total
manufacturing cost if:
a. The spoiled goods were due to internal failure.
b. The spoiled goods were due to exacting specifications.
PROBLEM 5
James Company’s job 65 for the manufacture of 2,200 units was completed during August at the unit costs presented
as follows: Direct materials, P20; Direct labor, P18; and Factory overhead (includes allowance of P1 spoiled work),
P18. Final inspection of Job 65 disclosed 200 spoiled units.
1. What would be the unit cost of good units if the spoilage loss is charged to all production during
August?
2. What would be the unit cost of good units if the spoilage loss attributable to exacting specifications of
Job 65?

PROBLEM 6
JH Company manufactures toys for big children. One order from Mr. Chan for 2,000 units showed the following
costs per unit: Direct Materials, P3.50; Direct Labor, P1.50.
Manufacturing overhead rate at 140 of direct labor cost if defected work is charged to the job, 150% if it is not.

Final inspection revealed that 100 units were improperly manufactured, these units were disassembled, and properly
manufactured. The per unit cost of correcting the defective products consists of P0.15 for materials, P0.25 for direct
labor and manufacturing overhead at the predetermined rate.
1. What is the cost per unit produced, assuming that the rework is charged to the customer?
2. What is the cost per product produced, assuming that the rework cost is charged to Factory overhead
control?

PROBPLEM 7
XYZ Manufacturing was a company engaging in manufacturing car parts. During this year, XYZ Manufacturing
made 30,000 units of clutch kits. However after further inspection, it was determined that 4% of the units made were
spoiled. These spoiled units can be sold at P150 each.
The following were the total cost of the 30,000 clutch kits:
Direct materials P2,760,000
Direct labor (P140 per direct labor hour) P 840,000
Applied overhead P1,800,000
(300 r direct labor hour inclusive of P50 allowance for spoiled work)
1. Assume that the spoiled goods were due to internal failure, what is the cost transferred to finish goods
at the end of the year?
2. Assume that the spoiled goods were due to exacting specifications, what is the cost per good unit at the
end of the year?

PROBLEM 8
AAA Inc. manufactured coil over springs for cars. During this year, AAA Inc. manufactured 200 units coil over
springs. After final inspection, it was determined that 15 units were defective. The cost per unit to rework the defective
units were the following: P100 for direct materials, P160 for direct labor and the appropriate factory overhead rate.

The following were the unit cost for the 200 coil over springs:
Direct materials P800
Direct labor P350
Applied overhead 160% of direct labor cost
(150% in case defective units were charged to specific order)
1. Assume that the defective goods were charged to all jobs, what is the cost transferred to finish goods
at the end of the year?
2. Assume that the defective goods were due to specific job, what is the unit cost of each good unit at the
end of the year?

PROCESS COSTING
PROBLEM 1
Compute the EUP for each of the following independent cases below:
A. The production of data of Jewel Company for the month of December, 20x2, follow:
Department A Department B
In process, December 1 5,000 10,000
Stage of completion 1/2 10%
Started in process 25,000 22,000
In process, December 31 ? 5,000
Stage of completion 25% 4/5
Department A applies materials as follows:
1/5 when the process is started; 30% when the process reaches ½ completion, and the balance at the end of
the process. In Department B, materials are applied 60% at the start of the process and 40% at the end.
(Compute for material equivalent production only in both departments).

B. Materials are issued at the following stages:

At the start of the process 25%
When work is 50% completed 50%
When work is 75% completed balance
Conversion costs are applied uniformly.
In process, June 1 (3/4 incomplete) 20,000 units
Transferred out 85,000
In process, June 30 (2/5 incomplete) 25,000

C. In process, beginning (40% incomplete) 35,000 units

Started in process during the period 95,000
Transferred out to next department 86,000
 In process, end (3/5 complete) ?
Materials are issued 100% at the start of the process, and conversion costs are applied uniformly.

D. In process, beginning (1/4 complete) 1,000 units

Started in process 7,500
In process, end (2/5 complete) 2,500
Materials are issued as follows: 40% at the start and the balance at the end of the process. Conversion costs are applied
evenly.

PROBLEM 2
COMPRE COMPANY uses process costing to account for its operations in its two departments. The company uses
FIFO in their first department and then it transfers the items to the second department which uses Weighted Average
to account for the goods they manufacture. The following are the data related to the company’s operations for the
month of October.
Beginning Ending
Materials P150,000 ?
Finished Goods P100,000 ?

Beginning Incurred this month

Department 1 1,000 units
Materials (30% complete) P92,075 P495,925
Conversion Cost (55% complete) P15,020 1,000 hrs.

Department 2 2,000 units

From Department 1 P20,755
Materials (60% complete) P148,720 P250,000
Conversion Cost (80% uncomplete) 74,160 500 hrs.

During the month the company purchased materials costing P800,000 and started to work on 12,000 units. Laborers
are paid at the rate of P60 per hour and factory overhead is applied at the rate of 50% of direct labor in Department 1
and 100% of direct labor in Department 2.

At the end of the month, Department 1 has 3,000 units in process (25% uncomplete as to materials, 60% complete as
to Conversion cost), while Department 2 has 4,000 units in process (80% complete as to materials and 40% to complete
as to conversion). 1,000 units remain unsold at the end of the month. The company sells their goods at a 100% mark-
up on cost.
1. Prepare the journal entries for October.
2. Determine the EUP for Department 1 and 2.
3. Prepare a cost of production report for Department 1 and 2.
4. Prepare a cost of goods sold statement for October.

PROBLEM 3
Bulls Corporation’s production starts in Department 1. The following data is available for the month.
Units work in process, beginning (50% complete) 40,000
Units started for the month 240,000
Units work in process, end (60% complete) 25,000
Materials are added at the beginning of the process in Department 1.
Using the average cost method, what are the equivalent units of production for the month for materials and
conversion costs?
Using the FIFO cost method, what are the equivalent units of production for the month for materials and
conversion costs
PROBLEM 4
Alberta Instrument Company uses a process costing system. A unit of product passes through three departments –
molding, assembly, and finishing – before it is completed.

The following activity took place in the Finishing Department during May.
Work in process inventory, May 1 1,400 units
Units transferred in from the Assembly Department 14,000 units
Units transferred out to finished goods inventory 11,900 units
Raw material is added at the beginning of processing in the Finishing Department. The work in process inventory was
70 percent complete as to conversion on May 1 and 40 percent complete as to conversion on May 31. Alberta
Instrument Company uses the weighted-average method of process costing. The equivalent units and current period
costs per equivalent unit of production for each cost factor are as follows for the Finishing Department.
Equivalent Current Period Costs per
Units Equivalent Unit
Transferred in costs 15,400 P 5.00
Raw materials 15,400 1.00
Conversion cost 13,300 3.00
Calculate the cost of units transferred to finished goods inventory during May and the cost of Finishing
Department’s work in process inventory on May 31.

PROBLEM 5
The data has been gathered from the records of Caleb Manufacturing Company for the month.
Units
Work in process, beg, (40% complete as to conversion costs) 5,000 units
Started during the month 90,400 units
Work in process, end (70% complete as to conversion costs) 4,000 units

Cost
Work in process, beg P24,875
Materials cost incurred for the month 433,920
Conversion costs incurred for the month 119,860
The company uses the FIFO process costing method. Materials are added at the beginning of the process while
conversion costs is evenly incurred during the process.
1. What are the equivalent units of production for materials and conversion costs?
2. What is the cost of units transferred out for the month?
3. What is the cost of ending work in process?

PROBLEM 6
ABC Inc. manufactures computer memory cards. During January our accounting department noted that there was no
beginning inventory. Direct materials incurred totaled P147,000 during the month. Work-in-process records revealed
that 15,000 cards were started in January, 12,000 cards were complete, and 1,500 units were spoiled as discovered.
Ending work-in-process units are 75% complete in respect to direct materials costs.
1. What are the respective direct material costs per equivalent unit?
2. What is the cost of materials transferred out?
3. What is the amount of materials costs allocated to the work-in-process ending inventory?
4. Assume all materials are added at the start of the process and inspection takes place when the units are 70%
complete. Allocate the total cost of materials incurred to the costs transferred out and in the work-in process
ending. (Assume total materials costs amount to 148,500.)

PROBLEM 7
ABC manufactures small tables in its Processing Department. Direct materials are added at the initiation of the
production cycle and must be bundled in single kits for each unit. Conversion costs are incurred evenly throughout
the product cycle. Before inspection, some units are spoiled due to non-detectible materials defects. Inspection occurs
when units are 50 percent converted. Spoiled units generally constitute 5 percent of the good units. Data for December
20x8 are as follows:

WIP, Beginning inventory 12/1/20x8 10,000 units

Direct materials: 100% complete
Conversion costs: 75% complete
Started during November 40,000 units
Completed & Transferred Out 12/31/20x8 38,400 units
WIP, Ending inventory 12/31/20x8 8,000 units
Direct materials: 100% complete
Conversion costs: 40% complete
Costs for December:
WIP, Beginning Inventory:
Direct materials 50,000
Conversion costs 24,910
Direct materials added 200,000
Conversion costs added 140,010

1. Determine the abnormal spoilage.

2. Determine the normal spoilage.
3. Prepare a cost of production report using WAVE.
4. Prepare a cost of production report using FIFO

FACTORY OVERHEAD
PROBLEM 1
CHARLIE Corporation has three production departments: X, Y, and Z. It also has two service departments:
Administration and Personnel. Administration costs are allocated based on value of assets employed, and Personnel
costs are allocated based on number of employees. Assume that Administration provides more service to the other
departments than does the Personnel Department. The corporation estimates that each employee will work 2,000 hours
each year.
Department Direct Costs Employees Asset Value
Administration 1,800,000 40 800,000
Personnel 600,000 20 200,000
X 1,400,000 30 600,000
Y 400,000 10 1,000,000
Z 500,000 20 1,400,000

1. Using the direct method, what amount of administration costs is allocated to X?

2. Using the direct method, what amount of personnel costs is allocated to Y?
3. Using the step method, what is the estimated factory overhead rate per hour in department Z?
4. Using the step method, what mount of administration costs is allocated to X?
5. Using the algebraic method, what amount of administration costs is attributable to Y?
6. Using the algebraic method, what amount of personnel costs is allocated to Z?

PROBLEM 2
ABC Manufacturing has the following budgeted overhead costs for 20x1 for producing product X:
Cost Amount
Electricity P 4,000,000
Indirect materials 6,000,000
Assembly 2,000,000
 Quality control inspections 6,000,000
Test runs 3,000,000
Total budgeted overhead cost P 21,000,000
For the past years, the cost accounting department has been charging overhead production costs based on machine
hours. The estimated capacity for the year is 2,000,000 machine hours.

The company is now shifting to activity-based costing, which they believe would give them a more reliable cost data
that, in turn, would result to a better competitive advantage when pricing their products. The production manager
provided the following data regarding expected 20x1 activity for the cost drivers of the preceding budgeted overhead
costs.
Cost Activity Drivers
Electricity 100,000 kilowatt hours
Indirect materials 2,400,000 grams
Assembly Time 500,000 hours
Quality control inspections 800,000 inspections
Test runs 100,000 test runs
The company received an offer to sell 5,000 units of product X to ZEEK Company. The head of the cost accounting
department prepares cost estimates for producing 5,000 units of product X.
Cost Amount
Direct materials P 500,000
Direct labor 800,000
Machine hours 10,000
Direct labor hours 15,000
Electricity-kilowatt hours 1,500
Indirect material (grams) 13,000
Assembly 1,000
Quality control inspections 1,000
Test runs 1,000
Determine:
1. Predetermined overhead rate under traditional method.
2. Cost per unit of product X under traditional method.
3. Cost per unit of product X under the proposed ABC method.

JOINT COSTS AND BY-PRODUCT

PROBLEM 1
In one joint process, Buckethead Company produces three joint products. The following information is available for
June 20X1:
PRODUCT Kilos Sales Value @ Further Processing Selling Cost Final Sales
Split-off Cost per Kilo Value
A 1,500 9.00 2.00 2.00 12.00
B 1,900 10.00 1.00 4.00 14.00
C 1,100 8.00 4.00 3.00 10.00
Required: allocate the joint costs of P48,000 to the joint products based on the:
a) Physical measures (number of kilos)
b) Sales value at split-off
c) Approximated net realizable values at split-off (adjusted sales value)

Problem 2
Conehead, Inc., manufactures one main product and two-by products. Data for July, 20x1 are:
Main Product By-Product A By-Product B
Sales P150,000 12,000 7,000
Manufacturing Cost before separation (P75,000) ? ? ?
 Manufacturing cost after separation 23,000 2,200 1,800
Marketing and admin expenses 12,000 1,500 1,100
Profit allowed for By-Product A is 15% of sales and for By-Product B is 20% of sales.
Required:
1. Calculate the manufacturing cost before separation that is to be charged to By-Products A and B.
2. Prepare an income statement detailing sales and costs of each product.

PROBLEM 3
GEE Company buys Material G for P0.80 per unit. At the end of processing in Department 1 Material G split into
products X, Y and Z. Product X is sold at split-off with no further processing. Products Y and Z require further
processing before they can be sold. Product Y is processed in Department 2; and product Z is processed in Department
3. The following is a summary of costs and other related data for the year ended July 31, 20x1:
DEPARTMENT 1 DEPARTMENT 2 DEPARTMENT 3
Direct Materials 360,000
Direct Labor 52,500 168,750 243,750
Factory overhead 37,500 78,750 183,750

PRODUCT X PRODUCT Y PRODUCT Z

Units sold 75,000 112,500 168,750
Units on hand July 31 37,500 0 56,250
Sales 112,500 P360,000 P531,562.50
GEE Company uses the adjusted sales value method (net realizable value) to allocate joint cost.
1. What is the cost of Product Y sold for the year ended July 31, 20x1?
2. What is the cost of ending inventory for Product X?

PROBLEM 4
The INDY Company manufactures joint products D and F as well as by-product X. Cumulative cost data for the period
amounts to P204,000 representing 20,000 completed units. Costs are assigned to products D and F by the net realizable
value method, which considers further processing costs in subsequent operations. Cost is allocated to by-product X
using the reversal cost method.
Additional data:
PRODUCT X PRODUCT D PRODUCT F
Quantity produced 2,000 units 8,000 units 10,000 units
Sales price per unit 10.00 20.00 25.00
Further processing cost per unit 1.00 5.00 7.00
Marketing and administrative expenses 2.00
Operating profit per unit 3.00
1. What is the joint cost allocated to by-product X?
2. What is the cost allocated to product D and F?

PROBLEM 5
The ZEE Company produces a products known as “Viagro” from which by product results. The main product and the
by-product can be sold at P12 per kilo and P4.25 per kilo. The manufacturing costs of the main product and by-product
up to the split-off point are as follows:
Materials 50,000
Labor 40,000
Overhead 30,000
The units produced were 15,000 kilos of the main product and 900 kilos of by-product.
During the period 12,000 kilos of Viagro were sold, while the company was able to sell 600 kilos of the by-product.
Selling costs (disposal costs) related to the main product and by-product amounted to P18,000 and P1,050 respectively.
1. If by-products are recognized when sold, what is the cost of inventory of Viagro?
 2. If by-products are recognized when sold, and the net realizable value of the by-product is
deducted from the total manufacturing costs of Viagro, what is the unit cost of Viagro?
3. If by-products are recognized when produced, and the net realizable value of the by-product is
deducted from the total cost of goods sold of Viagro, what is the gross profit of Viagro?

PROBLEM 6
XYZ Company produces three products from the same process and incurs joint processing costs of P200,000.
Gallons Sales price per gallon Disposal cost per Further processing Final sales price
at split-off gallon at split-off costs per gallon
A 4,800 P250.00 P 135.00 P 50.00 P350.00
B 2,000 200.00 36.00 100.00 500.00
C 3,200 500.00 150.00 100.00 750.00

Disposal costs for the products if they are processed further are:
A, P 150.00; B, P 220.00; C, P 50.00.
1. How much of the is allocated to Product A using the physical method allocation?
2. How much is the cost per gallon of Product B, assuming that joint costs are allocated using the sales
value of the products at split-off, and that B were processed further after split-off?
3. How much is the gross profit attributable to Product C, assuming that joint costs are allocated using
the Net Realizable Value at Split-off approach, and after being processed further, all gallons of Product
C were sold at its estimated final sales price per gallon?
4. How much is the net income attributable to Product A, assuming that joint costs are allocated using
the Approximate Net Realizable Value, and after being processed further, 1,800 gallons of Product A
was sold during the year?

STANDARD COSTING/JIT
PROBLEM 1
ABC’s standard cost per unit of Material X is P25.00 per pound. During the current month, 10,000 pounds of Material
X were purchased by ABC at a total cost of P241,500. 9,000 pounds were used during the month. The standard
quantity for actual production is 8,500 pounds.
Required:
1. Total Materials Variance
2. Purchase Price Variance
3. Price Usage Variance/Price Variance/Spending Variance
4. Quantity variance/Efficiency Variance
5. Journal entries for the above transactions

PROBLEM 2
During the month, 1,200 units of PRODUCT Y were produced. Actual labor required was 325 direct labor hours at
an actual cost of P6,500. According to the standard cost card for PRODUCT Y, 300 hours of labor should be required
per unit of PRODUCT Y, at a standard cost of P18 per labor hour.
Required:
1. Total Labor Variance
2. Compute the labor rate variance/spending variance
3. Compute labor efficiency variance
4. Journal entries for the above transactions

PROBLEM 3
ACDC CO. manufactures doors with the following standard quantity and cost information per door:
Variable overhead 5 machine hours at P10.00 50
Fixed overhead 5 machine hours at P5.00 25
Overhead rates are based on normal capacity of 5,000 machine hours
During November, the Company produced only 800 doors and the following costs were incurred for the month:
Variable overhead P42,750 (based on 4,500 machine hours)
Fixed overhead P27,000 (based on 4,500 machine hours)
Required:
1. Total factory overhead variance
2. Spending Variance
3. Volume Variance
4. Journal entries for the above transactions

PROBLEM 4
BB Company manufactures product A. the transactions for the month of February were as follows:
Purchase of raw materials P1,000,000
Labor/wages incurred 300,000
Factory overhead incurred 400,000
Units completed 50,000 units
Units sold 49,900 units
There are no beginning inventories. The standard cost per unit of output is P34.80 (19.8 for raw materials, P6 for labor
and P9 for applied overhead)
1. Prepare the entries using standard costing.
2. Prepare the entries assuming the company uses a just-in-time production process with the following trigger
points:
a. Purchase of materials, completion of the good finished units and the sale of the goods.
b. Purchase of the materials and sale of the goods
c. Completion of the good units and sale of the goods
d. Sale of the finished goods

PROBLEM 5
The Snow Pea Manufacturing Company uses Materials and in Process Inventory (MIP) account. At the end of each
month all inventories are counted, their conversion costs components are estimated, and inventory account balances
are adjusted accordingly. Direct materials used are backflushed from MIP account to Finished Goods account. The
following data pertains to September operations:
Beginning balance of MIP account 116,100
Actual conversion costs incurred 14,400
Materials purchased 2,040,000
Conversion costs allocated 15,900
Ending balance of MIP account 125,700
What is the amount of direct materials and conversion costs to be backflushed to finished goods?

PROBLEM
The Blover Corporation manufactures electrical meters. For October, there were no beginning inventories of materials.
Blover uses a Just In Time System and backflush costing with three trigger points of making entries to record their
manufacturing process. Blover’s October standard costs per meter are direct materials, P25 and conversion costs, P20.
The following data pertains to October operations:
Materials purchased 137,500 Number of finished units 5,250 units
Conversion costs incurred 110,000 Number of units sold 5,000 units
What are the balances of MIP inventory and Finished Goods inventory accounts at the end of October?