CHAPTER 16
Answers to Multiple Choice –Theoretical
1.
a
6.
c
2.
b
7.
c
3.
d
8.
a
4.
a
9.
a
5.
a
10.
C
Solutions to Multiple Choice – Computational
1. b
Materials and In Process Inventory (MIP), June 1 P 10,000
Materials received 205,000
Materials and In Process Inventory (MIP), June 30 ( 12,500)
Materials used to be backflushed to finished goods P202,500
2. a
Raw materials purchased P880,000
Raw materials used (850,000)
Balance of MIP, end P 30,000
3. c
MIP inventory, beginning P 38,700 Raw materials purchased 680,000 MIP inventory, ending ( 41,900)
Materials to be backflushed to finished goods P676,800 Conversion costs to be backflushed to finished goods P 5,300
4. c
Raw materials purchased P550,000 Materials used: (21,000 x P25) (525,000) MIP inventory, ending P 25,000
Raw materials used P525,000
Conversion costs (21,000 x P20) 420,000
Finished goods 945,000
Cost of goods sold (20,000 x P45) (900,000)
Finished goods inventory, ending P 45,000
5. a
Raw materials purchased P5,300,000 Materials standard cost: (192,000 x P26) ( 4,992,000) MIP Inventory, ending P 308,000
6. 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 (P33,000–P1,800) ( 31,200)
Amount to be backflushed P 365,400
7. c
Materials in May 1 MIP balance: (P12,300 – P1,300) P 11,000 Materials received during May 246,000 Materials in May 31 MIP balance: (P12,100 – P2,100) ( 10,000)
Amount to be backflused P 247,000
8. c
Applied conversion costs P1,300,000 Actual conversion costs incurred:
Direct labor P200,000
Factory overhead 995,000 1,195,000
Overapplied conversion costs P 105,000
9. c
Materials used P 300,000
Applied conversion costs 1,300,000
Cost of goods sold P1,600,000
10. 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 P 12,500 Materials in MIP, June 1 (10,000)
Materials used 202,500
Solutions to Problems
Problem 16-1
(a) Materials and in Process inventory (MIP) 440,000
Accounts payable 440,000
To record materials purchased.
(b) Conversion costs 211,000
Various accounts 211,000
To record conversion costs incurred
(c) Finished goods inventory 625,000
Materials and in Process inventory (MIP) 425,000 Applied conversion costs 200,000 To record cost of finished goods.
(d) Cost of goods sold 595,000
Finished goods inventory 595,000 To record cost of goods sold.
Problem 16-2
(a) Materials and in Process inventory (MIP) 2,754,000
Accounts payable 2,754,000
To record materials purchased.
(b) Conversion costs 723,600
Various accounts 723,000
To record actual conversion costs incurred.
(c) Finished goods inventory (26,800 x P130) 3,484,000
MIP inventory (26,800 x P102) 2,733,600 Applied conversion costs (26,800 x P28) 750,400 To record cost of finished goods
(d) Cost of goods sold (26,500 x P130) 3,432,000
Problem 16-3
(a) Conversion costs 723,600
Various accounts 723,600
To record actual conversion costs incurred.
(b) Finished goods inventory 4,234,400
Accounts payable 3,484,000
Applied conversion costs 750,400 To record cost of finished goods.
(c) Cost of goods sold 3,432,000
Finished goods 3,432,000
To record cost of finished goods.
(d) Applied conversion costs 750,400
Conversion costs 723,600
Cost of goods sold 26,800 To record disposition of under/over applied
conversion costs.
Problem 16-4
(a) Materials and In Process Inventory 550,000
Accounts payable 550,000
To record materials purchased.
(b) Conversion costs 440,000
Various accounts 440,000
To record actual conversion costs incurred.
(c) Finished goods inventory (21,000 x P45) 945,000
MIP inventory (21,000 x P25) 525,000 Applied conversion costs (21,000 x P20) 420,000 To record cost of finished goods.
(d) Cost of goods sold (20,000 x P45) 900,000
Finished goods inventory 900,000 To record cost of goods sold.
Problem 16-5
(a) Materials inventory 550,000
Accounts payable 550,000
To record materials purchased.
(b) Conversion costs 440,000
Various accounts 440,000
To record actual conversion costs incurred.
(c) Cost of goods sold 900,000
Materials inventory 500,000
Applied conversion costs 400,000 (d) Applied conversion costs 400,000
Cost of goods sold 40,000
Conversion costs 440,000
To closed under or over-applied conversion costs.
Problem 16-6
(a) No entry for materials purchased
(b) Conversion costs 440,000
Various accounts 440,000
(c) Finished goods inventory 945,000
Accounts payable 525,000
Applied conversion costs 420,000 To record cost of finished goods.
(d) Cost of goods sold 900,000
Finished goods inventory 900,000 To record cost of goods sold.
(e) Applied conversion costs 420,000 Cost of goods sold 20,000
Conversion costs 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 per unit (c) Units started : (5,000 + 40 - 35) = 5,005 P250,000 ÷ 5,005 = P49.950 per unit (2) 40 x .50 x P49.905 = P990 40 x .50 x P50 = P1,000 40 x .50 x P49.950 = 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.
