Reference no: EM133112157
Problem 1 - Honesty Company has only one job in process on January 1, 2021, Job No. 97 for 75 units, carried at a cost of P78,400. During the 6 months period January to June 2021, Honesty accepted two more jobs, Job No. 98 for 200 units and Job No. 99 for 100 units. Actual data for the period is as follows:
Direct Materials used, P2,800,000 distributed as: Job No. 97, 20%; Job No. 98, 45%; Job No. 99, 35%.
Direct Labor cost, P2,175,000 distributed as: Job No. 97, 25%; Job No. 98, 50%; Job No. 99, 25%.
Various overhead incurred, P2,878,000
Purchases of Raw Materials, P3,200,000
The company's annual budgeted overhead is P5,460,000 while the annual budgeted direct labor costs is P4,200,000. Overhead is applied to production on the basis of direct labor costs. Jobs 97 and 98 were completed and sold while Job 99 is still in process at the end of June. Any variance is considered immaterial.
Determine the balance of the work in process at the end of June?
a. P1,523,750
b. P1,899,025
c. P980,000
d. P2,230,625
Problem 2 - Honesty, Inc. manufactures item "B500" per the design and specification of its customers, and accordingly uses the job order costing system. In February 2022, it finished 10,000 pieces for a customer at a cost of P50.00 per unit for direct materials and P40.00 per unit for direct labor. Factory overhead is applied at 100% of direct labor cost. The production incurred 500 defective units due to an error in the specifications made by the customer and that had to be reworked at a direct labor cost of P10.00 per unit.
If the customer is billed at 20% above cost, how much is the billing price?
a. 1,560,000
b. 1,631,250
c. 1,637,500
d. 1,572,000
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