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Cost Accounting and Management

Write the letter of your choice beside each number.

1. Jasper Companys Job 302 for the manufacture of 2,200 shirts F 75


was completed during Sept. 2014 at the following unit costs: The portion of the weekly payroll that should be charged to
Direct materials P 20.00 factory overhead is:
Direct labor 18.00 a. P217.50 c. P5,275.00
Factory overhead (includes an allowance b. P5,217.50 d. P5,325.00
of P1 for spoiled work) 18.00
P 56.00 6. Nocturnal Scents, Inc. uses a job order cost system with
Final inspection of Job 302 discloses 200 spoiled units which machine hours as the overhead base. At the beginning of last
were sold to a jobber for P6,000. Assume that spoilage loss is year, Nocturnal estimated 38,000 machine hours and
charged to all production during Sept. What would be the P152,000 of manufacturing overhead costs. For the year,
unit cost of the good units produced on Job 302? only 37,500 machine hours were logged but P153,500 of
a. P58.00 c. P55.00 overhead was incurred. What is Nocturnal under or
b. P56.00 d. P53.00 overapplied manufacturing overhead?
a. P3,500 underapplied
2. Assume instead, that the spoilage loss is attributable to b. P2,000 underapplied
exacting specification of Job 302 and is charge to this specific c. P1,500 overapplied
job. What would be the unit cost of the good shirts produced d. P1,500 underapplied
on Job 302?
a. P61.60 c. P57.50 7. Supra Soap produces two types of whitening cleansers:
b. P58.60 d. P55.00 Deluxe and Elite. Both are produced on the same assembly
line but are considered separate divisions. The company
3. D Angeles uses a job order cost system with machine hours wants to know how to allocate manufacturing overhead to
as an overhead base. The following information relates to D the products. The relevant data for the possible allocation
Angeles for last year: bases are given below:
Deluxe Elite
Estimated machine hours for the year 42,000 Materials used P 40,000 P 25,000
Actual machine hours for the year 40,800 Direct labor hours 20,000 35,000
Predetermined overhead rate P 1.50 per MH Direct labor costs P 100,000 P145,000
Underapplied factory overhead P 2,600 Machine hours 6,000 15,000
What is the peso amount of the following items? Output units 25,000 30,000
Estimated OH Applied OH Actual OH The company incurred manufacturing overhead of P 48,000.
a. P63,000 P61,200 P63,800 Using direct labor hours, how much overhead will be
b. P63,000 P61,200 P58,600 allocated to the Elite?
c. P61,200 P63,000 P65,600 a. P34,054 c. P30,545
d. P61,200 P63,000 P60,400 b. P30,455 d. 29,544

4. G & G Company pays time and a half for hours in excess of 40 8. Using machine hours, how much overhead will be allocated
hours per week. An individual is paid P24.00 per hour and to the Deluxe?
worked 44 hours a week. The weekly earnings of the a. P34,286 c. 28,500
employee will amount to: b. P17,455 d. 29,544
a. P1,036 c. P1,032
b. P1,104 d. P960 9. Joint costs are those costs
a. of products requiring the services of two or more
5. Arnold Factory provides for an incentive scheme for its processing departments.
factory workers which features a combined minimum b. of a product from a common process that has
guaranteed wage of P875 per week and piece rate of P11.25. relatively little sales value and only a small effect on
Production report for the week show: profit.
Employee Units produced c. of production that are combined I the overhead
A 67 account.
B 78 C d. of two or more products produced from a common
80 process.
D 82
E 72
10. 2.The journal entry to record the requisition of materials for Prepaid Insurance 5,000
production in the amount of P90,000 and for indirect factory
use in the amount of P10,000 is c. Depreciation Expense P35,000
a. Work in Process P100,000 Insurance Expense 5,000
Materials P100,000 Factory Overhead Applied P40,000

b. Work in Process P90,000 d. Depreciation Expense P35,000


Factory overhead Applied P10,000 Insurance Expense 5,000
Materials P100,000 Accumulated Depreciation P35,000
Prepaid Insurance 5,000
c. Work in Process P90,000
Factory overhead Control P10,000 The following data (in thousands of pesos) have been taken
Materials P100,000 from the accounting records of Karlana Corporation for the
just completed year.
d. Factory overhead Control P90,000
Sales P 91
Work in Process P10,000
Raw materials inventory, beginning 80
Materials P100,000
Raw materials inventory, ending 20
Purchases of raw materials 100
11. The breakdown of payroll is:
Direct labor 130
Direct Labor P 100,000
Manufacturing overhead 200
Indirect Labor 30,000
Administrative expenses 160
Marketing salaries 20,000
Selling expenses 140
Administrative salaries 10,000
Work in process inventory, beginning 40
The journal entry to record such breakdown is
Work in process inventory, ending 10
a. Work in Process P160,000
Finished goods inventory, beginning 130
Payroll P160,000
Finished goods inventory, ending 150

b. Work in Process P100,000


Use these data to answer the following series of questions.
Factory overhead Control 60,000
Payroll P160,000
13. The cost of the raw materials used in production during the
year (in thousands of pesos) was:
c. Work in Process P100,000
a. P180 c. P120
Factory overhead Applied 30,000
b. P 40 d. d. P160
Marketing Expenses Control 20,000
Administrative Expenses
14. The cost of goods manufactured (finished) for the year (in
Control 10,000
thousands of Pesos) was:
Payroll P160,000
a. P530 c. P500
d. Work in Process P100,000
b. P520 d. P460
Factory overhead Control 30,000
Marketing Expenses Control 20,000
15. The cost of goods sold for the year (in thousands of pesos)
Administrative Expenses Control 10,000
was:
Payroll P160,000
a. P670 c. P540
b. P500 d. P650
12. Two of the components of actual factory overhead are the
following:
16. The net income for the year (in thousands of pesos) was:
a. P410 c. P 40
Depreciation P 35,000
b. P110 d. P180
Expired insurance 5,000
The journal entry is
The T accounts below provide selected data about a
a. Factory Overhead Control P40,000
companys financial results for the year.
Accumulated Depreciation P35,000
Prepaid Insurance 5,000
Raw Materials Inventory
Jan. 1 bal. Php 22,500 ? Credits
b. Factory Overhead Applied P40,000
Debits 75,000
Accumulated Depreciation P35,000
Dec. 31 bal. Php 18,000
Work in process 18,000 26,000
Finished Goods Finished goods 54,000 72,000
Jan. 1 bal. Php 90,000 ? Credits
Debits ? The following information were available for April, 2014:
Dec. 31 bal. Php 72,000
Direct labor P 60,000
Factory Overhead Direct labor rate per hour P7.50
Debits Php 110,000 ? Credits Overhead rate per direct labor hour 10.00
Cost of goods manufactured 153,650
Work-in-Process
Jan. 1 bal. Php 52,500 Php 282,000 Credits What is the prime cost during April, 2014?
Direct mat. 72,000 a. P81,650 c. P90,000
Direct labor 90,000 b. P80,000 d. P96,000
Overhead 112,500
Dec. 31 bal. Php ? . 22. Trackside Co. employs a job order cost system. Its
manufacturing activities in July, 2014, its first month of
Manufacturing Wages Payable operation, are summarized as follows:
Debits Php 100,500 Php 66,000 Jan. 1 bal.
99,000 Credits JOB NUMBERS
201 202 203 204
Cost of Goods Sold Direct materials P7,000 P5,800 P11,600 P5,000
Debits ? Direct labor cost P6,600 P6,000 P 8,400 P2,400
Direct labor hours 1,100 1,000 1,400 400
17. The amount of over- (under-) applied overhead is Units produced 200 100 1,000 300
a. Php (10,500) c. Php 1,500
b. Php (1,500) d. Php 10,500 Manufacturing overhead is applied at a rate of P2 per
direct labor hour for variable overhead, P3 per hour for
18. The amount of indirect materials in the factory overhead fixed overhead.
account is
a. Php 4,500 c. Php 12,000 Jobs 201, 202 and 203 were completed in July.
b. Php 7,500 d. Php 18,000
What is the cost of the completed jobs?
19. The cost of goods sold is a. P62,900 c. P72,900
a. Php 300,000 c. Php 274,500 b. P62,500 d. P65,900
b. Php 282,000 d. Php 372,000
23. Using the same info as in the previous problem, how much is
20. Last month, Pare Company placed P60,000 of materials into the cost of job-in-process at the end of July?
production. The Printing Department used 8,000 labor hours a. P62,900 c. P7,400
at P5.60 per hour and the Binding Department used 4,600 b. P8,200 d. P9,400
hours at P6.00 per hour. Factory overhead is applied at a rate
of P6.00 per labor hour in the Printing Department and P8.00 24. Worrel Corporation has a job order cost system. The
per labor hour in the Binding Department. Pares inventory following debits (credits) appeared in the ledger account
accounts show the following balances: work-in process for the month of March, 2014:
Beginning Ending March 1, balance P 12,000
Finished goods P22,000 P17,000 31, direct materials 40,000
Work in process 15,000 17,600 31, direct labor 30,000
Materials 20,000 18,000 31, factory overhead 27,000
31, to finished goods (100,000)
What is the total cost of goods sold?
a. P219,600 c. P108,000 Worrel applies overhead, to production at a predetermined rate
b. P214,600 d. P217,200 of 90% based on the direct labor cost. Job No. 232, the only job
still in process at the end of March, 2013, has been charged with
21. Marilag Company had the following inventories: factory overhead of P2,250. What was the amount of direct
April 1 April 30 materials charged to Job no. 232?
Direct materials P 36,000 P45,000 a. P2,250 c. P4,250
b. P2,500 d. P9,000 28. Helen Corp. manufactures products W, X, Y and Z from a joint
process. Additional Informa-tion follow:
25. Worley Company has underapplied overhead of P45,000 for If Processed Further
the year ended December 31, 2014. Before disposition of the Units Value at Additional Sales
underapplied overhead, selected December 31, 2014, bal- Product Produced Split-off Costs Value
ances from Worleys accounting records are as follows: W 6,000 P 80,000 P 7,500 P 90,000
Sales P1,200,000 X 5,000 60,000 6,000 70,000
Cost of goods sold 720,000 Y 4,000 40,000 4,000 50,000
Inventories: Z 3,000 20,000 2,500 30,000
Direct materials 36,000 18,000 P200,000 P20,000 P240,000
Work in process 54,000 Assuming that total joint costs of P160,000 were allocated using
Finished goods 90,000 the final selling price as allocation base, what is the amount of
joint costs allocated to product Y?
Under Worleys cost accounting system, over or a. P33,455 c. P33,333
underapplied overhead is adjusted to cost of goods sold. b. P60,000 d. P20,000
In his 2014 Income Statement, Worley should report cost
of goods sold of 29. HAVI Inc. manufactures products F, G and H from a joint
a. P682,500 c. P756,000 process. Additional information Is as follows:
b. P765,000 d. P757,500 Products
F G H Total
26. Worley Company has underapplied overhead of P45,000 for Units produced 8,000 ? 4,000 20,000
the year ended December 31, 2014. Before disposition of the Joint cost ? ? P24,000 ?
underapplied overhead, selected December 31, 2014, bal- Sales value at split-off ? ? ? P200,000
ances from Worleys accounting records are as follows: Joint product costs are allocated using the physical units of
Sales P1,200,000 production approach. What is the amount of joint costs allocated
Cost of goods sold 720,000 to product G?
Inventories: a. P36,000 c. P50,000
Direct materials 36,000 b. P48,000 d. P24,000
Work in process 54,000
Finished goods 90,000 30. HAVI Inc. manufactures products F, G and H from a joint
process. Additional information Is as follows:
Under Worleys cost accounting system, over or Products
underapplied overhead is allocated to appropriate F G H Total
inventories and cost of goods sold based on year-end Units produced 8,000 4,000 2,000 14,000
balances. In his 2014 Income Statement, Worley should Joint cost ? ? P18,000 P 120,000
report cost of goods sold of Sales value at split-off P120,000 ? ? P200,000
a. P682,500 c. P756,000 Joint product costs are allocated using the relative sales-value at
b. P684,000 d. P757,500 split-off approach. What is the amount of joint costs allocated to
product G?
27. Helen Corp. manufactures products W, X, Y and Z from a joint a. P30,000 c. P50,000
process. Additional Information follow: b. P18,000 d. P12,000
If Processed Further
Units Value at Additional Sales 31. Kew Co. had 3,000 units in work-in-process at April 1 that
Product Produced Split-off Costs Value were 60% complete as to conversion cost. During April,
W 6,000 P 80,000 P 7,500 P 90,000 10,000 units were completed. At April 30, the 4,000 units in
X 5,000 60,000 6,000 70,000 work-in-process were 40% complete as to conversion cost.
Y 4,000 40,000 4,000 50,000 Direct materials are added at the beginning of the process.
Z 3,000 20,000 2,500 30,000 How many units were started during April?
18,000 P200,000 P20,000 P240,000 a. 9,000 c. 10,000
Assuming that total joint costs of P160,000 were allocated using b. 9,800 d. 11,000
the net realizable value approach, what is the amount of joint
costs allocated to product W?
a. P82,500 c. P240,000
b. P60,000 d. P20,000
32. In department 1 of the XYZ Company, the beginning and Work-in-process, December 1 20,000 50%
ending in-process inventory were 2,000 units and 1,000 units, Units started 170,000
respectively. The beginning inventory was 70% complete, Units completed & transferred
while the ending inventory is 40% complete. There were to the distilling department 180,000
5,000 units started during the period. How much is the Work-in-process, December 31 10,000 50%
equivalent units of production used to allocate the cost
added into process this period? Materials are added at the beginning of the process and
a. 5,000 units c. 4,500 units conversion costs are incurred uniformly through-out the process.
b. 6,000 units d. 1,000 units Assuming use of the FIFO method of process costing, the
equivalent units of conversion performed during December were
33. In department 1 of the XYZ Company, the beginning and a. 170,000 equivalent units.
ending in-process inventory were 2,000 units and 1,000 units, b. 175,000 equivalent units.
respectively. The beginning inventory was 70% complete, c. 180,000 equivalent units.
while the ending inventory is 40% complete. There were d. 185,000 equivalent units.
5,000 units were started during the period. The cost
expended for the current period were P7,500. The cost 39. The Cutting Department is the first stage of Mark Companys
expended last period attributable to the beginning inventory production cycle. BWIP for this department was 80%
of this period is P2,740. How much is the cost assigned to the complete as to conversion costs. EWIP was 50% complete.
ending inventory? Conversion costs in the Cutting Department for January were
a. P500 c. P650 as follows:
b. P600 d. P700 Units CC
WIP at January l 25,000 P 22,000
34. In department 1 of the XYZ Company, the beginning and Units started and costs
ending in-process inventory were 2,000 units and 1,000 units, incurred during January 135,000 143,000
respectively. The ending inventory is 40% complete. There Units completed and transferred to next
were 5,000 units started during the period. The cost department during January 100,000
expended for the current period were P7,500. How much is Using the FIFO method, what was the conversion cost of WIP in
the equivalent units of production? the Cutting Department at January 31?
a. 5,000 units c. 6,500 units a. P22,000 c. P39,000
b. 6,400 units d. 5,500 units b. P33,000 d. P78,000

35. In department 1 of the XYZ Company, the beginning and 40. The following information pertains to Lap Co.s Palo Division
ending in-process inventory were 2,000 units and 1,000 units, for the month of April:
respectively. The ending inventory is 40% complete. There Number of Units Cost of Materials
were 5,000 units started during the period. The cost Beginning work-in-process 15,000 P 5,650
expended for the current period were P7,500. The cost Started in April 40,000 18,000
expended last period attributable to the beginning inventory Units completed 42,500
of this period is P2,740. How much is the cost assigned per Ending work-in-process 12,500
equivalent unit of inventory? All materials are added at the beginning of the process. Using the
a. P1.50 c. P1.70 weighted-average method, the cost per equivalent unit for
b. P1.60 d. P1.75 materials is
a. P0.59 c. P0.45
36. Using the same info as in the previous item, how much is the b. P0.55 d. P0.43
cost assigned to ending inventory?
a. P10,240 c. P640 Next three (3) questions are based on the following data: ERIC
b. P540 d. P600 Corporation manufactures a product that gives rise to a by-
product called X. The only costs associated with the by-product
37. Using the same info as in the previous item, how much is the are selling costs of P1 for each unit sold. ERIC accounts for X sales
cost assigned to inventory transferred to next department? first by deducting its separable costs from such sales and then by
a. P10,240 c. P9,640 deducting this net amount from cost of sales of the major
b. P9,600 d. P6,000 product. This year, 1,000 units of X were sold at P4 each.

38. The following data pertain to a companys cracking- 41. If sales and cost of sales of ERIC are P50,000 and P17,000,
department operations in December: respectively, prior to adjustment for the by-products net
Units Completion
realizable value, how much is the gross margin of ERIC after a. P36,000 c. P41,333
adjustment b. P40,000 d. P50,000
a. P30,000 c. P29,000
b. P36,000 d. P37,000 48. Assuming Golden Foods does not adjust the joint cost for the
value of Charlie, the by-product, the joint cost to be allocated
42. If ERIC changes its method of accounting for X sales by to Beta using the net-realizable-value method is
recording the net amount as additional sales revenue, ERICs a. P30,000 c. P52,080
gross margin will b. P31,000 d. P62,000
a. Be unaffected. c. Decrease by P3,000
b. Increase by P3,000. d. lncrease by P4,000. 49. A job order costing system would probably be appropriate for
a firm that produces:
43. If ERIC changes its method of accounting for X sales by a. Automobiles.
recording the net amount as other income, ERICs gross b. Accounting Firm
margin will c. Video cassettes.
a. Be unaffected c. Decrease by P3,000. d. Microcomputers.
b. Increase by P3,000. d. Decrease by P4,000.
50. An industry most likely to use process costing is:
The next five (5) questions are based on the following data: a. Sugar Processing
Golden Foods produces three supplemental food products b. Textbook publishing.
simultaneously through a refining process costing P93,000. The c. Aircraft manufacturing.
joint products, Alpha and Beta, have a final selling price of P4 per d. Construction.
pound and P10 per pound, respectively, after additional
processing costs of P2 per pound of each product are incurred 51. When a manufacturing firm has a highly automated plant,
after the split-off point. Charlie, a by-product, is sold at the split- the most probable basis for applying manufacturing
off point for P3 per, pound. overhead costs to units produced would be:
a. Units produced. c. Direct labor cost.
Alpha: 10,000 pounds of Alpha, a popular but relatively rare grain b. Machine hours. D. Material cost.
supplement having a caloric value of 4,400 calories per pound.
52. Overapplied overhead would result when:
Beta: 5,000 pounds of Beta, a flavoring material high in a. Overhead costs budgeted for the period exceeds
carbohydrates with a caloric value of 11,200 calories per pound. actual overhead cost incurred.
b. Actual overhead costs incurred exceed overhead
Charlie: 1,000 pounds of Charlie, used as a cattle feed supplement applied to production.
with a caloric value of 1,000 calories per pound. c. Overhead applied to production exceeds actual
overhead costs incurred.
44. Assuming Golden Foods inventories Charlie, the by-product, d. The plant operated at fewer hours than were
the joint cost to be allocated to Alpha, using the net- budgeted.
realizable-value method is
a. P 3,000 c. P31,000 53. Partial or completed units of manufactured goods that do not
b. P30,000 d. P60,000 meet customer specifications and sell at reduced price or
simply discarded are called
45. Assuming Golden Foods inventories Charlie, the by-product, a. spoilage c. scrap
the joint cost to be allocated to Alpha, using the physical b. Rework d. equivalence
quantity method is
a. P 3,000 c. P31,000 54. In process and job costing system, normal spoilage cost is
b. P30,000 d. P60,000 considered as
a. conversion costs c. inventoriable costs
46. Assuming Golden Foods inventories Charlie, the by-product, b. sunk costs d. non inventoriable costs
the joint cost to be allocated to Beta using the weighted-
quantity method based on caloric value per pound is 55. An Unit cost is calculated in costing system by assigning total
a. P39,208 c. P50,400 costs incurred to many similar units is classified as
b. P39,600 d. P52,080 a. accounting period costing system
47. Assuming Golden Foods inventories Charlie, the by-product, b. process costing system
the joint cost to be allocated to Alpha using the gross market- c. job costing system
value method is d. none of above
56. Costing system which is a combination of process costing and
job costing system is classified as
a. weighted costing system
b. average costing system
c. hybrid costing system
d. double costing system

57. Process of tracing direct costs and allocation of indirect costs


is classified as
a. cost assignment
b. direct assignment
c. indirect assignment
d. economic assignment

58. A joint cost allocation method is based on relative value of


total sales at point of split off is classified as
a. sales value at split off method
b. joint costs at split off point method
c. joint products value at split off method
d. main product cost at split off method

59. Manufacturing, distribution and marketing costs incur after


split off point is classified as
a. separable costs
b. joint costs
c. main costs
d. split off costs

60. . In cost terms, direct manufacturing labor cost is included in


a. manufacturing costs
b. prime costs
c. conversion costs
d. Both B and C