Rizal Technological University

Quiz 4/Activity 3
Cost Accounting (AC9)

Name________________________________________ Date_____________

Section/Time______________________________ Class #___________

1. Under perpetual inventory system, the purchase of materials is recorded in the account
a. Purchases
b. Work in Process Inventory
c. Raw Materials inventory
d. Finished Goods Inventory

2. The economic order quantity formula assumes that:

a. Periodic demand for the goods are known
b. Carrying cost per unit vary with the quantity ordered
c. Cost of placing an order vary with quantity ordered
d. Purchase cost per unit differ due to quantity discounts

3. The costs of preparing, issuing, and paying purchase orders, plus receiving and inspecting the items included in orders is
a. purchasing costs
b. ordering costs
c. stockout costs
d. carrying costs

4. Which of the following is an assumption of the economic-order-quantity decision model?

a. The quantity ordered can vary at each reorder point
b. Demand ordering costs and carrying costs fluctuate
c. There will be timely labor costs
d. No stock-outs occur

5. Material requisition is meant for

a. purchase of material
b. sale of material
c. supply of material from warehouse to production
d. storage of material

6. The company has been ordering more than the economic order quantity. This would result in
a. More frequent orders
b. Carrying costs less than order cost
c. Carrying cost greater than order cost
d. Equal safety stock costs and carrying costs

7. Which department prepares the purchase order

a. Production
b. Procurement
c. Accounting
d. Store room
 8. How is the allowance for inventory write down shown in the statement in the statement of financial position
a. As a deduction from the inventory of NRV
b. As an asset
c. As a deduction from the inventory at cost
d. As a liability

9. A material ledger card should be maintained by the

a. Accounting Department
b. Purchasing Department
c. Treasury department
d. Storeroom department

10. In the period of rising prices, what effect would the use if FIFO has on the Cost of Goods Sold of the company?
a. No effect
b. Cost of Goods Sold increases
c. Cost of Goods Sold decreases
d. Cannot be determined

Part 2:

11. Kick Company had 150 units of product on hand at January 1 costing 21 each. Purchases of Product A during the month of
January were as follows:

Units Unit Cost

January 10 200 22.00
18 250 23.00
28 100 24.00

Physical on January 31 shows 250 units of product A on Hand.

The Cost of Goods Sold under FIFO method is:

a. 9,850
b. 9,700
c. 5,850
d. 9,600

12. The following information pertains to Materials Y used by Mik Company

Annual usage in units 20,000

Working days per year 250 days
Safety stocks in units 800
Normal lead time in working days 30

What is the reorder point of the company?

a. 800
b. 1,600
c. 2,400
d. 3,200
 13. Pixel company produces and sells a single item of product. Inventory at the beginning of June was 400 units valued at 1.80
per unit. Further receipts and sales during the month were as follows

Units Cost per unit

June 8 Receipts 600 2.10
20 Receipts 500 ?

The company was able to sell 1,250 units at 4.00 each. Gross margin for the sale was P2,500. What was the cost per unit of
the 500 units received on June 20?
a. 1..04
b. 2.08
c. 2.00
d. 1.94

14. The following information is about a company’s inventory costs

Total cost to place one order P50.00

Total cost to carry one unit 4.00
Economic order quantity 7,000 units

What is the company’s estimated annual usage?

a. 1,000,000 units
b. 1,400,000 units
c. 1,960,000 units
d. 2,000,000 units

15. Using the same information above, how many order will be placed?
a. 200
b. 143
c. 286
d. 280

16. Sing Corporation provided the following transactions from the materials ledger for the month of march

Date Units
Opening Balance March 1 50 units@4.00
Received March 5 100 units @ 5.00
Received March 12 200 units @ 4.50
Issued March 2 30 units
Issued March 18 150 units

Using the moving average method, at what amount should Sing report as raw materials inventory

a. 765
b. 777
c. 786
d. 790
 17. Black Company carried four items in inventory. The following per unit data relate to these items at the end of first year of
operations:
Units Cost Sales Price Selling Cost Normal Profit
Category 1 A 25,000 105 130 15 20
B 20,000 85 90 10 10
Category 2 C 40,000 50 45 5 5
D 30,000 65 75 15 10

What is the measurement of inventory under LCNRV applied to individual items?

a. 8,275,000
b. 7,625,000
c. 7,725,000
d. 7,875,000

18. Using the same information above, what is the measurement of inventory under LCNRV applied to inventory category?
a. 7,725,000
b. 7,875,000
c. 8,275,000
d. 7,625,000

The following information was available from the inventory records of Rich Company for January:

Units Unit Cost Total Cost

Balance at January 1 3,000 9.77 29,310.00
Purchases:
January 6 2,000 10.30 20,600.00
January 26 2,700 10.71 28,917.00

Isssued to Production
January 7 2,500
January 31 4,000

Balance at January31 1,200

19. Assuming that Rich does not maintain perpetual inventory records, what should be the inventory at January 31, using the
weighted-average inventory method, rounded to the nearest peso?
a. 12,606
b. 12,284
c. 12,312
d. 12,432

20. Assuming that Rich maintains perpetual inventory records, what should be the inventory at January 31, using the moving-
average inventory method, rounded to the nearest peso?
e. 12,606
f. 12,284
g. 12,312
h. 12,432