Cost Accounting Systems

(A. Traditional Cost Accounting)

COST ACCOUNTING SYSTEMS

A. TRADITIONAL COST ACCOUNTING

THEORIES:
Basic concepts
Cost Accounting
1. Cost accounting involves the measuring, recording, and reporting of
A. product costs C. future costs
B. manufacturing process D. managerial accounting decisions

Cost management
3. The cost management function is usually under
A. the chief information officer. C. purchasing manager.
B. treasurer. D. controller.

2. The cost management information system provides information

A. that the accountant needs to prepare the financial statements.
B. that the manager needs to effectively manage the firm.
C. that the manager needs to effectively manage not-for-profit organization.
D. b and c.

4. The main focus of cost management information must be

A. usefulness and accuracy. C. usefulness and timeliness.
B. timeliness and accuracy. D. relevance and good format.

5. With regard to the task of management’s decision making, cost management information is needed to
A. make sound strategic decisions regarding choice of products, methods, and techniques.
B. support recurring decisions regarding replacement of equipment, managing cash flow, etc.
C. provide a fair and effective basis for identifying inefficient operations.
D. provide accurate accounting for inventory, receivables, and other assets.

Product costing
6. Product costing system design or selection:
A. requires an understanding of the nature of the business
B. should provide useful cost information for strategic and operational decision needs
C. should be cost effective in design and selection
D. all the above answers are correct
Cost concepts
Committed vs. Discretionary fixed costs
Commited fixed costs
7. Which of the following is an example of a committed fixed costs?
A. direct materials C. supervisor’s salary
B. depreciation on a factory building D. insurance on a building

16. An example of a committed fixed cost is:

A. a training program for salespersons.
B. executive travel expenses.
C. property taxes on the factory building.
D. new product research and development.

Discretionary fixed cost

8. Which of the following is an example of discretionary fixed cost?
A. direct labor C. property taxes on a factory building
B. insurance on a building D. depreciation on a factory building

Controllable costs
10. Controllable costs are:
A. Costs that management decides to incur in the current period to enable the company to achieve
operating objectives other than the filling of orders placed by customers.
B. Costs that are governed mainly by past decisions that established the present levels of operating

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and organizational capacity and that only change slowly in response to small changes in
capacity.
C. Costs that will unaffected by current managerial decisions.
D. Costs that are likely to respond to the amount of attention devoted to them by a specified
manager.

11. Controllable costs for responsibility accounting purposes are directly influenced only by
A. A given manager within a given period.
B. A change in activity.
C. Production volume.
D. Sales volume.

Imputed costs
12. An imputed cost is
A. The difference in total costs which results from selecting one choice instead of another.
B. A cost that does not entail any cash outlay but which is relevant to the decision-making process.
C. A cost that may be shifted to the future with little or no effect on current operations.
D. A cost that continues to be incurred even though there is no activity.

Cost According to Behavior

Semi-variable costs
14. Semi-variable costs
A. per unit remain the same regardless of total output
B. remain the same within the relevant range of output
C. increase in steps as the amount of the cost driver volume increases
D. have both fixed and variable components in them

Step cost
15. A step cost is
A. the same as semi-fixed cost
B. the same as mixed cost
C. a cost that increases in steps as the amount of cost-driver volume increases
D. a and c only.

Product Cost vs. Period Cost

Period cost
18. Which of the following would NOT be a period cost for a manufacturing firm?
A. Selling expenses
B. Salary paid to the CEO of the company
C. Repairs to the Receptionist's computer
D. Utilities in manufacturing plant

Direct vs. indirect costs

17. What kind of costs can be conveniently and economically traced to a cost object or pool?
A. Indirect Costs. C. Direct Costs.
B. Relevant Costs. D. Overhead Costs.

47. Direct product expenses

A. are incurred for the benefit of the business as a whole
B. cannot be identified readily with a given product
C. can be assigned to product only by a process of allocation
D. would not be incurred if the product did not exist

9. The distinction between direct and indirect costs depends on whether a cost
A. is controllable or non-controllable.
B. is variable or fixed.
C. can be conveniently and physically traced to a cost object under consideration.
D. will increase with changes in levels of activity.

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19. Of most relevance in deciding how indirect costs should be assigned to products is the degree of
A. Linearity. C. Avoidability.
B. Causality. D. Controllability.

Comprehensive
13. Almos, Inc. makes ski-boards in Davao. Identify the correct matching of terms.
A. Fiberglass is factory overhead
B. Plant real estate taxes are a period cost
C. Depreciation on delivery trucks is a product cost
D. Payroll taxes for workers in the Packaging Dept. are direct labor

Traditional Costing Accounting

28. An accounting system that focuses on transactions is
A. an activity-based accounting system. C. a traditional accounting system.
B. a product life cycle costing system. D. all of the above.

29. Traditionally, managers have focused cost reduction efforts on

A. activities. C. departments.
B. processes. D. costs.

33. Which of the following is a trait of a traditional cost management system?

A. unit-based drivers C. tracing is intensive
B. detailed activity information D. focus on managing activities

23. Which of the following is typically regarded as a cost driver in traditional accounting practices?
A. number of purchase orders processed C. number of transactions processed
B. number of customers served D. number of direct labor hours worked

21. Which of the following is not a trait of a traditional cost management system?
A. unit-based drivers C. focus on managing activities
B. allocating intensive D. narrow and rigid product costing

24. Which of the following is not typical of traditional costing systems?

A. Use of a single predetermined overhead rate.
B. Use of direct labor hours or direct labor cost to assign overhead.
C. Assumption of correlation between direct labor an incurrence of overhead cost.
D. Use of multiple cost drivers to allocate overhead.

Overhead allocation
35. Conventional product costing uses which of the following procedures?
A. Overhead costs are traced to departments, then costs are traced to products.
B. Overhead costs are traced to activities, then costs are traced to products.
C. Overhead costs are traced directly to product.
D. All overhead costs are expensed as incurred.

36. The overhead rates of the traditional approach to product costing use
A. nonunit-based cost drivers C. unit-based cost drivers
B. process costing D. job-order costing

Effect of Traditional overhead allocation

22. The use of unit-based activity drivers to assign costs tends to
A. overcost low-volume products. C. overcost all products.
B. overcost high-volume products. D. undercost all products.

30. Traditional overhead allocations result in which of the following situations?

A. Overhead costs are assigned as period costs to manufacturing operations.
B. High-volume products are assigned too much overhead, and low-volume products are assigned
too little overhead.
C. Low-volume products are assigned too much, and high-volume products are assigned too little
overhead.
D. The resulting allocations cannot be used for financial reports.

32. Product costs can be distorted if a unit-based cost driver is used and

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A. nonunit-based overhead costs are a significant proportion of total overhead

B. the consumption ratios differ between unit-based and nonunit-based input categories
C. both a and b
D. neither a nor b
Process Costing
40. Which of the following items is not a characteristic of a process cost system?
A. Once production begins, it continues until the finished product emerges
B. The products produced are heterogeneous in nature
C. The focus is on continually producing homogeneous products
D. When the finished product emerges, all units have precisely the same amount of materials, labor,
and overhead

Actual Costing, Normal costing, & Standard Costing

Predetermined overhead rate
39. The formula for computing the predetermined manufacturing overhead rate is estimated annual
overhead costs divided by an expected annual operating activity, expressed as
A. direct labor cost C. direct labor hours
B. machine hours D. any of these

37. The two main advantages of using predetermined factory overhead rates are to provide more
accurate unit cost information and to:
A. simplify the accounting process
B. provide cost information on a timely basis
C. insure transmission of correct data
D. adjust for variances in data sources

34. The effect of uniform production levels on production cost per unit can be achieved
A. by using a factory overhead rate based on different production levels for each year
B. by using a factory overhead rate based on selling price
C. by closing the factory overhead at the end of the accounting period
D. by using a factory overhead rate based on long-run normal production activity level

38. No matter which method is used, underapplied or overapplied overhead usually is adjusted only:
A. at the end of a year.
B. monthly during the year
C. if the difference exceeds P1,000 or one percent of total overhead.
D. when the company's profit projections require an adjustment

Actual Costing
43. Disadvantages of actual costing include
A. actual cost systems cannot provide accurate unit cost information on a timely basis
B. actual cost systems produce unit costs that fluctuate from period to period
C. estimates must be used when calculating the actual overhead rate
D. a and b

Normal Costing
42. The principal difficulty with normal costing is that
A. the unit cost information is not received on a timely basis
B. it can result in fluctuating per-unit overhead costs
C. estimated overhead and estimated activity are likely to differ from actual overhead and actual costs, resulting in
underapplied or overapplied overhead
D. there is no difficulty associated with using normal costing

46. Normal costing and standard costing differ in that

A. the two systems can show different overhead budget variances.
B. only normal costing can be used with absorption costing.
C. the two systems show different volume variances if standard hours do not equal actual hours.
D. normal costing is less appropriate for multiproduct firms.

Standard Costing
20. The product cost which is determined in a conventional standard cost accounting system is a(an)
A. Joint cost. C. Expected cost.

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B. Fixed cost. D. Direct cost.

Plant-wide vs. Department-side Overhead Rates

44. Volume-based plant-wide rates produce inaccurate product cost when:
A. a large share of factory overhead cost is not volume-based
B. firms produce a diverse mix of product
C. large volumes of production occur
D. Both a and b are correct.
Activity-based Costing
25. An activity that has a direct cause-effect relationship with the resources consumed is a(n)
A. cost driver. C. cost pool.
B. overhead rate. D. product activity.

27. The term cost driver refer to:

A. any activity that can be used to predict cost changes.
B. the attempt to control expenditures at a reasonable level.
C. the person who gathers and transfers cost data to the management accountant.
D. any activity that causes costs to be incurred.

26. Each group of overhead costs should be applied based on

A. direct labor hours or cost.
B. units produced.
C. whatever activity drives those specific overhead costs.
D. machine time.

31. Which of the following statements is true?

A. The traditional approach to costing uses many different cost drivers.
B. Costs that are indirect to products are by definition traceable to directly to products.
C. Costs that are indirect to products are traceable to some activity.
D. All of the above statements are true.

41. Why is it better to use separate overhead rates?

A. Some departments are labor-intensive, some are machine-intensive.
B. Labor rates vary considerably among departments.
C. The resulting overhead rates are all about the same.
D. All jobs require about the same percentage of time in all departments.
Operating Leverage
45. If company A has a higher degree of operating leverage than company B, then:
A. the company A has higher variable expenses.
B. the company A's profits are more sensitive to percentage changes in sales.
C. the company A is more profitable.
D. the company A is less risky.

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PROBLEMS:
Total manufacturing costs
i
. Direct materials and direct labor costs total P120,000, conversion costs total P100,000, and factory
overhead costs total P400 per machine hour. If 150 machine hours were used for Job #201, what is
the total manufacturing cost for Job #201?
A. 120,000 C. 180,000
B. 160,000 D. 280,000

Overhead
Budgeted overhead
ii
. Machine hours used to set the predetermined overhead rate were 25,000, actual hours were 24,000,
and overhead applied was P60,000. Budgeted overhead for the year was
A. P57,600. C. P60,000.
B. P59,000. D. P62,500.

Overhead per unit

iii
. ABC Company had a total overhead of P360,000 and selling and administrative expense of
P140,000 for the year. 1,000 units of A and 3,000 units of B were produced. A requires 3 machine
hours and B requires one machine hour per unit. What is overhead chargeable per unit of A
A. P 60 C. P120
B. P 90 D. P180
iv
. ABC Company had a total overhead of P360,000 and selling and administration expense of
P140,000 for the year. 1,000 units of A and 3,000 units of B were produced. A requires 3 and B
requires one machine hours per unit. A requires 6 direct labor hours and B requires 4 direct labor
hours per unit. 40% of overhead is related to labor and the balance to machines. Labor-related
overhead per hour amounts to
A. P 8 C. P18
B. P12 D. P24
v
. ABC Company had a total overhead of P360,000 and selling and administration expense of
P140,000 for the year. 1,000 units of A and 3,000 units of B were produced. A requires 3 and B
requires one machine hours per unit. A requires 6 direct labor hours and B requires 4 direct labor
hours per unit. 40% of overhead is related to labor and the balance to machines. The overhead per
unit of B amounts to
A. P 60 C. P156
B. P 68 D. P180
vi
. ABC Company had a total overhead of P360,000 and selling and administration expense of
P140,000 for the year. 1,000 units of A and 3,000 units of B were produced. Assuming that 20% of
all overhead are batch-related for 1,000 batches, 40% of which was for producing product A, batch-
related overhead for product A per unit amounts to
A. P20 C. P60
B. P40 D. P80
vii
. ABC Company had a total overhead of P360,000 and selling and administration expense of
P140,000 for the year. 1,000 units of A and 3,000 units of B were produced. Assuming that 30% of
overhead is product related overhead - 20% of which is related to product A, product-related
overhead per unit of A amounts to
A. P30 C. P50
B. P40 D. P60

Total overhead variance

viii
. Cooke Company uses the equation P450,000 + P1.50 per direct labor hour to budget manufacturing
overhead. Cooke has budgeted 150,000 direct labor hours for the year. Actual results were 156,000
direct labor hours and P697,500 total manufacturing overhead. The total overhead variance for the
year is
A. P4,500 favorable. C. P4,500 unfavorable.
B. P18,000 favorable. D. P18,000 unfavorable.

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Over(under)-applied overhead
ix
. If estimated annual factory overhead is P800,000, estimated annual direct labor hours are 400,000,
actual June factory overhead is P82,000, and actual June direct labor hours are 38,000, then
overhead is:
A. P6,000 overapplied C. P1,800 underapplied
B. P1,800 overapplied D. P6,000 underapplied

Gross profit
x
. BKY Company predicted that factory overhead for 2006 and 2007 would be P60,000 for each year. The predicted and
actual activity for 2006 and 2007 were 30,000 and 20,000 direct labor hours, respectively.
2006 2007
Sales in units 25,000 25,000
Selling price per unit P10 P10
Direct materials and direct labor per unit P 5 P 5
The company assumes that the long-run production level is 20,000 direct labor hours per year. The
actual factory overhead cost for the end of 2006 and 2007 was P60,000. Assume that it takes one
direct labor hour to make one finished unit.
When the annual estimated factory overhead rate is used, the gross profits for 2006 and 2007,
respectively, are
A. P 75,000 and P 75,000 C. P125,000 and P125,000
B. P 75,000 and P 55,000 D. P 75,000 and P 50,000

Process costing
Work in process
xi
. Britney Company has unit costs of P10 for materials and P30 for conversion costs. If there are 2,500
units in ending work in process, 40% complete as to conversion costs, and fully complete as to
materials cost, the total cost assignable to the ending work in process inventory is
A. P 45,000 C. P 75,000
B. P 55,000 D. P100,000

Overhead component
xii
. In the Star Company, the predetermined overhead rate is 80% of direct labor cost. During the
month, P210,000 of factory labor costs are incurred, of which P180,000 is direct labor and P30,000
is indirect labor. Actual overhead incurred was P200,000. The amount of overhead debited to Work
in Process Inventory should be
A. P120,000 C. P168,000
B. P144,000 D. P160,000

Equivalent unit of production

xiii
. The Assembling Department’s output during the period consists of 20,000 units completed and
transferred out, and 5,000 units in ending work in process 60% complete as to materials and
conversion costs. Beginning inventory is 1,000 units, 40% complete as to materials and conversion
costs. The equivalent units of production are
A. 22,600 C. 24,000
B. 23,000 D. 25,000
xiv
. The Amor Company has 2,000 units in beginning work in process, 20% complete as to conversion
costs, 23,000 units transferred out to finished goods, and 3,000 units in ending work in process one-
third complete as to conversion costs. The beginning and ending inventory is fully complete as to
materials costs. Equivalent units for materials and conversion costs are
A. 22,000 and 24,000 C. 24,000 and 26,000
B. 26,000 and 24,000 D. 26,000 and 26,000
xv
. Dodge Company has a mixing department and a refining department. Its process-costing system in
the mixing department has two direct materials cost categories (material J and material P) and one
conversion costs pool. The company uses First-in, First out cost flow method. The following data
pertain to the mixing department for November 2006
Units

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Work in process, November 1: 50 percent

completed 15,000
Work in process, November 30, 70 percent 25,000
completed
Units started 60,000
Completed and transferred 50,000
Costs
Work-in-process, November 1 P218,000
Material J 720,000
Material P 750,000
Conversion Costs 300,000
Material J is introduced at the start of operations in the Mixing department, and Material P is added
when the product is three-fourths completed in the mixing department. Conversion costs are added
uniformly during the process.
The respective equivalent units for Material J and Material P in the mixing department for
November 2006, are
A. Both 50,000 units C. 75,000 units and 60,000 units
B. 60,000 units and 50,000 units D. 60,000 units and 75,000 units
xvi
. The cost of goods completed and transferred out to the Refining department was
A. P1,930,750 C. P1,600,500
B. P1,350,000 D. P1,550,500
xvii
. The Amor Company’s accounting records reflected the following data for April 2003. The company accounts its
production using First-in, First-out cost flow method:
Work in process, March 31,2003, 60%
completed as to materials and conversion ? units
costs
Work in process, April 30, 2003, 30%
completed as to materials and conversion 24,000 units
costs
Equivalent units of production for April 2003 64,000
Units started and completed in April 50,000
How many units were in the beginning work-in-process?
A. 6,800 C. 17,000
B. 11,333 D. 24,000
xviii
. Had the company used the weighted-average method of accounting for its production, the equivalent
units should be
A. 74,200 C. 81,000
B. 57,200 D. 53,800

Units to be accounted for

xix
. In the Newman Company, there are zero units in beginning work in process, 7,000 units started into
production, and 500 units in ending work in process 20% completed. The physical units to be
accounted for are
A. 7,000 C. 7,600
B. 7,360 D. 7,340

Cost of Finished Goods Transferred

xx
. For the month of May, the Production Control Department of La Mesa, Inc. reported the following production data for
Finishing Department (second department):
Transferred-in from Assembly Department 75,000
Transferred-out to Packaging Department 59,250
In-process end of May (with 1/3 labor and factory overhead) 15,750
All materials were put into process in Assembly Department. The Cost Accounting Department
collected these figures for Finishing Department.
Unit cost for unit transferred-in from Assembly DepartmentP 2.70
Labor cost in Finishing Department 41,280.00
Applied factory overhead 112.5% of labor cost

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How much was the cost of Finished goods transferred out to the Packaging Department?
A, P240,555 C. P260,580
B. P 80,580 D. P159,975

Comprehensive
Use the following data to answer question Nos. 18 through 20.
Mergy Company uses process costing in accounting for its production department, which uses two raw materials. Material
Alpha is placed at the beginning of the process. Inspection is at the 85% completion stage. Material Bravo is then added to
the good units. Normal spoilage units amount to 5% of good output. The company records contain the following information
for April:

Started during the period 20,000 units

Material Alpha P26,800
Material Beta P22,500
Direct labor cost P75,160
Factory overhead P93,950
Transferred to finished goods 14,000
Work in process (95% complete), April 30 4,000
xxi
. How much were Material cost per equivalent unit for Alpha and Beta, respectively?
A. P1.40; P1.36 C. P1.34; P1.06
B. P1.40; P1.06 D. P1.34; P1.25
xxii
. The equivalent units of production for Material Alpha and Beta are
Alpha Beta
A. 18,000 14,000
B. 18,000 18,000
C. 20,000 18,000
D. 20,000 14,000
xxiii
. The number of normal and abnormal lost units are:
Normal Abnormal
A. 700 1,400
B. 1,400 700
C. 900 1,100
D. 1,100 900

Material cost
Unit material cost
xxiv
. Catridge Company has no beginning work in process; 9,000 units are transferred out and 3,000 units
in ending work in process are one-third finished as to conversion costs and fully complete as to
materials cost. If total materials cost is P60,000, the unit materials cost is
A. P5.00 C. P5.45
B. P6.00 D. P5.35

Lost units
xxv
. Lapid Company uses process costing. All materials are added at the beginning of the process. The product is inspected
when it is 90 percent converted, and spoilage is identified only at that point. Normal spoilage is expected to be 5% of
good output.
The following are extracted from the production records of Lapid Company for May 2003:
Units put into process 21,000
Units transferred to finished goods 14,000
In-process, May 31, 75% complete 6,000
How many are considered abnormal lost units?
A. Zero C. 15
B. 300 D. 850

Statement of Cost of Goods Manufactured & Sold

Use the following information that pertains to beta manufacturing company to answer questions 21
through 23:

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Beginning direct materials inventory P 20,000

Beginning WIP inventory 20,000
Beginning finished goods inventory 40,000
Ending direct materials inventory 10,000
Ending WIP inventory 100,000
Ending finished goods inventory 50,000
Purchases 140,000
Direct labor 160,000
Factory overhead 200,000
xxvi
. What is the amount of direct materials used during the period?
A. P140,000 C. P 60,000
B. P130,000 D. P150,000
xxvii
.What is the amount of cost of goods manufactured during the period?
A. P430,000 C. P470,000
B. P420,000 D. P510,000
xxviii
. What is the amount of cost of goods sold during the period?
A. P430,000 C. P470,000
B. P420,000 D. P510,000

748
i
. Answer: C
Direct materials and direct labor P120,000
Factory overhead P400 x 150 60,000
Total manufacturing cost P180,000
ii
. Answer: D
Overhead rate per hour (P60,000 ÷ 24,000) P2.50
Budgeted overhead (25,000 x P2.50) P62,500
iii
. Answer: D
Total number of hours: (1,000 x 3) + (3,000 x 1) 6,000
Overhead cost per hour (P360,000 ÷ 6,000) P 60
Overhead charged per unit of product A: 3 hrs. x P60 P180
iv
. Answer: A
Labor-related overhead: (P360,000 x 0.40) P144,000
Total number of labor hours: (1,000 x 6) + (3,000 x 4) 18,000
Labor-related overhead per DLH: (P144,000 ÷ 18,000) P 8
v
. Answer: B
Machine-related overhead: (P360,000 x 0.6) P216,000
Total number of machine hours (1,000 x 3) + 3,000 6,000
Machine-related OH per MH: (P216,000 ÷ 6,000) P36

Overhead applied per unit of Product B:

Labor-related (4 hours x P8) P32
Machine-related (1 x P36) 36
Overhead per unit P68

The overhead is broken down into two volume-based cost pools. This is a more modified example of traditional
costing
vi
. Answer: B
Batch related costs: (360,000 + 140,000) × 20% P100,000
Batch related costs, Product A: 100,000 × 40% 40,000
Batch-related overhead per unit of Product A: 40,000 / 1,000 P 40
In ABC costing, there is no need to make a distinction between manufacturing and non-manufacturing costs in
computing the relevant product costs
vii
Answer: A
Product-related overhead cost (360,000 + 140,000) × 30% P150,000
Product-related overhead cost, Product A: 150,000 × 20% P 30,000
Product-related overhead cost per unit, Product A: 30,000 / 1,000 P 30
viii
. Answer: A
Variable overhead P1.50
Predetermined fixed overhead (P450,000 ÷ 150,000) 3.00
Total overhead rate P4.50
Actual overhead P697,500
Applied overhead (156,000 hours x P4.50) 702,000
Total overhead variance, favorable P 4,500
ix
. Answer: D
Applied overhead 38,000 x P2 P76,000
Actual overhead 82,000
Underapplied overhead P6,000

Overhead rate per direct labor hour (P800,000 ÷ 400,000) P2.00

x
. Answer: B
Gross Profit:
2006: (25,000 x 10) - 175,000 = P75,000
2007: (25,000 x 10) - 195,000 = P55,000

Overhead application rates:

2006: 60,000/30,000 = P2.00
2007: 60,000/20,000 = P3.00

Unit Costs:
 2006: 5 + 2 = P7.00
2007: 5 + 3 = P8.00

Costs of goods sold:

2006: 25,000 x P7 P175,000
2007: (5,000 x P7) + (20,000 x P8) P195,000
Note: In 2007 the company has a beginning inventory of 5,000 units at unit cost of P7.
xi
. Answer: B
Materials cost (2,500 x P10) P25,000
Conversion cost (2,500 x 0.4 x P30) 30,000
Total costs of Work in Process P55,000
xii
. Answer: B
The amount of overhead applied to production should be 80 percent of direct labor cost (P180,000 x 0.80) =
P144,000
xiii
. Answer: B
Completed units 20,000
Work in process, End (5,000 x 0.6) 3,000
Total equivalent units, average 23,000
xiv
. Answer: B
Units completed and transferred out 23,000
Work in Process, End 3,000

MaterialsConversion Costs% of CompletionEUP% of CompletionEUPCompleted units10023,000100.0023,000WIP - End100

3,00033.33 1,000Weighted-Average EUP26,00024,000
xv
. Answer: B
Computation of equivalent units
Material JMaterial PWork-in-process, Nov. 1-15,000Units started and completed35,00035,000Work-in-process, Nov.
3025,000-EUP60,00050,000
xvi
. Answer: C
Work in process-beginning
Cost, Nov. 1P218,000Cost, November Material P (15,000 x P5)225,000 Conversion 7,500 x P5 37,500262, 500P
480,500Started, completed 35,000 P32
1,120,000Cost of goods transferred out
P1.600,500Unit Costs
Material J720,000/60,000P12 Material P750,000/50,00015 Conversion costs300,000/60,0005 TotalP32
xvii
. Answer: C
Equivalent units for April64,000Less: EU – started and completed during: April50,000 Work-in-process, end
(24,000 x 3)7,20057,200Equivalent units - work-in-process end Mar 316,800Number of units in process as of March
31 6,800  4017,000
xviii
. Answer: A
Equivalent units – FIFO 64,000
Add equivalent units in March 31 (17,000 x .6) 10,200
Weighted Average EUP 74,200
xix
. Answer: A
The number of units to be accounted should be the sum of the units in beginning work in process and the number of
units that have been started during the period
xx
. Answer: A
EUP:
Transferred out to Packaging Dept. 59,250
In process, end 15,750 x 1/3 5,250
Total 64,500
Unit Cost:
Transferred in 2.70
Labor and overhead 87,720/64,500 1.36
Total 4.06
Cost of finished goods transferred out 59,250 x 4.06 P240,555
xxi
. Answer: D
Equivalent units AlphaBeta Transferred to F.G.14,00014,000 End Process 4,000 4,000 Normal lost units
9000 Abnormal lost unit 1,100 0 Total20,00018,000Unit cost
Alpha P26,800  20,000 = P1.34
Beta P22,500  18,000 = P1.25
xxii
. Answer: C
Equivalent unitsAlphaBetaTransferred to F.G.14,00014,000End Process 4,000 4,000Normal lost units 900Abnormal lost
unit 1,100 ______Total20,00018,000
xxiii
. Answer: C
Total lost units (20,000 – 18,000) 2,000
Total lost units 5% x 18,000 900
Abnormal lost units 1,100
xxiv
. Answer: A
Completed and transferred out 9,000
Units in work-in-process, End (3,000 x 100%) 3,000
Equivalents units of production - Materials 12,000
Materials cost per EUP (P60,000 ÷ 12,000) P5.00
xxv
. Answer: B
Total lost units (21,000 – 20,000) 1,000
Less normal lost units 5% of 14,000 700
Abnormal lost unit 300
xxvi
. Answer: D
Beginning materials inventory P 20,000
Add Materials Purchased 140,000
Total cost of materials available for use 160,000
Deduct Materials inventory, End 10,000
Cost of materials used P150,000
xxvii
. Answer: A
Direct materials used P150,000
Direct labor 160,000
Overhead 200,000
Total manufacturing costs 510,000
Add Work in process, beginning 20,000
Total costs placed in process 530,000
Deduct Work in process, end 100,000
Cost of goods manufactured P430,000
xxviii
. Answer: B
Cost of goods manufactured P430,000
Add finished goods inventory, beginning 40,000
Total cost of goods available for sale 470,000
Deduct finished goods inventory, end 50,000
Cost of goods sold P420,000