UNIVERSITY OF CALOOCAN CITY

COST ACCOUNTING & CONTROL

QUIZ NO. 1

THEORIES:

1. Montgomery Company has a variable selling cost. If sales volume increases, how will the total
variable cost and the variable cost per unit behave?
Total Variable Cost Variable Cost Per Unit
a. Increase Increase
b. Increase Remain constant
c. Increase Decrease
d. Remain constant Decrease

2. What type of cost exhibits the behavior that follows?

Production
Volume (Units) Cost Per Unit
50,000 P1.95
70,000 1.95
a. Variable cost
b. Fixed cost
c. Semi-variable cost
d. Discretionary fixed cost

3.Within a relevant range, the amount of variable cost per unit:

a. moves in the same direction as fixed cost per unit
b. differs at each production level
c. remains constant at each production level
d. increases as production increases

4.Straight-line depreciation is a typical example of a:

a. variable cost
b. step-variable cost
c. fixed cost
d. mixed cost

5. Within the relevant range of activity, costs:

a. can be estimated with reasonable accuracy.
b. can be expected to change radically.
c. exhibit decreasing marginal cost patterns.
d. exhibit increasing marginal cost patterns.

6. In a normal cost system, debits to Work in Process Inventory would not be made for
a. actual overhead
b. applied overhead
c. actual direct material
d. actual direct labor

7. Which of the following would be least likely to be supported by subsidiary accounts or ledgers in a
company that employs a job order costing system?
a. Work in Process Inventory
 b. Raw Material Inventory
c. Accounts Payable
d. Supplies Inventory

8.Prime cost and conversion cost share what common element of total cost?
a. direct labor
b. commercial expense
c. variable overhead
d. fixed overhead

9. Factory overhead includes:

a. indirect materials but not indirect labor
b. indirect labor but not indirect materials
c. prime costs
d. all manufacturing costs, except direct materials and direct labor

10. A journal entry includes a debit to Work in Process Inventory and a credit to Raw Material
Inventory. The explanation for this would be that
a. indirect material was placed into production
b. raw material was purchased on account
c. direct material was placed into production
d. direct labor was utilized for production

11. Which of the following journal entries records the accrual of the cost of indirect labor used in
production?
a. debit Work in Process Inventory, credit Wages Payable
b. debit Work in Process Inventory, credit Manufacturing Overhead
c. debit Manufacturing Overhead, credit Work in Process Inventory
d. debit Manufacturing Overhead, credit Wages Payable

12. Debits to Cost of Goods Sold typically represent the

a. transfer of completed items to Finished Goods Inventory.
b. costs of items sold.
c. selling price of items sold.
d. the cost of goods manufactured.

13.Finished Goods is debited and Work in Process is credited for a:

A. transfer of completed goods out of the factory
B. transfer of completed production to the finished goods storeroom
C. purchase of goods on account
D. transfer of materials to the factory

14.In job order costing, when materials are returned to the storekeeper that were previously issued to the
factory for cleaning supplies, the journal entry should be made to:
A. Materials
Factory Overhead
B. Materials
Work in Process
C. Purchases Returns
Work in Process
D. Work in Process
Materials
15.At the end of the year, Paola Company had the following account balances after applied factory
overhead had been closed to Factory Overhead Control:

Factory Overhead Control............................................................................ P 1,000 CR

Cost of Goods Sold...................................................................................... 980,000 DR
Work in Process........................................................................................... 38,000 DR
Finished Goods............................................................................................ 82,000 DR

The most common treatment of the balance in Factory Overhead Control would be to:
A. carry it as a deferred credit on the balance sheet
B. credit it to Cost of Goods Sold
C. prorate it between Work in Process and Finished Goods
D. prorate it among Work in Process, Finished Goods, and Cost of Goods Sold

16.In service businesses using job order costing, the hourly rate used to charge costs to a job usually
includes:
A. both labor and overhead cost
B. labor cost only
C. overhead cost only
D. labor, overhead, and miscellaneous costs

17.Factory Overhead Control is debited and Payroll is credited for:

A. the recording of payroll
B. the distribution of indirect labor costs
C. the distribution of direct labor costs
D. the distribution of withholding taxes

18. An accountant recently debited Work-in-Process Inventory and credited Manufacturing Overhead.
The accountant was:
a. applying a predetermined overhead amount to production.
b. recognizing receipt of the factory utilities bill.
c. recording a year-end adjustment for an insignificant amount of underapplied overhead.
d. recognizing actual overhead incurred during the period.

19. Sanger Corporation debited Cost of Goods Sold and credited Manufacturing Overhead at year-end.
On the basis of this information, one can conclude that:
a. budgeted overhead exceeded actual overhead.
b. budgeted overhead exceeded applied overhead.
c. budgeted overhead was less than applied overhead.
d. actual overhead exceeded applied overhead.

20. The estimates used to calculate the predetermined overhead rate will virtually always:
a. prove to be correct.
b. result in a year-end balance of zero in the Manufacturing Overhead account.
c. result in overapplied overhead that is closed to Cost of Goods Sold if it is immaterial in amount.
d. result in either underapplied or overapplied overhead that is closed to Cost of Goods Sold if it is
immaterial in amount.

PROBLEMS:

21.Douglas Corporation recently produced and sold 100,000 units. Fixed costs at this level of activity
amounted to P50,000; variable costs were P100,000.
 How much cost would the company anticipate if during the next period it produced and sold 102,000
units?
a. P150,000
b. P151,000
c. P152,000
d. P153,000

22. Extron, Inc., has only variable costs and fixed costs. A review of the company's records disclosed
that when 100,000 units were produced, fixed manufacturing costs amounted to P200,000 and the
cost per unit manufactured totaled P5. On the basis of this information, how much cost would the
firm anticipate at an activity level of 97,000 units?
a. P485,000
b. P491,000
c. P494,000
d. P500,000

23. A review of Parry Corporation's accounting records found that at a volume of 90,000 units, the
variable and fixed cost per unit amounted to P8 and P4, respectively. On the basis of this information,
what amount of total cost would Parry anticipate at a volume of 85,000 units?
a. P1,020,000
b. P1,040,000
c. P1,060,000
d. P1,080,000

24. For a simple regression-analysis model that is used to allocate factory overhead, an internal auditor
finds that the intersection of the line of best fit for the overhead allocation on the y-axis is P50,000.
The slope of the trend line is .20. The independent variable, factory wages, amounts to P900,000 for
the month. What is the estimated amount of factory overhead to be allocated for the month?
a. P910,000
b. P950,000
c. P 50,000
d. P230,000

25. The following data relate to the Hodges Company for May and August of the current year:
May August
Maintenance hours 10,000 12,000
Maintenance cost P260,000 P300,000

May and August were the lowest and highest activity levels, and Hodges uses the high-low method
to analyze cost behavior. Which of the following statements is true?
a. The variable maintenance cost is P25 per hour.
b. The variable maintenance cost is P25.50 per hour.
c. The variable maintenance cost is P26 per hour.
d. The fixed maintenance cost is P60,000 per month.

26. Genos Company manufacturers desks. The beginning balance of Raw Material Inventory was
P4,500; raw material purchases of P29,600 were made during the month. At month end, P7,700 of
raw material was on hand. Raw material used during the month was
a. P26,400
b. P34,100
c. P37,300
d. P29,600
27.Avery Co. uses a predetermined factory overhead rate based on direct labor hours. For the month of
October, Avery's budgeted overhead was P300,000 based on a budgeted volume of 100,000 direct
labor hours. Actual overhead amounted to P325,000 with actual direct labor hours totaling 110,000.
How much was the overapplied or underapplied overhead?
A. P5,000 overapplied
B. P5,000 underapplied
C. P30,000 overapplied
D. P30,000 underapplied

28.J. D. Doonesbury Company manufactures tools to customer specifications. The following data
pertain to Job 1501 for April:

Direct materials used......................................................................................... P 4,200

Direct labor hours worked................................................................................. 300
Direct labor rate per hour................................................................................... P 8.00
Machine hours used........................................................................................... 200
Applied factory overhead rate per machine hour............................................... P 15.00

What is the total manufacturing cost recorded on Job 1501 for April?
A. P9,600
B. P10,300
C. P11,100
D. P5,400

29. ABC Corp. has a job order cost system. The following debits (credits) appeared in WIP for the
month of July:
July 1 balance P 36,000
July 31, direct materials 120,000
July 31, direct labor 90,000
July 31, factory overhead 81,000
July 31, to finished goods (300,000)

ABC applies overhead to production at a predetermined rate of 75% based on the direct labor cost.
Job 1040, the only job still in process of July, has been charged with factory overhead of P6,750.
What was the amount of direct materials charged to Job 1040?
a. P7,500
b. P2,750
c. P20,250
d. P11,250

30. The Grapes Company uses a job order cost accounting system. Overhead is applied to production at
a predetermined rate based on direct labor cost.

The following postings appear in the ledger accounts of the company for the month of September,
2020:
Work in Process, Sept. 1 P30,000
Direct Materials 60,000
Factory Overhead 40,000
Direct Labor 50,000

On September 30, 2020, finished goods completed, from work in process cost P160,000.
 Job. No. 327 was the only job not completed in September, and it has been charged P4,600 for
factory overhead.
a. P10,350
b. P14,650
c. P 9,650
d. P25,000

31. Hugo Company uses a job order costing system to account for product costs. The following
information pertains to 1st quarter of 2020:
Raw materials placed into production P 70,000
Indirect labor 20,000
Indirect materials 8,000
Depreciation-factory building 15,000
Other factory overhead 22,000
Direct labor (P125 per hour) 80,000

Overhead is applied at P100 per direct labor hour

Increase in WIP Inventory is P35,000.

The amount credited to Raw Materials for the quarter amounts to

a. P70,000
b. P78,000
c. P35,000
d. P62,000

32. Yow Company is a manufacturing concern using the perpetual inventory system. The following
materials inventory account data is provided:
Beginning balance P 275,000
Other debits to the account 825,000
Excess of ending over beginning inventory 55,000

How much is the cost of materials issued to production?

a. P770,000
b. P1,045,000
c. P1,100,000
d. P1,155,000

33. Jaguar Machines uses two rates to apply overhead to jobs. One rate is based on material cost, the
other on machine time. The following data relate to 2020.
Bu
dget
Materials-related overhead P 1,280,000
Machine-related overhead 2,200,000
Cost of materials used on jobs 3,200,000
Machine hours 400,000

Data related to three jobs worked in June follow:

Job X2 Job X3Job X4
Materials P 42,000 P 164,000 P 78,000
Direct labor 32,000 26,000 36,000
Machine hours 17,000 9,000 5,800
 Actual materials related to overhead was P118,400 and actual machine related overhead was
P185,600.

The total amount of overhead variance is

a. P15,500 over-applied
b. P15,500 under-applied
c. P4,800 under-applied
d. P10,700 under-applied

34. The records of XYZ Co. revealed the following data for 2020:
Work in process P 73,150
Finished goods 115,000
Cost of goods sold 133,650
Direct labor 111,600
Direct materials 84,200

Assume that XYZ has overapplied overhead of P25,000 for 2020 and that this amount is material.
What is the balance in COGS after the overapplied overhead is closed?
a. P123,267
b. P144,033
c. P158,650
d. P108,650

35. Romblon Products, Inc. had the following information relating to the current period:
Units sold P 100,000
Units in Finished Goods Inventory 70,000
Units in Work in Process Inventory 30,000
Materials Inventory 50,000

Additionally, factory overhead control was charged during the period for P 325,000 and factory
overhead applied was P 375,000. (The difference is considered significant).

Which of the following entries is the correct manner to account for the difference between applied
and actual overhead?
a. Factory Overhead Applied P 50,000
Cost of Goods Sold P 50,000

b. Cost of Goods Sold 20,000

Finished Goods Inventory 14,000
Work in Process Inventory 6,000
Materials Inventory 10,000
Factory Overhead Applied 50,000

c. Factory Overhead Applied 375,000

Cost of Goods Sold 20,000
Finished Goods Inventory 14,000
Work in Process Inventory 6,000
Materials Inventory 10,000
Factory Overhead Control 325,000

d. Factory Overhead Applied 375,000

Cost of Goods Sold 25,000
Finished Goods Inventory 17,500
Work in Process Inventory 7,500
Factory Overhead Control 325,000