Cost Accounting and CostManagement

School: COC
PEN Code: ACC 011

PEN Subject Title: Cost Accounting and Cost Management
Directions: Please type your questions, choices and comments in the corresponding boxes.
Kindly follow the example below.
Example:
Item Questions and Answers Comments
Please type your question in the upper box followed by the choices Please type your
in the lower box. Do not forget to highlight the answer. comments here.
1. “Begin with the end in mind.” What is the implication of this
statement to the work of a teacher?
a. Come to class prepared for all eventualities.
b. Master the subject matter.
c. Understand the nature of each learner.
d. Define the lesson objective clearly.
Comment
s from
Item Questions and Answers
UPANG
and UI
1. Management and financial accounting are used for which of the following
purposes?
Management accounting Financial accounting
a internal external
.
b external internal
.
c internal internal
.
d external external
.
2. Which of the following statements about management or financial
accounting is false?
a Financial accounting must follow GAAP.

.
b Management accounting is not subject to regulatory reporting
. standards.
c Both management and financial accounting are subject to mandatory
. recordkeeping requirements.
d Management accounting should be flexible.
.
3. The three primary inventory accounts in a manufacturing company are
a Merchandise Inventory, Supplies Inventory, and Finished Goods

. Inventory.
b Merchandise Inventory, Work in Process Inventory, and Finished
. Goods Inventory.
c Supplies Inventory, Work in Process Inventory, and Finished Goods
. Inventory.
d Raw Material Inventory, Work in Process Inventory, and Finished
. Goods Inventory.
4. Product costs are deducted from revenue
a as expenditures are made.

.
b when production is completed.
.
c as goods are sold.
.
d to minimize taxable income.
.
5. Botana Company constructed the following formula for monthly utility Delete
cost. Figure 3-
4?????
Total utility cost = P1,200 + (P8.10 labor hours)
Assume that 775 labor hours are budgeted for the month of April.
5. Calculate the total variable utility cost for the month of April.
a P1,200
.
b P7,477.50
.
c P6,277.50
.
d P5,077.50
.
6. Why not
Botana Company constructed the following formula for monthly utility copy paste
cost. Q-5 here?
Why
Total utility cost = P1,200 + (P8.10 labor hours) Figure 3-
4?
Calculate the total utility cost for the month of April.

a P7,477.50
.
b P6,277.50
.
c P1,200.00
.
d P5,077.50
.
7. Botana Company constructed the following formula for monthly utility Copy
cost. paste Q-5
here
Total utility cost = P1,200 + (P8.10 labor hours)
If Botana Company incurs 9,600 labor hours for the year, what would be
the estimate of total utility cost?
a P76,560
.
b P78,960
.
c P92,160
.
d none of these are correct
.
8. A responsibility center in which a manager is responsible for both
revenues and costs is a(n)
a cost center.
.
b revenue center.
.
c profit center.
.
d investment center
.
9. A responsibility center in which a manager is responsible only for sales is

a(n)
a cost center.
.
b revenue center.
.
c profit center.
.
d investment center.
.
10. Listed below are steps of purchasing and receiving materials:
1. The receiving clerk prepares a receiving report.

2. Purchase requisitions are prepared to notify the purchasing agent that
additional materials are needed.
3. The purchase of merchandise is recorded by the accounting department.
4. The purchasing agent completes a purchase order.
In which order would these events typically happen?
a 4, 2, 3, 1
.
b 2, 4, 3, 1
.
c 2, 4, 1, 3
.
d 4, 2, 1, 3
.
11. To effectively control materials, a business must maintain:
a Limited access.
.
b Combination of duties.
.
c Safety stock.
.
d None of these are correct.
.
12. All of the following are characteristics of hourly wage plans except:
a They provide no extra recognition for doing more than the minimum
. required.
b They are easy to apply.
.
c They establish a definite rate per hour for each employee.
.
d They encourage employees to sacrifice quality in order to maximize
. earnings.
13. A wage plan based solely on an employee's quantity of production is
known as a(n):
a Modified wage plan.

.
b Hourly-rate plan.
.
c Incentive wage plan.
.
d Piece-rate plan.
.
14. Cibolo Company
Cibolo Company has the following information available for March when
4,200 units were produced (round answers to the nearest peso).
Standards:
Material 4.0 pounds
per unit @
P5.25 per
pound
Labor 6.0 hours
per unit @
P10.00 per
hour
Actual:
Material purchased 17,500
pounds @
P5.10
Material used 16,700
pounds
25,500 direct labor hours @ P9.85 per hour
14. What is the labor efficiency variance?
a P 2,955 F
.
b P 2,955 U
.
c P 3,000 U
.
d P 3,000 F
.
15. Information relating to direct labor for the Newstead Company follow:
Actual direct labor hours 5,600

Standard direct labor hours 5,400
Total direct labor per payroll P53,200
Standard labor rate per hour P9.00
The labor efficiency variance is:
a P2,800 unfavorable
.
b P1,900 unfavorable
.
c P4,600 unfavorable
.
d P1,800 unfavorable
.
16. Which of the following would generally be considered a fixed factory
overhead cost?
Straight-line Factory Units-of-production

depreciation insurance depreciation
a no no no
.
b yes no yes
.
c yes yes no
.
d no yes no
.
17. Consider the following costs:
I. The cost of electricity which is used to power machinery and light the
plant.
II. Depreciation on the building which houses both the factory and the
sales office.
Which of the following statements is true?
a Only statement I is an example of a semivariable cost.

.
b Only statement II is an example of a semivariable cost.
.
c Both statements I and I are examples of semivariable costs.
.
d Neither statement I nor II is an example of a semivariable cost.
.
18. The records of Phoenix Corporation revealed the following data for the
current year.
Work in Process P 73,150

Finished Goods 115,000
Cost of Goods Sold 133,650
Direct Labor 111,600
Direct Material 84,200
18. Assume, for this question only, actual overhead is P98,700 and applied
overhead is P93,250. Manufacturing overhead is:
a overapplied by P12,900.
.
b underapplied by P18,350.
.
c overapplied by P5,450.
.
d underapplied by P5,450.
.
19. The records of Phoenix Corporation revealed the following data for the
current year.
Work in Process P 73,150
Finished Goods 115,000
Cost of Goods Sold 133,650
Direct Labor 111,600
Direct Material 84,200
Assume that Phoenix has overapplied overhead of P25,000 and that this
amount is material. What is the balance in Cost of Goods Sold after the
overapplied overhead is closed?
a P123,267
.
b P144,033
.
c P158,650
.
d P108,650
.
20. The Mason Corporation budgeted overhead at P240,000 for the period for
Department A based on a budgeted volume of 60,000 direct labor hours.
At the end of the period, the factory overhead control account for
Department A had a debit balance of P260,000; actual direct labor hours
were 63,000. What was the under- or over applied factory overhead for
the period?
a P12,000 overapplied
.
b P 8,000 overapplied
.
c P 8,000 underapplied
.
d P12,000 underapplied
.
21. Meger Manufacturing uses the direct labor cost method for applying
factory overhead to production. The budgeted direct labor cost and factory
overhead for the previous fiscal year were P1,000,000 and P800,000,
respectively. Actual direct labor cost and factory overhead were
P1,100,000 and P825,000, respectively.
What is the amount of under- or overapplied factory overhead?
a P25,000 overapplied
.
b P55,000 overapplied
.
c P80,000 overapplied
.
d P50,000 underapplied
.
22. Alana's Clothing Store sells jeans. During January 2014, its inventory records for
one brand of designer jeans were as follows:
Beginning 10 @ P 20 P
Inventory .................... pairs = 200
January 6 4 @ 25 = 100
Purchase ..................... pairs
January 10 5
Sale ........................ pairs
January 15 7 @ 30 = 210
Purchase .................... pairs
January 20 10
Sale ........................ pairs
January 25 4 @ 30 = 120
Purchase .................... pairs
22. See information for Alana's Clothing Store above. Using this information,
periodic FIFO cost of goods sold is
a P330.
.
b P300.
.
c P430.
.
d P250.
.
23. Alana's Clothing Store sells jeans. During January 2014, its inventory records for
one brand of designer jeans were as follows:
Beginning 10 @ P 20 P
Inventory ................... pairs = 200
January 6 4 @ 25 = 100
Purchase ..................... pairs
January 10 5
Sale ........................ pairs
January 15 7 @ 30 = 210
Purchase .................... pairs
January 20 10
Sale ........................ pairs
January 25 4 @ 30 = 120
Purchase .................... pairs
Using this information, the cost of goods sold using the average cost
method is
a P378.
.
b P358.
.
c P265.
.
d P236.
.
24. With LIFO, cost of goods sold is P195,000, and ending inventory is
P45,000. If FIFO ending inventory is P65,000, how much is FIFO cost of
goods sold?
a P215,000
.
b P195,000
.
c P175,000
.
d P65,000
.
25. Paper Depot is a wholesaler of office supplies. The activity for Model III
These are
calculators during August is shown below: financial
accountin
Balance/ g
Date Transaction Units Cost problems
August Inventory 2,000 P36.00
1 for
7 Purchase 3,000 37.20 inventorie
12 Sales 3,600 s. Are
21 Purchase 4,800 38.00 these not
22 Sales 3,800 supposed
29 Purchase 1,600 38.60 for
materials
If Paper Depot uses a FIFO periodic inventory system, the ending inventory?
inventory of Model III calculators at August 31 is reported as Issued not
sold dapat
a P150,080.
.
b P150,160.
.
c P152,288.
.
d P152,960.
.
26. Digipro Inc. is a wholesaler of photography equipment. The activity for Correct
the VTC cameras during July is shown below: me if I am
wrong.
Balance/ Referring
Date Transaction Units Cost to the
July 1 Inventory 2,000 P36.00 TOS, are
7 Purchase 3,000 37.00
these not
12 Sales 3,600
for
21 Purchase 5,000 37.88
22 Sales 3,800 equivalent
29 Purchase 1,600 38.11 productio
n
computati
If Digipro Inc. uses the average cost method to account for inventory, the on?
ending inventory of VTC cameras at July 31 is reported as
a P153,400.
.
b P156,912.
.
c P158,736.
.
d P159,464.
.
27. Which of the following procedures will usually be performed by the
auditor to actively determine obsolete inventory?
a Confirmation of inventory with customers.

.
b Footing the inventory subsidiary ledger.
.
c Tracing inventory ordered by the client to receiving reports.
.
d Analysis of inventory turnover and sales reports.
.
28. A perpetual inventory system is preferable to a periodic system if
adequately controlled and maintained because
a it requires that a full inventory count be taken at year-end by all

. warehouse employees.
b it allows management to calculate cost of goods sold at year end.
.
c it provides information to management about inventory that
. approaches real-time.
d it better controls the receipt of goods.
.
29. Robinson Company’s compensation scheme for its factory workers
provides a combined maximum guaranteed wage and a piece rate. Each
worker is paid P50 per piece with a minimum wage of P2,100 a week (6
work days). During the first week of May, the production department
submitted the following output:
Employee Units Produced

Mariel 55
Toni 40
Anne 38
Sam 48
Lucky 52
Angel 35
What amount of labor is charged to work in process?
a. P13,400
b. P14,050
c. P650
d. P550
30. Robinson Company’s compensation scheme for its factory workers Copy
provides a combined maximum guaranteed wage and a piece rate. Each paste the
worker is paid P50 per piece with a minimum wage of P2,100 a week (6 data here.
work days). During the first week of May, the production department
submitted the following output:
Employee Units Produced

Mariel 55
Toni 40
Anne 38
Sam 48
Lucky 52
Angel 35
What amount of labor is charged to manufacturing overhead?
a.P650
b. P13,400
c.P14,050
d. P550
31. The weekly time tickets indicate the following distribution of labor hours
for three factory workers who worked on a rush order.
HOU
RS
Indir
Job Job Job ect
01 02 03
Name Rate Reg OT Reg OT Reg OT
of per
worker hour
Carlo P43.75 9 5 13 5 15 - 3
Tin P37.5 18 - 15 - 2 5 5
Pamu P40.625 6 2 7 2 25 - 2
. What is the amount of direct labor charged to work in process?
a. P400
b. P5,420
c. P5,320
d. P4,500
32. The weekly time tickets indicate the following distribution of labor hours Copy
for three factory workers who worked on a rush order. paste the
data here.
HOU
RS
Indir
Job Job Job ect
01 02 03
Name Rate Reg OT Reg OT Reg OT
of per
worker hour
Carlo P43.75 9 5 13 5 15 - 3
Tin P37.5 18 - 15 - 2 5 5
Pamu P40.625 6 2 7 2 25 - 2
What is the amount of indirect labor charged to manufacturing overhead?

a.P400
b. P5,420
c.P5,320
d. P4,500
33. A plantwide overhead rate:
a.Provides less accurate computation of factory overhead than

departmental rates.
b. Provides more accurate computation of factory
overhead than departmental rates.
c.Provides the same accuracy of computation of factory overhead than
departmental rates.
d. Provides no accuracy of computation the same with
departmental rates.
34. The following information pertains to Utter Company:
Support Producing
Departme Departments
nts
Personnel Maintenance Fabrication Assembly
Budgeted
P40,000 P72,000 P140,000 P160,000
overhead
Direct labor
2,000 2,500 8,000 10,000
hours
Machine hours - - 12,000 8,000
Number of
4 5 15 25
employees
Utter Company does not divide costs into fixed and variable components.
Personnel costs are allocated based on the number of employees, and
maintenance costs are allocated based on machine hours.
Predetermined overhead rates for fabrication and assembly are based on direct
labor hours. (Round amounts to peso.)
If the direct method is used to allocate support department costs, the

predetermined overhead rate for the Fabrication Department (rounded to two
decimal places) would be
a P28.80.
.
b P5.40.
.
c P7.28.
.
d P24.78.
.
35. Staff Company allocates common Building Department costs to producing
departments (P1 and P2) based on space occupied, and it allocates
common Personnel Department costs based on the number of employees.
Space occupancy and employee data are as follows:
Building Personnel Dept. P1 Dept. P2

Space 2,000 ft. 10,000 ft. 120,000 ft. 70,000 ft.
occupied
Employees 6 10 80 50
If Staff Company uses the direct allocation method, the ratio representing the
portion of building costs allocated to Department P1 is
a 120,000/190,000.
.
b 2,000/120,000.
.
c 120,000/202,000.
.
d 190,000/202,000.
.
36. Savings Bank of Lawrence has three revenue-generating departments:
checking accounts, savings accounts, and loans. The bank also has three
service areas: administration, personnel, and accounting. The direct costs
per month and the interdepartmental service structure are shown below:
Percent
age of
Service
Used by
Dept. Costs Admin Pers Acctg Check Sav Loan
. . . . . s
Administratio
P40,000 - 10 10 40 20 20
n
Personnel 23,000 10 - 10 20 40 20
Accounting 30,000 10 10 - 20 20 40
Checking 41,000
Savings 25,000
Loans 16,000
The savings bank uses the sequential (step) method and the service departments
are allocated in the following order: administration, personnel, and accounting.
How much cost would be allocated to the loan area from the personnel
department using the sequential/step method? (Round to two decimal places.)
a P4,600.00
.
b P5,111.11
.
c P6,000.00
.
d P7,666.67
.
37. Plants Company has two support departments (S1 and S2) and two
producing departments (P1 and P2). Department S1 costs are allocated on
the basis of number of employees, and Department S2 costs are allocated
on the basis of space occupied expressed in square feet.
Data on direct department costs, number of employees, and space

occupied are as follows:
S1 S2 P1 P2
Direct dept. costs P7,500 P11,000 P27,500 P30,000
Number of
10 5 20 25
employees
Space occupied (sq.
1,000 500 1,500 2,500
ft.)
When Plants uses the sequential method, the support department allocated
first is the one with the highest percentage of interdepartmental service.
The choice of the department allocated first is determined by the
comparison of the following ratio for S1 and S2, respectively:
a 5/60; 1,000/5,500
.
b 5/50; 1,000/5,000
.
c 10/50; 1,000/5,000
.
d 10/55; 500/4,500
.
38. Plants Company has two support departments (S1 and S2) and two
producing departments (P1 and P2). Department S1 costs are allocated on
the basis of number of employees, and Department S2 costs are allocated
on the basis of space occupied expressed in square feet.
Data on direct department costs, number of employees, and space

occupied are as follows:
S1 S2 P1 P2
Direct dept. costs P7,500 P11,000 P27,500 P30,000
Number of
10 5 20 25
employees
Space occupied (sq.
1,000 500 1,500 2,500
ft.)
If Plants used the reciprocal method, the algebraic equation expressing the total
costs allocated from S1 is
a S1 = P7,500 + 0.10S2.
.
b S1 = P10,000 + 0.20S2.
.
c S1 = P7,500 + 0.20S2.
.
d S1 = P10,000 + 0.10S2.
.
39. Gray Enterprises has two support departments (S1 and S2) and two
producing departments (A and B). The distribution of services by the
support departments is as follows:
Services
Provided
to
Services Provided from S1 S2 A B
S1 - 8% 74% 18%
S2 21% - 47% 32%
Total department costs for the support and producing departments are as follows:
S1 P 58,000
S2 124,000
A 712,000
B 568,000
What is the amount of total cost for A?
a. P625,254
b. P836,746
c. P61,494
d. P41,868
40. Which of the following organizations would be most likely to use a job-
order costing system?
a the loan department of a bank

.
b the check clearing department of a bank
.
c a manufacturer of processed cheese food
.
d a manufacturer of video cassette tapes
.
41. When job-order costing is used, the primary focal point of cost
accumulation is the
a department.
.
b supervisor.
.
c item.
.
d job.
.
42. In a job-order costing system,
a standards cannot be used.

.
b an average cost per unit within a job cannot be computed.
.
c costs are accumulated by departments and averaged among all jobs.
.
d overhead is typically assigned to jobs on the basis of some cost
. driver.
43. What is the best cost accumulation procedure to use when many batches,
each differing as to product specifications, are produced?
a job-order
.
b process
.
c actual
.
d standard
.
44. Which of the following costing systems allows management to quickly
recognize materials, labor, and overhead variances and take measures to
correct them?
Actual Cost System Normal Cost System
a yes yes
.
b yes no
.
c no yes
.
d no no
.
45. Which of the following costing methods of valuation are acceptable in a

job-order costing system?
Actual Standard Actual Predetermined

Material Material Labor Overhead
Cost Cost Cost Cost
a yes yes no yes

.
b yes no yes no
.
c no yes yes yes
.
d yes yes yes yes
.
46. Job-order costing and process costing have which of the following
characteristics?
Job-order Costing Process Costing
a homogeneous products heterogeneous products

. and large quantities and small quantities
b homogeneous products heterogeneous products
. and small quantities and large quantities
c heterogeneous products homogeneous products
. and large quantities and large quantities
d heterogeneous products homogeneous products
. and small quantities and large quantities
47. Chapman Company uses a job-order costing system. At the beginning of
March, the company had two jobs in process with the following costs:
Direct Material Direct Labor Overhead

Job #456 P3,400 P510 P255
Job #461 1,100 289 ?
Chapman pays its workers P8.50 per hour and applies overhead on a direct
labor hour basis.
What is the overhead application rate per direct labor hour?
a P 0.50
.
b P 2.00
.
c P 4.25
.
d P30.00
.
48. Chapman Company Copy
paste the
Chapman Company uses a job-order costing system. At the beginning of data in
March, the company had two jobs in process with the following costs: No. 47
here.
Job #456 P3,400 P510 P255
Job #461 1,100 289 ?
labor hour basis.
Refer to Chapman Company. How much overhead was included in the

cost of Job #461 at the beginning of March?
a P 144.50
.
b P 153.00
.
c P2,200.00
.
d P2,456.50
.
49. Chapman Company uses a job-order costing system. At the beginning of Copy
March, the company had two jobs in process with the following costs: paste data
in No. 47
Job #456 P3,400 P510 P255
Job #461 1,100 289 ?
labor hour basis.
During March, Chapman’ employees worked on Job #649. At the end of

the month, P714 of overhead had been applied to this job. Total Work in
Process at the end of the month was P6,800 and all other jobs had a total
cost of P3,981. What amount of direct material is included in Job #649?
a P 677.00
.
b P1,391.00
.
c P2,142.00
.
d P4,658.00
.
50. Mayflower Corporation manufactures products on a job-order basis. The
job cost sheet for Job #656 shows the following for September:
Direct material P5,000

Direct labor (100 hours @ P7.25) P725
Machine hours incurred 40
Predetermined overhead rate per machine hour P26
At the end of September, what total cost appears on the job cost sheet for
Job #656?
a P5,725
.
b P5,765
.
c P6,765
.
d P8,325
.
51. Trinity Corporation manufactures products on a job-order basis. The job
cost sheet for Job #902 shows the following for June:
Direct material P6,000

Direct labor (110 hours @ P8.50) P935
Machine hours incurred 50
Predetermined overhead rate per machine hour P28
At the end of June, what total cost appears on the job cost sheet for Job
#902?
a P 6,935
.
b P 6,985
.
c P 8,335
.
d P10,015
.
52. In a cost of production report using process costing, transferred-in costs
are similar to the
a cost of material added at the beginning of production.

.
b conversion cost added during the period.
.
c cost transferred out to the next department.
.
d cost included in beginning inventory.
.
53. EUP calculations for standard process costing are the same as
a the EUP calculations for weighted average process costing.

.
b the EUP calculations for FIFO process costing.
.
c LIFO inventory costing for merchandise.
.
d the EUP calculations for LIFO process costing.
.
54. To compute equivalent units of production using the FIFO method of
process costing, work for the current period must be stated in units
a completed during the period and units in ending inventory.

.
b completed from beginning inventory, units started and completed
. during the period, and units partially completed in ending inventory.
c started during the period and units transferred out during the period.
.
d processed during the period and units completed during the period.
.
55. The primary difference between the FIFO and weighted average methods
of process costing is
a in the treatment of beginning Work in Process Inventory.

.
b in the treatment of current period production costs.
.
c in the treatment of spoiled units.
.
d none of the above.
.
56. Which of the following firms is least likely to use process costing?
a A yogurt manufacturer.
.
b A refiner of petroleum products.
.
c A computer manufacturer.
.
d A manufacturer of concrete products.
.
57. Process costing techniques should be used in assigning costs to products:
a If the product is manufactured on the basis of each order received.

.
b In all manufacturing situations.
.
c When production is only partially completed during the accounting
. period.
d If the product is composed of mass-produced homogeneous units.
.
58. Which of the following characteristics applies to process costing?
a Differentiated products are provided on a special order basis.

.
b Cost are accumulated by department.
.
c Cost are accumulated by jobs.
.
d Direct labor workers must keep detailed records as to the jobs on
. which they worked.
59. Characteristics that job order costing and process costing have in common
include all of the following except:
a The use of predetermined factory overhead rates.

.
b Each can be used by service firms.
.
c The costs of materials and labor are charged to the departments
. where they are incurred.
d The primary objective is to complete a unit cost for products.
.
60. Bartling Company transferred 5,500 units to Finished Goods Inventory
during October. On October 1, the company had 300 units on hand (40
percent complete as to both material and conversion costs). On October
31, the company had 800 units (10 percent complete as to material and 20
percent complete as to conversion costs). The number of units started and
completed during October was:
a 5,200.
.
b 5,380.
.
c 5,500.
.
d 6,300.
.
61. Daniels Company started 9,000 units in March. The company transferred
out 7,000 finished units and ended the period with 3,500 units that were 40
percent complete as to both material and conversion costs. Beginning
Work in Process Inventory units were
a 500.
.
b 600.
.
c 1,500.
.
d 2,000.
.
62. Lewis Company uses a weighted average process costing system. Material
is added at the start of production. Lewis Company started 13,000 units
into production and had 4,500 units in process at the start of the period that
were 60 percent complete as to conversion costs. If Lewis Company
transferred out 11,750 units, how many units were in ending Work in
Process Inventory?
a 1,250
.
b 3,000
.
c 3,500
.
d 5,750
.
63. Hogan Company uses a weighted average process costing system and
started 30,000 units this month. Hogan had 12,000 units that were 20
percent complete as to conversion costs in beginning Work in Process
Inventory and 3,000 units that were 40 percent complete as to conversion
costs in ending Work in Process Inventory. What are equivalent units for
conversion costs?
a 37,800
.
b 40,200
.
c 40,800
.
d 42,000
.
64. Riggs Company uses a FIFO process costing system. The company had
5,000 units that were 60 percent complete as to conversion costs at the
beginning of the month. The company started 22,000 units this period and
had 7,000 units in ending Work in Process Inventory that were 35 percent
complete as to conversion costs. What are equivalent units for material, if
material is added at the beginning of the process?
a 18,000
.
b 22,000
.
c 25,000
.
d 27,000
.
65. Duffy Company makes fabric-covered hatboxes. The company began July
with 500 boxes in process that were 100 percent complete as to cardboard,
80 percent complete as to cloth, and 60 percent complete as to conversion
costs. During the month, 3,300 boxes were started. On April 30, 350 boxes
were in process (100 percent complete as to cardboard, 70 percent
complete as to cloth, and 55 percent complete as to conversion costs).
Using the FIFO method, what are equivalent units for cloth?
a 3,295
.
b 3,395
.
c 3,450
.
d 3,595
.
66. A continuous loss
a occurs unevenly throughout a process.

.
b never occurs during the production process.
.
c always occurs at the same place in a production process.
.
d occurs evenly throughout the production process.
.
67. Which of the following would be considered a discrete loss in a production
process?
a adding the correct ingredients to make a bottle of ketchup

.
b putting the appropriate components together for a stereo
.
c adding the wrong components when assembling a stereo
.
d putting the appropriate pieces for a bike in the box
.
68. When the cost of lost units must be assigned, and those same units must be
included in an equivalent unit schedule, these units are considered
a normal and discrete.

.
b normal and continuous.
.
c abnormal and discrete.
.
d abnormal and continuous.
.
69. Normal spoilage units resulting from a continuous process
a are extended to the EUP schedule.

.
b result in a higher unit cost for the good units produced.
.
c result in a loss being incurred.
.
d cause estimated overhead to increase.
.
70. Painter Corporation has the following information for the current month:
Units started 100,000 units

Beginning Work in Process: (35% 20,000 units
complete)
Normal spoilage (discrete) 3,500 units
Abnormal spoilage 5,000 units
Ending Work in Process: (70% complete) 14,500 units
Transferred out 97,000 units
Beginning Work in Process Costs:
Material P15,000
Conversion 10,000
All materials are added at the start of the production process. Painter Corporation
inspects goods at 75 percent completion as to conversion.
What are equivalent units of production for material, assuming FIFO?
a 100,000
.
b 96,500
.
c 95,000
.
d 120,000
.

complete)
Material P15,000
Conversion 10,000
What are equivalent units of production for conversion costs, assuming

FIFO?
a 108,900
.
b 103,900
.
c 108,650
.
d 106,525
.
72. Painter Corporation has the following information for the current month: Copy
paste data
Units started 100,000 units in No. 71
complete)
Material P15,000
Conversion 10,000
Assume that the costs per EUP for material and conversion are P1.00 and
P1.50, respectively. What is the amount of the period cost for July using
FIFO?
a P0
.
b P9,375
.
c P10,625
.
d P12,500
.

complete)
Material P15,000
Conversion 10,000
Assume that the costs per EUP for material and conversion are P1.00 and
P1.50, respectively. Using FIFO, what is the total cost assigned to the
transferred-out units (rounded to the nearest peso)?
a P245,750
.
b P244,438
.
c P237,000
.
d P224,938
.
74. Industrial Solutions Company produces three products from the same
process that has joint processing costs of P4,100. Products R, S, and T are
produced in the following quantities: 250 gallons, 400 gallons, and 750
gallons. Industrial Solutions Company also incurred advertising costs of
P60,000. The ad was used to run sales for all three products. The three
products occupy floor space in the following ratio: 5:4:9. (Round all
answers to the nearest peso.)
Using gallons as the physical measurement, what amount of joint

processing cost is allocated to Product R?
a P2,196
.
b P1,171
.
c P1,367
.
d P 732
.
75. Industrial Solutions Company produces three products from the same Copy
process that has joint processing costs of P4,100. Products R, S, and T are paste data

processing cost is allocated to Product S?
a P2,196
.
b P1,171
.
c P1,367
.
d P 732
.
76. Industrial Solutions Company produces three products from the same Copy
process that has joint processing costs of P4,100. Products R, S, and T are paste data
produced in the following quantities: 250 gallons, 400 gallons, and 750 here

processing cost is allocated to Product T?
a P2,196
.
b P732
.
c P1,367
.
d P1,171
.
77. Industrial Solutions Company produces three products from the same Copy past
process that has joint processing costs of P4,100. Products R, S, and T are data here.
Assume that Industrial Solutions chooses to allocate its advertising cost

among the three products. What amount of advertising cost is allocated to
Product R using the floor space ratio?
a P30,000
.
b P17,806
.
c P1,139
.
d P16,667
.
78. By-products are
a items resulting from a joint process that have no further value.

.
b not sufficient alone, in terms of sales value, for management to
. justify undertaking the joint process.
c also known as scrap.
.
d the primary reason management undertook the production process.
.
79. Which of the following statements is true regarding by-products or scrap?
a Process costing is the only method that should result in by-products

. or scrap.
b Job order costing systems will never have by-products or scrap.
.
c Job order costing systems may have instances where by-products or
. scrap result from the production process.
d Process costing will never have by-products or scrap from the
. production process.
80. Which of the following has sales value?
By-products Waste
a no no
.
b yes no
.
c yes yes
.
d no yes
.
81. Under an acceptable method of costing by-products, inventory costs of the

by-product are based on the portion of the joint production cost allocated
to the by-product
a but any subsequent processing cost is debited to the cost of the main
. product.
b but any subsequent processing cost is debited to revenue of the main
. product.
c plus any subsequent processing cost.
.
d minus any subsequent processing cost.
.
82. Ryan Company
Ryan Company manufactures products X and Y from a joint process that

also yields a by-product, Z. Revenue from sales of Z is treated as a
reduction of joint costs. Additional information is as follows:
Products
X Y Z Total
Units produced 20,000 20,000 10,000 50,000
Joint costs ? ? ? P262,000
Sales value at
split-off P300,000 P150,000 P10,000 P460,000
Joint costs were allocated using the sales value at split-off approach.
82. The joint costs allocated to product X were
a P 84,000
.
b P100,800.
.
c P150,000.
.
d P168,000.
.
83. Ryan Company manufactures products X and Y from a joint process that Copy
also yields a by-product, Z. Revenue from sales of Z is treated as a paste data
reduction of joint costs. Additional information is as follows: here
Products
X Y Z Total
Units produced 20,000 20,000 10,000 50,000
Joint costs ? ? ? P262,000
Sales value at
split-off P300,000 P150,000 P10,000 P460,000
Joint costs were allocated using the sales value at split-off approach.
The joint costs allocated to product Y were
a P 84,000
.
b P100,800.
.
c P150,000.
.
d P168,000.
.
84. Commodore Company uses a standard cost system for its production
process and applies overhead based on direct labor hours. The following
information is available for September when Commodore produced 5,000
units:
Standard:
DLH per unit 3.00
Variable overhead per DLH P1.80
Fixed overhead per DLH P3.25
Budgeted variable overhead P27,250
Budgeted fixed overhead P49,500
Actual:
Direct labor hours 16,000
Variable overhead P31,325
Fixed overhead P49,750
84. Refer to Commodore Company. Using the one-variance approach, what is

the total overhead variance?
a P 275 U
.
b P 1,000 U
.
c P 4,325 U
.
d P 5,325 U
.
85. Commodore Company
Commodore Company uses a standard cost system for its production

process and applies overhead based on direct labor hours. The following
information is available for September when Commodore produced 5,000
units:
Standard:
DLH per unit 3.00
Variable overhead per DLH P1.80
Fixed overhead per DLH P3.25
Budgeted variable overhead P27,250
Budgeted fixed overhead P49,500
Actual:
Direct labor hours 16,000
Variable overhead P31,325
Fixed overhead P49,750
Refer to Commodore Company. Using the two-variance approach, what is

the controllable variance?
a P4,075 U
.
b P4,075 F
.
c P4,575 U
.
d P4,575 F
.
86. A company has a favorable variable overhead spending variance, an
unfavorable variable overhead efficiency variance, and underapplied
variable overhead at the end of a period. The journal entry to record these
variances and close the variable overhead control account will show which
of the following?
VOH spending VOH efficiency

variance variance VMOH
a debit credit credit

.
b credit debit credit
.
c debit credit debit
.
d credit debit debit
.
87. Assume that SQ = Standard Quantity, SP = Standard Price, AQ = Actual
Quantity, and AP = Actual Price. The correct entry along with the equation
to record the issuance and usage of materials, assuming a favorable
materials usage variance, is as follows
a Work in Process SQ SP
Materials Usage Variance (AQ SQ)SP
.
Materials AQ SP
b Work in Process SQ SP
. Materials AQ SP
c Work in Process AQ AP
.
Materials AQ SP
d Work in Process AQ AP
. Materials AQ SP
e None of these.
.
88. During September, a small roofing company purchased 500 bundles of a
certain type of shingle at a price of P35 per bundle, P5 less than the
standard price. Its standard quantity of this type of shingles is 550 bundles.
What is the journal entry to record the purchase of materials?
a Materials 20,000
Materials Price Variance 2,500
.
Accounts Payable 17,500
b Materials 20,000
. Accounts Payable 22,500
c Materials 17,500
.
Accounts Payable 15,000
d Materials 20,000
. Accounts Payable 17,250
89. During June, Cisco Company produced 15,000 chainsaw blades. The
standard quantity of material allowed per unit was 1.5 pounds of steel per
blade at a standard cost of P5 per pound. The actual purchase price was
P6.25 per pound. Cisco determined that it had a favorable materials usage
variance of P2,500 for June. What is the journal entry to record the
issuance and usage of materials?
a Work in Process 112,500

Materials Usage Variance 2,500
.
Materials 110,000
b Work in Process 110,000
. Materials 112,000
c Work in Process 112,500
.
Materials 115,000
d Work in Process 140,625
. Materials 138,125
90. Hillandale Company manufactures overalls. During the year, it
manufactured 125,000 overalls, using 2.9 hours of direct labor at a rate of
P6.25 per hour. The materials and labor standards for manufacturing the
overalls are as follows:
Direct materials (5 yards of denim @ P2 per yard) P10

Direct labor (3 hours @ P6 per hour) 18
It took Hillandale 600,000 yards at P1.95 per yard to make the 125,000
overalls.
90. . What is Hillandale's labor rate variance?
a P90,625 F
.
b P93,750 F
.
c P90,625 U
.
d P93,750 U
.
91. Hillandale Company manufactures overalls. During the year, it Copy
manufactured 125,000 overalls, using 2.9 hours of direct labor at a rate of paste data
P6.25 per hour. The materials and labor standards for manufacturing the here.
overalls are as follows:
Direct materials (5 yards of denim @ P2 per yard) P10

Direct labor (3 hours @ P6 per hour) 18
It took Hillandale 600,000 yards at P1.95 per yard to make the 125,000
overalls.
What is Hillandale's labor efficiency variance?
a P75,000 U
.
b P78,125 F
.
c P75,000 F
.
d P78,125 U
.
92. Rizzo Manufacturing produces two types of cameras: 35mm and digital.
The cameras are produced using one continuous process. Four activities
have been identified: machining, setups, receiving, and packing. Resource
drivers have been used to assign costs to each activity. The overhead
activities, their costs, and the other related data are as follows:
Product Machine Setups Receiving Packing

Hours Orders Orders
35mm 10,000 100 200 400
Digital 10,000 250 800 2,000
Costs P60,000 P40,000 P8,000 P24,000
92. Calculate the total overhead assigned to the 35mm cameras using only
machine hours to calculate a plantwide rate.
a P132,000
.
b P72,000
.
c P60,000
.
d P66,000
.
93. Rizzo Manufacturing produces two types of cameras: 35mm and digital. Copy
The cameras are produced using one continuous process. Four activities paste data

Hours Orders Orders
35mm 10,000 100 200 400
Digital 10,000 250 800 2,000
Costs P60,000 P40,000 P8,000 P24,000
Calculate a consumption ratio for setups on the digital cameras.
a 0.688
.
b 0.730
.
c 0.700
.
d 0.714
.
94. Rizzo Manufacturing produces two types of cameras: 35mm and digital.

Hours Orders Orders
35mm 10,000 100 200 400
Digital 10,000 250 800 2,000
Costs P60,000 P40,000 P8,000 P24,000
Using an activity rate for receiving based on receiving orders, assign
receiving costs to the 35mm camera.
a P1,800
.
b P2,000
.
c P1,600
.
d P1,200
.
95. Figure 7-5.
Rizzo Manufacturing produces two types of cameras: 35mm and digital.

Hours Orders Orders
35mm 10,000 100 200 400
Digital 10,000 250 800 2,000
Costs P60,000 P40,000 P8,000 P24,000
Refer to Figure 7-5. Calculate an activity rate for packing based on

packing orders
a P9.00 per packing order

.
b P10.00 per packing order
.
c P8.00 per packing order
.
d P60.00 per packing order
.
96. A factory produces 124,000 televisions per quarter. A total of 8,000
production hours are used within the factory per quarter. Compute the
velocity in units per hour.
a 16 units per hour

.
b 15 units per hour
.
c 15.5 units per hour
.
d 18 units per hour
.
97. The projected sales price for a new product (which is still in the
development stage of the product life cycle) is P50. The company has
estimated the life-cycle cost to be P30 and the first-year cost to be P60. On
this type of product, the company requires a P12 per unit profit. What is
the target cost of the new product?
a P30
.
b P38
.
c P42
.
d P60
.
98. The projected sales price for a new product (which is still in the
development stage of the product life cycle) is P60. The company has
estimated the life-cycle cost to be P30 and the first-year cost to be P60. On
this type of product, the company requires a P12 per unit profit. What is
the target cost of the new product?
a P30
.
b P38
.
c P42
.
d P48
.
99. _______________ is a predetermined amount of defective product that a
company permits to be sold.
a Acceptable quality level

.
b Taguchi quality loss function
.
c Zero defects
.
d Kaizen
.
100. Which of the following is NOT a dimension of quality?
a performance
.
b durability
.
c reliability
.
d All of these are dimensions of quality.
.
- - - End - - -

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School: COC

PEN Code: ACC 011

Item Questions and Answers Comments

Management accounting Financial accounting

a Financial accounting must follow GAAP.

a Merchandise Inventory, Supplies Inventory, and Finished Goods

a as expenditures are made.

Calculate the total utility cost for the month of April.

9. A responsibility center in which a manager is responsible only for sales is

1. The receiving clerk prepares a receiving report.

In which order would these events typically happen?

a Modified wage plan.

14. What is the labor efficiency variance?

Actual direct labor hours 5,600

The labor efficiency variance is:

Straight-line Factory Units-of-production

Which of the following statements is true?

a Only statement I is an example of a semivariable cost.

Work in Process P 73,150

What is the amount of under- or overapplied factory overhead?

a Confirmation of inventory with customers.

a it requires that a full inventory count be taken at year-end by all

Employee Units Produced

Employee Units Produced

What amount of labor is charged to manufacturing overhead?

. What is the amount of direct labor charged to work in process?

What is the amount of indirect labor charged to manufacturing overhead?

33. A plantwide overhead rate:

a.Provides less accurate computation of factory overhead than

34. The following information pertains to Utter Company:

If the direct method is used to allocate support department costs, the

Building Personnel Dept. P1 Dept. P2

Data on direct department costs, number of employees, and space

Data on direct department costs, number of employees, and space

What is the amount of total cost for A?

a the loan department of a bank

a standards cannot be used.

Actual Cost System Normal Cost System

45. Which of the following costing methods of valuation are acceptable in a

Actual Standard Actual Predetermined

a yes yes no yes

Job-order Costing Process Costing

a homogeneous products heterogeneous products

Direct Material Direct Labor Overhead

Refer to Chapman Company. How much overhead was included in the

During March, Chapman’ employees worked on Job #649. At the end of

Direct material P5,000

Direct material P6,000

a cost of material added at the beginning of production.

a the EUP calculations for weighted average process costing.

a completed during the period and units in ending inventory.

a in the treatment of beginning Work in Process Inventory.

a If the product is manufactured on the basis of each order received.

a Differentiated products are provided on a special order basis.

a The use of predetermined factory overhead rates.

a occurs unevenly throughout a process.

a adding the correct ingredients to make a bottle of ketchup

a normal and discrete.

a are extended to the EUP schedule.

Units started 100,000 units

What are equivalent units of production for material, assuming FIFO?

Units started 100,000 units

What are equivalent units of production for conversion costs, assuming

Units started 100,000 units