QUEZON CITY UNIVERSITY

MID-TERM EXAMINATION
COST ACCOUNTING
SY 2019-2020

Part 1: Theories (1pt each)

1. Which of the following is least likely to be an objective of a cost accounting system?

a. Product costing and inventory valuation c. Sales and commission determination

b. Department efficiency d. Income determination

2. In cost terminology, conversion costs consists of:

a. Direct labor and indirect labor c. Direct labor and factory overhead
b. Direct labor and direct materials d. Indirect labor and variable factory overhead

3. Which of the following work follow were materials and supplies needed for manufacturing are ordered, received and stored.
Direct and indirect factory labor and services are rendered.

a. Procurement c. Warehousing
b. Production d. Selling

4. Which of the following work follow were finished goods are moved from factory to warehouse to be held until they are sold?

a. Procurement c. Warehousing
b. Production d. Selling

5. Under this system, direct materials and direct labor and factory overhead costs are determined as they occur simultaneously
with the manufacturing operation but the total of these costs is known ony after the operation has been completed.

a. Standard cost system c. Normal cost system

b. Actual cost system d. Job order cost system

6. Many firms use two overhead accounts: factory overhead control and factory overhead applied. During the period, which
account receives numerous debits and credits?

a. Factory overhead applied c. Both

b. Factory overhead control d. Neither

7. `In job-order cost system, the use of direct materials previously purchased usually is recorded as an increase in:

a. Work-in-process account c. Factory overhead applied

b. Factory overhead account d. Materials account

8. Which of the following items is not included in (charged to) factory overhead?

a. Factory depreciation and supplies c. Cost of marketing departments

b. Costs of service departments d. Cost of maintenance departments

9. To check the accuracy of hours worked, one would ordinarily compare time cards with:

a. Employee earning records c. Job time tickets

b. Personnel records d. Payroll journal

10. The document that is used to secure information as to the type of worked performed is the:

a. Labor voucher c. Clock card

b. Time ticket d. Requisition report

11. An example of labor-related costs is:

a. bonus pay b. factory labor

 c. fringe benefits d. operating expense

12. Costing method that is no longer permitted by Inventory standard is:

a. FIFO c. Moving average

b. LIFO d. Specific identification

13. Under what costing method are the materials on hand considered to be from the first ones purchased?
a. FIFO
b. LIFO
c. Moving average
d. Specific identification
14. A company services office equipment. Some customers bring their equipment to the company’s service shop; other customers
prefer to have the company’s service personnel to come to their offices to repair their equipment. The most appropriate costing
method for the company is?

a. Job-order cost system c. A process costing system

b. An activity-based costing system d. An operation costing system

15. All costs related to manufacturing function in a company are

a. Prime cost
b. Direct cost
c. Product cost
d. Conversion cost
 16. The wages of the factory janitorial staff should be classified as:

a. Factory overhead cost c. Period cost

b. Direct labor cost d. Prime cost

17. In retailing enterprise, the statement of comprehensive income includes cost of goods sold. Cost of goods sold is, in effect
purchases adjusted for change in inventory. In a manufacturing company, the purchases account is replaced by which
account?

a. Inventory c. Finished goods

b. Cost of goods sold d. Cost of goods manufactured

18. In job-order costing, the basic document to accumulate the cost of each order is the

a. Invoice c. Requisition order

b. Purchase order d. Job-cost sheet

19. Companies characterized by the production of heterogeneous products will most likely use which of the following methods for
the purpose of averaging costs and providing management with unit cost data?

a. Process costing c. Direct costing

b. Job-order costing d. Absorption costing

20. A new advertising agency serves a wide range of clients including manufacturers, restaurants, service business, department
stores, and other retail establishments. The accounting system the advertising agency has most likely adopted for its record
keeping in accumulating costs is:

a. Job-order costing c. Operation costing

b. Process costing d. Service costing

Part 2: Problems (2pts each)

Use the following data in answering 21 to 23:

Roman Company uses normal costing. Its job costing system has two direct-cost categories (direct materials and direct labor) and one
indirect cost category (manufacturing overhead). The following information is obtained from the company’s records for 2018:
 Total manufacturing costs, P8,000,000
 Cost of finished goods manufactured, P7,920,000
 Manufacturing overhead applied, P3,600,000
 Manufacturing overhead was applied to production at a rate of 200% of direct labor costs.
 The peso amount of work in process inventory on January 1, 2014 was P320,000

21. What is the total direct labor cost in 2018?

a. P1,800,000 c. P1,700,000
b. P1,500,000 d. P3,600,000

22. What is the total cost of direct materials used in 2018?

a. P2,600,000 c. P1,800,000
b. P2,500,000 d. P3,600,000

23. What is the peso amount of work in process inventory on December 31, 2018?
a. P400,000
b. P800,000
c. P500,000
d. P320,000

Use the following data in answering 24 to 31:

Sweet Company use normal costing in its job order costing system. Partially completed T-account and additional information for the
year 2018 follows:
 Materials Work in Process
1/1: 30,000 380,000 1/1: 20,000
400,000 360,000

Finished Goods Overhead Control Account

1/1: 10,000 900,000 540,000
940,000
Additional information as follows:

 Direct labor cost rate was P15 per hour.

 Manufacturing overhead rate was applied at P20 per direct labor hour
 During the year, sales revenue were P1,090,000 and marketing expense were P140,000

24. What was the amount of direct materials issued to production during 2018?

a. P350,000 c. P360,000
b. P380,000 d. P390,000

25. What was the amount of manufacturing overhead applied to jobs during 2018?

a. P450,000 c. P460,000
b. P480,000 d. P360,000

26. What was the cost of jobs completed during 2018?

a. P940,000 c. P950,000
b. P900,000 d. P930,000

27. What was the balance of work in process inventory on December 31, 2018?

a. P300,000 c. P310,000
b. P250,000 d. P320,000

28. What was the cost of goods sold before adjustment for over or underapplied overhead?

a. P910,000 c. P850,000
b. P900,000 d. P950,000

29. What was the under-overapplied manufacturing overhead in 2018?

a. P50,000 c. P70,000
b. P60,000 d. P80,000

30. What is the operating income (loss) for 2018 assuming the under or overapplied is closed to cost of goods sold?

a. (P10,000) c. (P20,000)
b. P10,000 d. P20,000

31. What is the operating income (loss) for 2018, assuming the under or overapplied overhead is prorated to Work in Process,
Finished Goods and Cost of Goods sold?

a. (P6,800) c. P6,800
b. (P8,600) d. P8,600

Use the following data in answering 32 to 35:

Settler Company sells a number of products to many restaurants in the area. One product is a special meat cutter with a disposable
blade. Blades are sold in a package of 12 at P20 per package. It has been determined that the demand for the replacement blades is at
a constant rate of P2,000 packages per month. The packages cost the company P10 each from the manufacturer and require a three-
day lead time from date of order to date of delivery. The ordering cost is P1.20 per order, and carrying cost is 10% per year. The
company uses the economic order quantity formula.

32. What is the economic order quantity?

a. P240 c. P200
b. P100 d. P120

33. What is the number of orders needed per year?

a. 120 c. 100
b. 240 d. 200

34. What is the total cost of ordering and carrying of blades for the year?

a. P120 c. P200
b. P240 d. P100

35. What is the number of days until the next order should be placed, assuming that there is no safety stock and that present
inventory level is 400 packages. (360 days = 1 year)
a. 1 day
b. 1.3 days
c. 3 days
d. 3.6 days
36. Jess Company has a plant that manufactures transistor radios. One component is an XT transistor. Expected demand is for
5,200 of these transistors in March 2018. Jess estimates the ordering cost per purchase order to be P250. The carrying cost
for two units of XT in stock is P10. What is the EOQ for the XT transistor?

a. P354 c. P355
b. P721 d. P722
Use the following information in answering 37 to 40
The management of Welcome Hotel is interested in analysis of the fixed and variable costs in the electricity used relative to hotel
occupancy. The following data have been gathered from the records for year:

Guest Electricity Cost

Month Days (P)
January 1,000 400
February 1,500 500
March 2,500 500
April 3,000 700
May 2,500 600
June 4,500 800
July 6,500 1,000
August 6,000 900
Septembe
r 5,500 900
October 3,000 700
November 2,500 600
December 3,500 800
TOTAL 42,000 8,400

37. What is the amount of fixed cost per month using least square regression analysis?

a. P700 c. P345
b. P355 d. P115

38. What is the amount of variable cost rate using least square regression analysis?

a. P0.1015 c. P0.1091
b. P0.1020 d. P0.1100

39. What is the amount of fixed cost per month using Hi-low method?

a. P709 c. P600
b. P345 d. P291

40. What is the amount of variable cost rate using Hi-low method?

a. P0.1015 c. P0.1000
b. P0.1091 d. None of the choices

Use the following information in answering 41 to 46

Cost data on the activities of Columbia Manufacturing for May are as follows:
April 30 May 31
Account Balances:
Finished Goods 45,602 ?
Work in Process 60,420 52,800
Direct Material 10,250 12,700
Indirect Material 5,600 5,180

Transactions in May:
Supplies purchaseed 16,500
Cost of goods sold 280,000
Raw materials purchased 105,000
Indirect Labor 22,000
Factory hear, light, and power 11,220
Factory rent 18,500
Factory insurance 2,000
Sales commission 48,000
Administrative expenses 25,000
Production supervisor's salary 5,000

Additional Information as follows:

4,250 direct labor hour were worked in May. Laborers work a 40-hour work week and are paid P22 per hour for the regular shift and
time and a half for each hour of overtime. Of the 4,250 hours, 250 hours were worked in overtime in May. The company treats the
overtime premium as part of overhead.

41. What is the amount if raw materials used?

a. P197,500 c. P102,550
b. P154,000 d. P160,000
 42. What is the amount of direct labor to be reported?

a. P22,000 c. P16,920
b. P93,500 d. None of the choices

43. What is the amount of total overhead?

a. P78,930 c. P70,000
b. P78,000 d. None of the choices

44. How much is the total manufacturing cost?

a. P60,000 c. P282,060
b. P52,800 d. P334,860

45. How much is the cost of goods manufactured?

a. P280,000 c. P45,602
b. P282,060 d. P334,860

46. How much is the ending balance of finished goods?

a. P45,602 c. P52,800
b. P47,662 d. None of the choices

Use the following information in answering 47 to 50

Valleydale Company incurred the following costs during the month: direct labor, P120,000, overhead, P108,000; and direct material
purchases, P160,000. Inventories were costed as follows:

Beginnin
g Ending
Finished Goods 27,000 26,000
Work in Process 61,500 57,500
Direct Materials 37,500 43,500

47. How much are the direct materials used?

a. P154,000
b. P197,500
c. P160,000
d. None of the choices
48. How much is the prime cost?
a. P154,000
b. P120,000
c. P108,000
d. None of the choices
49. How much is the cost of goods manufactured?
a. P443,500
b. P413,000
c. P387,000
d. P386,000
50. How much is the cost of goods sold?
a. P443,500
b. P413,000
c. P387,000
d. P386,000