1.

An example of a cost that is irrelevant to a future decision is a(n):

Ans. Sunk Cost

2. Which of the following statements about internal reports is not true?

a. The content of internal reports may extend beyond the double-entry accounting system
b. Most internal reports are summarized rather than detailed
c. Internal reports may discuss prospective events.
d. Internal reports may show all amounts at market values.

3. Process costing is used by companies making one-of-a-kind products.

Ans. False

4. Management accounting information is generally prepared

Ans. Managers

5. Management accountants would not

a. assist in budget planning
b. be concerned with the impact of cost and volume on profits
c. determine cost behavior
d. prepare reports primarily for external users.

6. The financial statements of Minatozaki Company included these items:

Variable factory overhead costs P155000
Marketing costs P160,000
Direct labor cost P245,000
Administrative costs P145,000
Direct materials used P285,000
Fixed factory overhead costs P175,000
Compute the inventoriable cost. Ans. 860000

7. Which of the following statements about cost accounting is not true?

a. Cost accounting is not important to any company
 b. Cost accounting provides product cost information to internal parties such as managers
for planning and controlling
c. Is the intersection between financial and management accounting
d. Information generated by cost accounting is used by both financial and managerial
accounting.

8. Internal reports are generally

a. detailed
b. unreliable
c. aggregated
d. regulated

9. Which of the following is an example of direct materials: (Desk Manufacturing Company)

a. Sandpaper
b. Salary of employee who paints desk
c. Salary of factory supervisor
d. Wood

10. Controlling is the process of determining whether planned goals are being met.
Ans. True

11. When the number of units manufactured increases, the most significant change in average
unit cost will be reflected as
a. an increase in the non variable element
b. a decrease in the variable element
c. an increase in the variable element
d. an increase in the semi variable element
e. a decrease in the non variable element

12. A factory overhead cost:

a. is a prime cost
b. can be a variable cost or a fixed cost
c. can only be a fixed cost
 d. includes all factory labor
e. is a direct cost

13. All of the following are examples of nonfinancial performance measures except:
a. number of days on schedule
b. the number of defective units produced
c. the gross margin on a product line income statement
d. weight of scrap material produced
e. hours of machine downtime

14. Within a relevant range, the amount of fixed cost per unit:
a. remains constant in total
b. increases as production decreases on a per‑unit basis
c. differs at each production level on a per‑unit basis
d. all of the above
e. decreases as production increases on a per‑unit basis

15. Determining the unit cost of manufacturing a product is an output of financial accounting.
Ans. False

1st Examination
1. The financial statements of Daenerys Company included these items:
Marketing costs P160,000
Direct labor cost P490,000
Administrative costs P290,000
Direct materials used P570,000
Fixed factory overhead costs P350,000
Variable factory overhead costs P310,000
 Ans. 1060000 (Forgot to copy the question, basta something like conversion cost).

2. The following statement that best describes a fixed cost is:

Ans. It decreases on a per-unit basis as production increases

3. Prime cost and conversion cost share what common element of total cost?
Ans. Direct Labor

4. The professional certification developed by the IMA indicating professional competence in the
management accounting field is the
Ans. CMA

5. The financial statements of Daenerys Company included these items:

Marketing costs P160,000

Direct labor cost P490,000
Administrative costs P290,000
Direct materials used P570,000
Fixed factory overhead costs P350,000
Variable factory overhead costs P310,000
Ans. 1720000 (Forgot to copy the question. Something like manufacturing cost)

6. Salaries of the security guard for a small plant are an example of:
Ans. Indirect Labor, Fixed Factory Overhead

7. The department that uses pertinent cost data to determine products that are most profitable and
sales policies is:
Ans. Marketing

8. A manager that is establishing objectives is performing a management function?

Ans. Planning

9. The measurement of performance and the control of costs is aided the most by:
Ans. Budgets and Standards
10. Which of the following statements about internal reports is not true?
Ans. Most internal reports are summarized rather than detailed

11. Financial accounting information is used for reporting to

Ans. External Parties

12. The financial statements of Daenerys Company included these items:

Marketing costs P160,000

Direct labor cost P490,000
Administrative costs P290,000
Direct materials used P570,000
Fixed factory overhead costs P350,000
Variable factory overhead costs P310,000
Ans. 1150000 (Forgot to copy the question.)

13. The term "relevant range" as used in cost accounting means the range over which:
Ans. cost relationships are valid

14. A type of employee whose wages are not a component of indirect labor is a(n):
Ans. Assembler

15. A typical marketing expense is

Ans. Freight Out

16. Which of the following is not a management function?

Ans. Constraining

17. An example of a cost that is irrelevant to a future decision is a(n):

Ans. Sunk Cost

18. The financial statements of Daenerys Company included these items:

Marketing costs P160,000

 Direct labor cost P490,000
Administrative costs P290,000
Direct materials used P570,000
Fixed factory overhead costs P350,000
Variable factory overhead costs P310,000
Ans. 450000 (Forgot the question. Something like Operating Cost)

19. Determination of per Unit Total Costs. The estimated unit costs for Hoteling Industries,
when operating at a production and sales level of 10,000 units, are as follows:

Cost Item Estimated Unit Cost

Direct materials....................................................15
Direct labor............................................................10
Variable factory overhead.....................................8
Fixed factory overhead..........................................5
Variable marketing.................................................4
Fixed marketing......................................................3

Ans. 23

20. Which of the following statements is/are true?

I. Reports prepared in financial accounting are general-purpose reports, whereas reports

prepared in managerial accounting are usually special-purpose reports.
II. Determining the unit cost of manufacturing a product is an output of financial accounting.
III. Cost accounting procedures help management in gathering the data needed to determine
product costs and thus generate meaningful financial statements and other reports.

Ans. Statement 1 and 3

21. Wages paid to factory machine operators of a manufacturing plant are an element of:
Ans. Both Prime and Conversion Cost

22. The term "variable costs" refers to:

Ans. All costs whose total amounts change in proportion to changes in activity within a
relevant range
23. The term "conversion costs" refers to:
Ans. The sum of direct labor costs and all factory overhead costs

24. Which of the following statements is/are false:

I. Management accounting applies to all forms of business organizations.

II. Controlling is the process of determining whether planned goals are being met.
III. Managerial accounting information generally pertains to an entity as a whole and is
highly aggregated.

Ans. Statement 1 and 2

25. Direct materials and direct labor are considered to be:

Ans. Prime Cost

2nd Examination

1.Budgeting plays an important role in influencing individual and group behavior at all of the
following stages of the management process, except:

a. setting goals
b. computing bonuses
c. motivating desired performance
d. suggesting when corrective action should be taken
e. evaluating performance

2. A cost accounting information system necessarily should accomplish all of the following
except:

a. be tailored to give the most efficient blend of sophistication and simplicity

b. reflect the division of authority so that individual managers can be held accountable
c. focus management's attention
 d. provide management with information that facilitates prompt identification of activities
needing attention
e. be more sophisticated than is required by legal, regulatory, and contractual requirements

3. Depreciation on factory buildings and equipment is classified as:

a. Factory overhead
b. Selling expense
c. Indirect materials
d. Direct labor
e. Administrative expense

4. Pitino Company has a beginning inventory of direct materials on March 1 of 30,000 and an
ending inventory on March 31 of 36,000. The following additional manufacturing cost data were
available for the month of March:

Direct materials purchased..................................................................84,000

Direct labor............................................................................................60,000

Factory overhead..................................................................................80,000

During March, prime cost added to production was: (Do not include comma and peso sign).

Ans. 138000

5. Determination of per Unit Total Costs. The estimated unit costs for Hoteling Industries, when
operating at a production and sales level of 10,000 units, are as follows:

Cost Item Estimated Unit Cost

Direct materials.................................................. 15

Direct labor......................................................... 10

Variable factory overhead................................... 8

Fixed factory overhead........................................ 5

Variable marketing............................................... 4

Fixed marketing.................................................... 3
Identify the estimated total conversion cost. (Do not include comma and peso sign).

Ans. 230000

6. When cost relationships are linear, total variable manufacturing costs will vary in proportion
to changes in:

a. volume of production
b. total material cost
c. total overhead cost
d. machine hours
e. direct labor hours

7. An industry that would most likely use job order costing procedures is:

a. road building
b. petroleum refining
c. fertilizer manufacturing
d. flour milling
e. textile manufacturing

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

a. purchase of goods on account

b. return of unused materials from the factory
c. transfer of completed production
d. transfer of materials to the factory

9. Job order cost accounting systems and process accounting systems differ in the way:

a. product profitability is determined and compared with planned costs

b. none of the above
c. orders are taken and in the number of units in the orders
d. manufacturing processes can be accomplished and in the number of production runs that
may be performed in a year
e. costs are traced to cost objects
10. The element of manufacturing cost that supports time tickets is:

a. materials
b. none of the above
c. labor
d. factory overhead
e. all of the above

11. Work in Process is debited and Materials is credited for:

a. direct materials requisitioned to production

b. indirect materials requisitioned to production
c. the completion of work in process
d. the sale of completed product
e. materials returned to the storeroom

12. In a job order cost system, the distribution of direct labor costs usually are recorded as an
increase in:

a. Factory Overhead Control

b. Finished Goods
c. Cost of Goods Sold
d. none of the above
e. Work in Process

13. Nayeon Company had the following account balances and results from operations for the
month of July: direct materials consumed, 10,400; direct labor, 8,000; factory overhead, 8,800;
July 1, work in process inventory, 2,400; July 31, work in process inventory, 1,800; finished
goods inventory, July 1, 1,200; finished goods inventory, July 31, 1,000. The total
manufacturing cost for the month of July was? (Do not include comma and peso sign). Ans.
27200

14. Nayeon Company had the following account balances and results from operations for the
month of July: direct materials consumed, 10,400; direct labor, 8,000; factory overhead, 8,800;
July 1, work in process inventory, 2,400; July 31, work in process inventory, 1,800; finished
goods inventory, July 1, 1,200; finished goods inventory, July 31, 1,000. The cost of goods
manufactured was: (Do not include comma and peso sign. Ans. 27800
15. Cherokee Company applies factory overhead on the basis of direct labor hours. Budget and
actual data for direct labor and overhead for the year are as follows:

Budget Actual

Direct labor hours............................................................... 600,000 650,000

Factory overhead costs....................................................... 720,000 760,000

The factory overhead for Cherokee for the year is:

Hint: Use the budget to compute for the predetermined overhead rate

(Do not include comma and peso sign)

(Indicate U for underapplied and O for overapplied after the amount)

Your answer should look like this: 1000U or 1000O (no space)

Ans. 200000

16. Sana Company's Job 301 for the manufacture of 2,200 T-shirts was completed during August
2014 at the following unit costs:

Direct materials ...................................................................................................... 20

Direct labor ............................................................................................................. 18

Factory overhead (includes an allowance of P1 for spoiled work) .................... 18

Total ....................................................................................................................... 56

Final inspection of Job 301 discloses 200 spoiled T-shirts which were sold to a jobber for P6,000.

Assume that spoilage loss is charged to all production during August.

What would be the unit cost of the good units produced on Job 301? (Do not include comma and
peso sign). Ans. 56

17. Sana Company's Job 301 for the manufacture of 2,200 T-shirts was completed during August
2014 at the following unit costs:

Direct materials ........................................................................................... 20

Direct labor .................................................................................................. 18

Factory overhead

(includes an allowance of P1 for spoiled work) ……………………................. 18

Total ............................................................................................................ 56

Final inspection of Job 301 discloses 200 spoiled T-shirts which were sold to a jobber for P6,000.

Assume instead that the spoilage loss is attributable to exacting specification of Job 301 and is
charged to this specific job. What would be the unit cost of the good coats produced on Job 301?
(Do not include comma and peso sign, provide at least 2 decimal places). Ans. 57.50

18. In accounting for materials, the cost of rework charged to all production usually is debited to:

a. Spoiled Goods Inventory

b. Work in Process
c. Factory Overhead Control
d. Applied Factory Overhead
e. none of the above

19. In accounting for materials, the cost of rework charged to a specific job is usually debited to:

a. Factory Overhead Control

b. Applied Factory Overhead
c. Work in Process
d. Spoiled Goods Inventory
e. none of the above

20. Job 75 incurred the following costs for the manufacture of 200 units of motors:

Original cost accumulation

Direct materials ..................................................................... 13,200

Direct labor ............................................................................ 16,000

Factory overhead (150% of direct labor) .............................. 24,000

Direct costs-of reworked 10 units

Direct materials .................................................... 2,000

Direct labor ........................................................... 3,200

The total rework costs were attributable to exacting specifications of Job 75 and the full rework
costs were charged to the specific job. (Do not use commas and peso signs).

Ans. 316

21. Overapplied factory overhead would result if:

a. a firm incurred a significant amount of overhead

b. factory overhead costs incurred were unreasonably large in relation to units produced
c. the plant were operated at less than normal capacity
d. factory overhead costs incurred were greater than costs charged to production
e. factory overhead costs incurred were less than costs charged to production

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

a. the distribution of indirect labor costs

b. the distribution of direct labor costs
c. the distribution of withholding taxes
d. the recording of payroll
e. none of the above

23. Finished Goods is debited and Cost of Goods Sold is credited for:

a. transfer of completed goods to the customer

b. return of materials to the supplier
c. none of the above
d. return of goods by the customer
e. sale of a customer order

24. Nayeon Company had the following account balances and results from operations for the
month of July: direct materials consumed, 10,400; direct labor, 8,000; factory overhead, 8,800;
July 1, work in process inventory, 2,400; July 31, work in process inventory, 1,800; finished
goods inventory, July 1, 1,200; finished goods inventory, July 31, 1,000. The cost of goods sold
was: (Do not include comma and peso sign).

Ans. 28000

25. Process costing techniques should be used in assigning costs to products:

a. none of the above

b. if the product is manufactured on the basis of each order received
c. when production is only partially completed during the accounting period
d. if the product is composed of mass‑produced homogeneous units
e. whenever standard costing techniques should not be used

3rd Quiz - Process Costing

1. Assuming that there was no beginning work in process inventory and the ending work in
process inventory is 50% complete as to conversion costs, the number of equivalent units as to
conversion costs would be:

a. less than the units placed in process

b. more than the units completed
c. less than the units completed
d. the same as the units completed
e. the same as the units placed in process

2. Read, Inc. instituted a new process in October. During October, 10,000 units were started in
Department A. Of the units started, 7,000 were transferred to Department B, and 3,000 remained
in process as of October 31. The work in process at October 31 was 100% complete as to
material costs and 50% complete as to conversion costs. Materials costs of $27,000 and
conversion costs of $39,950 were charged to Department A in October. What were the total costs
transferred to Department B? (Do not use comma and dollar signs). Ans. 51800

3. Beginning work in process was 60% complete as to conversion costs, and ending work in
process was 45% complete as to conversion costs. The dollar amount of the conversion cost
included in ending work in process (using the average cost method) is determined by multiplying
the average unit conversion costs by what percentage of the total units in ending work in
process? (Your answer should look like this, example: 80%). Ans. 45%

4. Beginning work in process was 60% complete as to conversion costs, and ending work in
process was 45% complete as to conversion costs. The dollar amount of the conversion cost
included in beginning work in process (using the FIFO method) is determined by multiplying the
average unit conversion costs by what percentage of the total units in beginning work in process?
(Your answer should look like this, example: 80%). Ans. 40%

5. Dover Corporation's production cycle starts in the Mixing Department. The following
information is available for April:
Units
Work in process, April 1 (50% complete).................................................. 40,000
Started in April.......................................................................................... 240,000
Work in process, April 30 (60% complete).............................................. . 25,000
Materials are added at the beginning of the process in the Mixing Department. Using the average
cost method, what are the MATERIALS equivalent units of production for the month of April?
(Do not use commas). Ans. 280000

6. Dover Corporation's production cycle starts in the Mixing Department. The following
information is available for April:

Units

Work in process, April 1 (50% complete)............................................40,000

Started in April..................................................................................... 240,000
Work in process, April 30 (60% complete)..........................................25,000
Materials are added at the beginning of the process in the Mixing Department. Using the average
cost method, what is the CONVERSION COST equivalent units of production for the month of
April? (Do not use commas). Ans. 270000

7. Information concerning Department A of Neeley Company for June is as follows:

Units Materials Costs
Beginning work in process..............................17,000 $12,800
Started in June..................................................82,000 $69,700
Units completed..............................................85,000
Ending work in process....................................14,000

All materials are added at the beginning of the process. Using the average cost method, the cost
per equivalent unit for materials is: (Do not use comma and dollar sign, use 2 decimal places).
Ans. 0.83

8. Simpson Co. adds materials at the beginning of the process in Department M. The following
information pertains to Department M's work in process during April:

Units

Work in process on April 1

(60% complete as to conversion cost).................................................. 3,000
Started in April........................................................................................25,000
Completed in April................................................................................ 20,000
Work in process on April 30
(75% complete as to conversion cost).................................................. 8,000
Under the average costing method, the equivalent units for conversion cost are: (Do not use
comma). Ans. 26000

9. During March, Quig Company's Department Y equivalent unit product costs, computed under
the average cost method, were as follows:
Materials................................................. $1
Conversion.............................................. 3
Transferred-in.......................................... 5
Materials are introduced at the end of the process in Department Y. There were 4,000 units (40%
complete as to conversion costs) in work in process at March 31. The total costs assigned to the
March 31 work in process inventory should be: (Do not use comma and dollar sign). Ans. 24800

10. In order to compute equivalent units of production using the fifo method of process costing,
work for the period must be broken down to units:

a. completed during the period and units in ending inventory

b. completed from beginning inventory, started and completed during the month, and units
in ending inventory
c. processed during the period and units completed during the period
d. started and completed during the period
 e. started during the period and units transferred out during the period

11. The first-in, first-out method of process costing will produce the same cost of goods
manufactured amount as the average cost method when:

a. beginning inventories are 100% complete as to materials

b. goods produced are homogeneous
c. there is no beginning inventory
d. beginning and ending inventories are each 50% complete
e. there is no ending inventory

12. The fifo method of process costing differs from the average cost method of process costing in
that fifo:

a. is applicable only to those companies using the fifo inventory pricing method, but the
average cost method may be used with any inventory pricing method
b. allocates costs based on whole units, but the average cost method uses equivalent units
c. does not consider the stage of completion of beginning work in process in computing
equivalent units of production, but the average cost method does
d. considers the stage of completion of beginning work in process in computing equivalent
units of production, but the average cost method does not

13. Connor Company computed the flow of physical units completed for Department M for the
month of March as follows:

Units completed:
From work in process on March 1...................................................... 15,000
From March production.................................................................... 45,000
Total................................................................................................. 60,000

Materials are added at the beginning of the process. The 12,000 units of work in process at
March 31 were 80% complete as to conversion costs. The work in process at March 1 was 60%
complete as to conversion costs. Using the fifo method, the equivalent units for March
conversion costs were: (Do not use comma). Ans. 60600
14. The Hilo Company computed the physical flow of units for Department A for the month of
April as follows:
Units completed:
From work in process on April 1............................................................. 10,000
From April production............................................................................... 30,000
Total........................................................................................................... 40,000

Materials are added at the beginning of the process. Units of work in process on April 30 were
8,000. The work in process at April 1 was 80% complete as to conversion costs, and the work in
process at April 30 was 60% complete as to conversion costs. What is the MATERIALS
equivalent units of production for the month of April using the fifo method? (Do not use
commas). Ans. 38000

15. The Hilo Company computed the physical flow of units for Department A for the month of
April as follows:

Units completed:
From work in process on April 1............................................................. 10,000
From April production............................................................................... 30,000
Total........................................................................................................... 40,000

Materials are added at the beginning of the process. Units of work in process on April 30 were
8,000. The work in process at April 1 was 80% complete as to conversion costs, and the work in
process at April 30 was 60% complete as to conversion costs. What is the CONVERSION
COSTS equivalent units of production for the month of April using the fifo method? (Do not use
commas). Ans. 36800