PRELIM EXAMINATION

1. Planning is a function that involves

a. Hiring the right people for a particular job
b. Coordinating the accounting information system
c. Setting goals and objectives for an entity
d. Analyzing financial statements

2. Managerial accounting is applicable to

a. Service entities
b. Manufacturing entities
c. Merchandising entities
d. All of these

3. 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. Internal reports may show all amounts at market values.
c. Internal reports may discuss prospective events.
d. Most internal reports are summarized rather than detailed.

4. Indirect labor is a
a. Prime cost
b. Conversion cost
c. Period cost
d. Non-manufacturing cost

5. In a job cost system, manufacturing overhead is

a. A direct cost of jobs and a necessary element of production.
b. A direct cost of jobs but not a necessary element of production.
c. An indirect cost of jobs and a necessary element of production.
d. An indirect cost of jobs but not a necessary element of production.

6. Costs that vary inversely with changes in volume include

a. Total variable costs
b. Total variable costs divided by volume
c. Total fixed costs
d. Total fixed costs divided by volume

7. For a manufacturing company, which of the following is an example of a period rather than a
product cost?
a. Depreciation of factory equipment
b. Wages of a sales person
c. Wages of machine operators
d. Insurance on factory equipment
8. The variable portion of the semi-variable cost of electricity for a manufacturing plant is a:
a. Conversion cost and a Period cost
b. Conversion cost and a Product cost
c. Prime cost and a Period cost
d. Prime cost and a Product cost

9. The distinction between indirect and direct costs depends on

a. Whether a costs is controllable or non-controllable
b. Whether a cost is variable or fixed
c. Whether a cost is a product or a period cost
d. Whether a cost can be conveniently and physically traced to a unit under consideration.

10. The wage of a time keeper in the factory would be classified as

a. Prime cost
b. Direct labor
c. Indirect labor
d. Administrative expense

11. As current technology changes manufacturing processes, it is likely that direct

a. Labor will increase
b. Labor will decrease
c. Materials will increase
d. Materials will decrease

12. A manufacturing company reports cost of goods manufactured as

a. A current asset on the balance sheet
b. An administrative expense on the income statement
c. A component in the calculation of cost of goods sold
d. A component of the raw materials inventory on the balance sheet

13. It’s two o’clock in the morning and you’ve been studying job-order costing for the past three
hours. You drift off
to sleep and in your first dream you visit JOB-ORDER COSTING LAND. You are a direct labor
peso and are
traveling through a giant ledger. By the time you finish your journey, which accounts will you
travel through and
in what order?

a. Work in process, Cost of goods manufactured, Finished goods, and Cost of goods sold
b. Direct labor, Work in process, Finished goods, and Cost of goods sold
c. Work in process, Finished goods, and Cost of goods sold
d. Direct labor, Work in process, Finished goods, Cost of goods manufactured and Cost of
goods sold
14. Someone told you that under- or overapplied manufacturing overhead can be allocated to
three accounts. What
are those three accounts?
a. Raw materials, Work in process, and Finished goods
b. Raw materials, Finished Goods, and Cost of goods sold
c. Cost of goods sold, Work in process, and Finished goods
d. Cost of goods sold, Work in process, and Raw materials

15. Which of the following statements are False?

I. A manufacturing company can use direct labor hours as an overhead base in one department
and machine
hours as an overhead base in another.
II. A debit balance in the work in process account indicates that not all goods completed during
the period
were sold.
III. The predetermined OH rate is computed by dividing estimated units in the overhead base by
budgeted or
estimated manufacturing overhead costs.
a. I only
b. II only
c. II and III only
d. I, II, and III

16. Which of the following statements pertaining to job-order costing are TRUE?
I. The issuance of indirect materials from the storeroom is recorded on job-cost sheets.
II. Overapplied factory overhead can be properly disposed off with a debit to cost of goods sold
and a credit to
factory overhead.
III. Both an overstated forecast of overhead and an understated forecast of units of the
overhead base can
cause overhead to be overapplied.
a. I only
b. II only
c. III only
d. II and III only

17. Cost of raw materials are debited to Raw materials inventory when
a. The materials are ordered
b. The materials are received
c. Materials are put into production
d. The bill for the materials are paid
18. When a job is completed and all costs have been accumulated on a job cost sheet, the
journal entry that should
be made.
a. Finished goods inventory
Direct materials
Direct labor
Factory overhead
b. Work in process inventory
Direct materials
Direct labor
Factory overhead
c. Raw materials inventory
Work in process inventory
d. Finished goods inventory
Work in process inventory

19. Under an effective system of internal control, the authorization for issuing materials is made
a. Orally
b. On a prenumbered materials requisition slip
c. By the accounting department
d. By anyone

20. A company is more likely to use a job order cost system if

a. It manufactures a large volume of similar products
b. Its production is continuous
c. It manufactures products with unique characteristics
d. It uses a periodic inventory system

21. Process costing should be used in assigning cost to products in which of the following
situations?
a. If the product is composed of mass-produced homogeneous units.
b. If the product is manufactured individually based on an order received.
c. When the product is composed of heterogeneous units made in a job shop.
d. Whenever cost allocation is not used.

22. Milky Inc. produces and sells milk flavored bubble gum. Over the last five months, Milky had
the following
production costs and production volume.
Month Cost Volume (in cases)
March 6,000 12
April 6,659 14
May 8,370 18
June 8,800 19
July 8,050 17

Using the high-low method, what is the fixed cost per month for bubble gum production?
a. 400
b. 1,200
c. 4,800
d. 7,600

Justy Company produced 5,500 outdoor chairs for Job Order No. 610. Total material cost was
P51,700. Each chair
required 2.2 hours of direct labor at 8.90/hour. A total of P53,845 of factory overhead was
traced to Order 610.

23. What is the prime cost per unit of this order?

a. 18.69
b. 28.98
c. 29.37
d. 18.30

24. What is the conversion cost per unit of this order?

a. 18.69
b. 28.98
c. 29.37
d. 18.30

25. What is the unit cost of this order?

a. 37.88
b. 38.77
c. 28.09
d. 36.99

26. The following information was taken from Jerry Company’s accounting records for the year
ended December 31,
2021.

Increase in raw materials inventory 25,000

Decrease in finished goods inventory 45,000
Raw materials used 450,000
Direct labor payroll 200,000
Factory overhead 300,000
There was no work-in-process inventory at the beginning or end of the year. Jerry’s 2021 cost of
goods sold is
a. 950,000
b. 905,000
c. 970,000
d. 995,000

The next two items are based on the following data of Matty Company for the month of March
2021:

March 1 March 31
Materials 40,000 50,000
Work in process 25,000 35,000
Finished goods 60,000 70,000

March 1 to 31, 2021

Direct labor cost 120,000

Factory overhead control 118,000
Factory overhead applied 108,000
Cost of goods sold 378,000
27. The total amount of direct materials purchased during March was:
a. 50,000
b. 170,000
c. 180,000
d. 220,000

28. The cost of goods manufactured during March 2021 was:

a. 378,000
b. 388,000
c. 398,000
d. 428,000

29. During the month of January, Nanny Company’s direct labor cost totaled P36,000, and direct
labor cost was 60%
of prime cost. It total manufacturing cost during January were P85,000, the factory overhead
was:
a. 24,000
b. 25,000
c. 49,000
d. 60,000

30. Bechy Beach Industries has two production departments. ABC and XYZ, and uses a job
order cost system. To
determine manufacturing costs, the company applies manufacturing overhead to production
orders based on
direct labor cost using the departmental rates predetermined at the beginning of the year based
on the annual
budget. The 2021 budget for the two departments was as follows:
ABC XYZ
Direct materials 630,000 90,000
Direct labor 180,000 720,000
Factory overhead 540,000 360,000

Actual materials and labor costs of Job No. 676 during 2021 were as follows:
Direct materials 22,500
Direct labor - ABC 7,200
Direct labor - XYZ 10,800
What was the total manufacturing cost associated with Job No. 676 for 2021?
a. 45,000
b. 49,500
c. 58,500
d. 67,500

Work in process of Lesmar Corporation on July 1 (per general ledger) is P22,800.

Per cost sheets:

Job 101 Job 102

Direct materials 6,000 8,000
Direct labor 3,000 2,500
Amount charged to Work in Process for July of the current year

Job 101 Job 102 Job 103 Job 104

Direct materials 3,000 2,000 6,000 4,500
Direct labor 1,000 1,500 2,600 2,000
Factory overhead is applied to production based on direct labor cost. Jobs 101 and 103 are
completed during the
month.
31. Cost of goods put into process must be;
a. 42,100
b. 26,860
c. 45,400
d. 49,660

32. The cost of goods manufactured for the month of July is

a. 21,600
b. 15,400
c. 25,560
d. 31,800

33. Materials costing P56,000 were transferred from materials inventory to Job No. 333 which
is still incomplete at
this point. Which of the following is the proper journal entry for the transfer?
a. Materials inventory 56,000
Work in process 56,000
b. Work in process 56,000
Materials inventory 56,000
c. Finished goods 56,000
Work in process 56,000
d. Factory overhead control 56,000
Materials inventory 56,000

34. The accounting records for 2021 of Wallie Company showed the following:
Decrease in raw materials inventory 45,000
Decrease in finished goods inventory 150,000
Raw materials purchased 1,290,000
Direct labor payroll 600,000
Factory overhead 900,000
Freight-out 135,000

The cost of raw materials used for the period amounted to

a. 1,245,000
b. 1,290,000
c. 1,335,000
d. 1,380,000

35. Lollipop Company applied factory overhead as follows:

Actual machine hours are: 19,000 hours for fabricating; 27,500 hours for spreading and 5,500
hours for
gossiping. If the actual factory overhead cost for the period is P574,375, how much is over
(under) applied
factory overhead?
a. (11,875.00)
b. (23,562.50)
c. (187.50)
d. (76,125.00)

Department Factory overhead rate

Fabricating 7.75 per Machine hour
Spreading 15.10 per Machine hour
Gossiping 2.125 per Machine hour

Midterm Examination - Cost Accounting and Control

1. The underlying philosophy of “just-in-time” inventory system is *
0/1

That it is impractical to give equal attention to all stock items, hence the need to classify and
rank them according to their cost significance.
That the status of quantities on hand must be periodically reviewed where high-value or
critical items are examined more frequently than low-cost or non-critical items.
It is a quest toward continuous improvement in the environmental conditions that
necessitate inventories.
 
That the quantities of most stock are subject to definable limits.

Correct answer
That the quantities of most stock are subject to definable limits.

 
2. Companies that adopt just-in-time purchasing systems often experience *
0/1

A greater need for inspection of goods as the goods arrive.

Less need for linkage with a vendor’s computerized order entry system.
An increase in carrying costs.
A reduction in the number of suppliers.
 

Correct answer
A greater need for inspection of goods as the goods arrive.

 
3. Buying of goods or materials for production in a way that they are delivered directly on the
manufacturing facility of company is called. *
1/1

Economic order quantity purchasing

Annual purchasing
Just in time purchasing
 
All of the above

 
4. The costing system appropriate to use with a JIT inventory system whose costs flow
directly to cost of goods sold is *
1/1
Backflush costing
 
Activity-based costing
Variable costing
Absorption costing

For 5-7.

 
5. The journal entry to record the manufacture of finished good units is *
1/1

Option 1
Option 2

Option 3
No entry
 

 
6. The January ending total for all inventory balances is *
0/1

16,250
12,250
11,250
10,000
 

Correct answer
11,250

 
7. The January cost of goods sold is *
0/1

1,284,750
1,296,000
1,286,000
 
1,283,750

Correct answer
1,284,750
 
8. According to the net method, which of the following items should be included in the cost of
inventory? *
1/1

Freight cost – YES; Purchase discounts not taken – NO

 
Freight cost – YES; Purchase discounts not taken – YES
Freight cost – NO; Purchase discounts not taken – NO
Freight cost – NO; Purchase discounts not taken – YES

 
9. During June, Pepper Company experienced scrap, normal spoilage, and abnormal spoilage
in its manufacturing process. The cost of units produced includes *
0/1

Scrap, but not spoilage

Normal spoilage, but neither scrap nor abnormal spoilage
Scrap and normal spoilage, but not abnormal spoilage
 
None of the items mentioned

Correct answer
Normal spoilage, but neither scrap nor abnormal spoilage

 
10. Under the perpetual inventory system, the purchase of materials is recorded in the
account *
1/1

Purchases
Finished goods inventory
Materials inventory
 
Work in process inventory

 
11. *
1/1
2.08
 
2.00
1.04
1.94

 
12. *
1/1
800
3,200
 
1,600
2,400

 
13. *
1/1
450
400
300
 
200

For 14 and 15.

 
14. The cost per finished unit of Job Seed using Method A is: *
1/1

15.80
 
15.60
13.30
13.50

 
15. The cost per finished unit of Job Seed using Method B is: *
1/1

13.30
 
13.60
15.80
15.30

For 16-18

 
16. Suppose that Orange orders 3,000 bats at a time. What is the total annual inventory
cost? *
0/1

750
581
1,200
2,700
 

Correct answer
750

 
17. What is the economic order quantity? *
1/1

1,643 units
2,324 units
 
3,000 units
1,324 units

 
18. How many times would Orange have to place an order in one year? *
1/1

30 times
67 times
39 times
 
55 times

 
19. Which of the following is not an ordering cost? *
1/1

Cost of receiving inventory

Cost of handling the inventory
 
Cost of record keeping
Cost of preparing the order

 
20. In a JIT system, the quality of each product begins with *
1/1

Inspection of finished goods inventory

Employees
A good product warranty
A company’s suppliers
 

 
21. Reducing inventory to the lowest possible levels is a major focus of *
1/1

Push inventory system

JIT
 
EOQ
ABC
 
22. Which of the following describes the effect on direct labor when management adopts the
JIT philosophy? *
1/1

Each direct labor person performs a single task, thereby allowing that person to reach his or
her theoretical potential.
Machine operators are expected to run several different types of machines, help set up for
production runs, and identify and repair machinery needing maintenance.
 
Because each person runs a single machine in a JIT environment, there are more employees
classified as direct labor.
The environment becomes more labor-intensive.

 
23. Which of the following is not true? *
1/1

JIT manufacturing uses manufacturing cells

JIT manufacturing strives for zero defects
JIT manufacturing utilizes long lead time and few deliveries
 
JIT manufacturing strives for zero inventories

 
24. The data used to calculate the order point include all of the following except: *
1/1

The estimated minimum level of inventory needed to protect against stockouts.

The rate at which the material will be used
The cost of placing an order
 
The estimated time interval between the placement and receipt of an order.

 
25. To effectively control materials, a business must maintain: *
1/1

Limited access
 
Combination of duties
Safety stock
None of these are correct

 
26. Moona is the purchasing agent at Starlit Manufacturing. Her duties include vendor
selection and ordering materials. Due to a recent economic downturn and resulting cut backs,
Moona has been assigned the additional duty of preparing a receiving reports after the goods
received to the purchase order. This is an example of *
1/1

Misappropriations of assets
A lack of segregation of duties
 
Independence of assigned functions
Unlimited access to materials

 
27. The form used to notify the purchasing agent that additional materials are needed is
known as a: *
1/1

Material requisition
Purchase requisition
 
Purchase order
Vendor’s invoice

 
28. Which of the following is not true about backflush costing? *
1/1

A single account is used for raw and in process materials because materials are issued to
production when received from the supplier.
Direct labor is usually insignificant in a highly automated system, so is not cost effective to
account for it separately.
Production costs are attached to products as they move through work in process.
 
Different companies may choose different trigger points.

 
29. *
1/1
DR. Spoiled Goods Inventory 11,200; CR. Factory overhead 11,200
DR. Spoiled Goods Inventory 6,000; CR. Work in process 6,000
DR. Spoiled Goods Inventory 6,000; DR. Factory overhead 5,200; CR. Work in process 11,200
 
DR. Factory overhead 11,200 ; CR. Work in process 11,200

For 30 and 31
 
30. Assuming that Lemon Company maintains perpetual inventory records, calculate the cost
of the ending inventory at August 31. *
1/1

4,770
2,310
 
3,956
2,291

 
31. The cost of the units issued of the problem above is *
1/1

2,310
3,956
1,620
4,770
 

 
32. All of the following methods may be used to account for the revenue from scrap sales
except: *
1/1

Credit Scrap revenue, which is included in the “Other Income” section of the income
statement.
Credit Materials, if the scrap would have been able to be recycled.
 
Credit Work in Process, if the scrap is identified with a specific job.
Credit Factory Overhead, if the scrap cannot be identified with a specific job.

Semi-Final Examination - Cost Accounting

and Control
 
1. What is the total spending variance? *
0/1

a. P4,000 unfavorable
b. P3,000 unfavorable
c. P4,000 favorable
d. P7,000 favorable
 
Correct answer
c. P4,000 favorable

 
2. What is the total production variance? *
0/1

a. P4,000 unfavorable
 
b. P3,000 unfavorable
c. P4,000 favorable
d. P7,000 favorable

Correct answer
d. P7,000 favorable

 
3. Using the algebraic method, department A's cost allocated to department C is: *
1/1

a. P48,000
b. P58,800
c. P60,619
 
d. P98,000

 
4. Using the algebraic method, department B's cost allocated to department C is: *
0/1

a. P 7,794
b. P13,192
c. P14,021
d. P29,021
 
Correct answer
c. P14,021

 
5. What is the amount of headquarters' costs allocated to Plant A if payroll is used as
the allocation base? *
1/1

a. P 75,053
b. P 92,019
c. P 110,094
 
d. P 1,019,357

 
6. What is the amount of headquarters' costs allocated to Plant B if sales volume, in
pesos, is used as the allocated base? *
1/1

a. P 81,395
b. P 129,126
c. P 146,512
 
d. P 268,605

 
7. The overhead cost per unit of Candy A under activity-based costing is *
1/1

a. P6.00
b. P9.70
 
c. P4.85
d. P3.00

 
8. Which of the following describes a part of the step method of allocation?  *
1/1

a. All services between intermediate cost enters are simultaneously allocated to final cost
centers.
b. It ignores services between intermediate cost centers.
c. Linear algebra is required for the allocation
d. Once an allocation is made from one service department, no further allocation is made to this
department.
 
 
9. Which of the following is not true of the methods of allocating service department
costs to user departments? *
0/1

a. A cause and effect basis is the preferred method of allocation

 
b. Each method allocates the same total cost when there are no interservice department
activities
c. If a cause and effect relationship cannot be established for service department costs, then an
allocation cannot be conducted
d. The level of detail associated with allocating service department costs should be decided on a
cost-benefit basis.

Correct answer
c. If a cause and effect relationship cannot be established for service department costs, then an
allocation cannot be conducted

 
10. In the determination of factory overhead application rates, the numerator of the
formula is the: *
1/1

a. Actual factory overhead for the next period.

b. Estimated factory overhead for the next period.
 
c. Actual labor hours for the next period.
d. Estimated labor hours for the next period.

 
11. Which productive capacity level does not consider product demand, but at the
same time accounts for anticipated and unavoidable interruptions in production? *
1/1

a. Expected productive capacity

b. Normal productive capacity
c. Theoretical or maximum productive capacity
d. Practical productive capacity
 
 
12. Which productive capacity level is based on estimated production for the next
period? *
1/1
a. Expected productive capacity
 
b. Normal productive capacity
c. Theoretical or maximum productive capacity
d. Practical productive capacity

 
13. To check the accuracy of hours worked, one would ordinarily compare clock cards
with: *
1/1

a. Employee earnings
b. Personnel records
c. Job tickets
 
d. Labor variance reports

 
14. *
1/1

a. 6.80
b. 6.00
c. 3.00
d. 3.40
 
 
15. The manufacturing overhead that would be applied to a unit of product Rose under
the company’s traditional costing is closest to: *
1/1

a. 12.80
b. 39.35
c. 76.03
d. 36.68
 
 
16. The manufacturing that would be applied to a unit of product Apple under the
activity-based costing system is closes to: *
1/1

a. 88.28
 
b. 96.29
c. 187.57
d. 10.13

 
17. The document that is used to secure information as to the type of work performed
is the: *
1/1

a. Labor voucher
b. Time ticket
 
c. Daily efficiency reports
d. Clock card

 
18. The company that is responsible for recording the direct labor cost on the
appropriate production reports and indirect labor cost on the departmental cost
analysis sheet is: *
1/1

a. Timekeeping Department
b. Production Planning Department
c. Payroll Department
d. Cost Department
 
 
19. The employer’s portion of SSS premiums is: *
1/1

a. An expense for the employee

b. An expense for the employer
 
c. A revenue for the employee
d. A revenue for the employer

 
20. Factory workers fringe benefits are usually charged to *
1/1

a. Work in process account

b. Direct labor
c. Administrative expense
d. Factory overhead control
 
 
21. F & B Company pays time and a half for hours in excess of 40 hours per week. An
individual is paid P24.00 per hour and worked 44 hours a week. The weekly earnings
of the employee will amount to *
1/1

a. P 960
b. P1,032
c. P1,104
 
d. P1,036

 
22. *
0/1

a. P677,500
b. P672,500
 
c. P642,500
d. P692,500

Correct answer
d. P692,500

 
23. The portion of the weekly payroll that should be charged to factory overhead is *
1/1

a. 5,275.00
b. 5,215.50
c. 292.50
d. 217.50
 
 
24. The portion of the weekly payroll that should be charged to work in process is *
1/1

a. 5,250.00
b. 5,275.00
c. 5,117.50
d. 5,107.50
 
 
25. Ackee Co. pays their employees on a combined minimum rate and piecework rate
plan. The minimum guaranteed daily wage is P420. Any employee who produces more
than 10 shirts receives a bonus. If Mr. Figs produced 14 shirts, what amount should be
charged to factory overhead control? *
0/1

a. 0
b. P 88
c. P 268
d. P 168
 
Correct answer
a. 0

Final Examination
Cost Accounting and Control

Final Examination 2021-2022

Instruction: All answers must be in the google form.

1. The process costing system is best suited for:

a. industries where different types of products are manufactured

b. industries where homogeneous products are manufactured on continuous basis

c. service industries only

d. all of the above

2. Which of the following businesses is likely to adopt a process costing system?

a. Plan manufacturSers

b. Construction companies

c. Sugar refining units

d. Printing presses

3. In process costing system, the materials can be added in

a. first department only

b. last department only

c. first and last department only

d. any department

4. Which of the following is not correct about process costing and job order costing?

a. Both the systems classify materials as direct materials and/or indirect materials

b. Both the systems classify labor as direct labor and/or indirect labor

c. Direct materials under job order costing might be indirect under process costing and vice
versa

d. Both the systems assign costs by process

5. An equivalent unit of material or conversion cost is equal to:

a. The prime cost

b. The amount of material or conversion cost necessary to complete one unit of production

c. a unit of work in process inventory

d. the amount of material or conversion cost necessary to start a unit of production into work
in process

6. An item that does not appear on a cost of production report is:

a. work in process-beginning inventory

b. cumulative costs through the end of departmental production

c. finished goods-ending inventory

d. materials used in the department

7. When added materials in subsequent departments result in an increase of the units

produced, the unit

transferred-in costs will:

a. be reclassified as new materials

b. be increased to provide for the additional units

c. be decreased as they are spread over more units

d. remain unchanged
8. Assuming that there was no beginning work in process inventory, and the ending work in
process inventory is 50%

complete with respect to conversion costs, the number of equivalent units of production with
respect to

conversion costs would be:

a. The same as the units completed

b. the same as the units started during the period

c. less than the units completed

d. less than the units started during the period

9. Process costing would be appropriate for each of the following except

a. custom furniture

b. oil refining

c. grain milling

d. newsprint production

10. On January 1, Department A had 3,000 units 50% complete with respect to direct labor and
factory overhead; materials are added at the beginning of the process. During January, 15,000
units were started into process in Department A. At the end of June, the ending goods in
process of 4,000 units were 80% complete with respect to direct labor and factory overhead.
There was no normal and/or abnormal loss of units in Department A during the month of
January. The number of units transferred to Department B were:

a. 16,700 units

b. 13,300 units

c. 14,000 units

d. 15,500 units

11. The following data belongs to Department A of Nakiri Company:

 WIP beginning inventory: 6,000 units – 40% complete as to labor and overhead

 Completed and transferred to finished goods store room: 30,000 units

 WIP ending inventory: 1,000 units – 60% compete as to labor and overhead

The number of units started in Department A during the period were:

a. 24,000 units
b. 37,000 units

c. 25,000 units

d. 31,000 units

12. Alchemilla Manufacturing has three producing departments in its factory. The ending
inventory in the Milling Department consisted of 3,000 units. These units were 60% complete
with respect to labor and factory overhead. Materials are applied at the end of the milling
process. Unit costs for the complete process in the Milling Department are: materials, 50;
labor, 100; and factory overhead, 300. The appropriate unit cost for each unit in the ending
inventory is:

a. 240

b. 270

c. 400

d. 450

13. Gyro Products transferred 10,000 units to one department. An additional 3,000 units of
materials were added in

the department. At the end of the month, 7,000 units were transferred to the next department.
There was no

beginning inventory. The costs for units transferred in would be effectively allocated over:

a. 3,000 units

b. 10,000 units

c. 7,000 units

d. 13,000 units

14. Production in July resulted in 100 lost units of which 40 was considered normal and 60
abnormal. The 100 units

were complete with respect to materials but only 40 percent complete with respect to labor
and overhead. Unit

cost for materials, labor and overhead were P10, P15 and P9 respectively. The unit costs have
been determined

after including normal and abnormal lost units separately in the computation of total
equivalent units.

a. P2,040

b. P1,176

c. P1,360
d. P 784

15. A characteristic of a process costing system is that:

a. costs are accumulated by order

b. standard costs are not applicable

c. it requires a lot more detailed accounting than does a job order system

d. work in process inventory is restated in terms of completed units

16. In a process costing system, how is the unit cost affected in a production cost report
when materials are added in a department subsequent to the first department and the added
materials result in additional units?

a. The first department's unit cost is increased, but it does not necessitate an adjustment of
the transferred-in unit cost.

b. The first department's unit cost is decreased, but it does not necessitate an adjustment of
the transferred-in unit cost.

c. The first department's unit cost is increased, which necessitates an adjustment of the
transferred-in unit cost.

d. The first department's unit cost is decreased, which necessitates an adjustment of the
transferred-in unit cost.

17. Alstroemeria 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 work in process at 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?

a. 46,900

b. 53,600

c. 51,800

d. 57,120

18. Crocus Company produces a small standard component in a process operation. There is a
quality control check at

the end of the processing. Items which fail this check are sold off as scrap for P1.80 per unit.
The expected rate of

rejection is 10%. Normal loss is not given a cost except that whatever scrap value it has is
credited to the process
account. The cost/value of the abnormal loss or gain, net of scrap, is written off to the profit
and loss account.

Data for July are as follows:

Materials input 1,000 units 5,100

Conversion cost 3,000

Output to Finished Goods 800 units

What was the full cost of the finished output that passed the quality control check?

a. P7,040

b. P7,920

c. P7,200

d. P8,100

A company produces plastic kitchenware and uses process costing system. Products go
through three

departments – Mixing, Molding, and Packaging. During the month of August, the following
information is made

available for the Mixing Department

Units started 160,000

Units completed and transferred 140,000

Units in process, end (25% complete) 20,000

Materials are added at two points in the process. Material A is added at the beginning of the
process and Material

B when the units are 50% completed. Conversion costs are incurred uniformly throughout the
mixing process.

19. The equivalent production for Material A

a. 140,000

b. 145,000
c. 150,000

d. 160,000

20. The equivalent production for Material B

a. 140,000

b. 145,000

c. 150,000

d. 160,000

21. The equivalent production for conversion cost

a. 140,000

b. 145,000

c. 150,000

d. 160,000

22. Normal spoilage was computed to be 2,000 units. Spoilage is discovered at the end of the
process and is debited

to Finished Goods Inventory, it is not spread over good units produced. Costs per equivalent
unit were: Prior

department P3.00; Materials P2.00; Conversion costs P4.00.

The journal entry to remove all the costs of spoiling the 2,000 units from work in process as
follows:

DEBIT CREDIT

a. FG Inventory for P6,000 WP Inventory for P6,000

b. WP Inventory for P6,000 FG Inventory for P6,000

c. FG Inventory for P12,000 WP Inventory for P12,00

d. FG Inventory for P18,000 WP Inventory for P18,000

23. Snowdrop Company uses a process costing system. The company adds all materials at
the beginning of the

process in the Molding Department, which is the first of two stages of its production process.
Information
concerning the Molding Department during March is as follows:

Units started 112,000

Units completed and transferred 97,000

Units in process, end (50% complete) 15,000

Material cost 57,120

What was the material cost of the work in process inventory at March 31?

a. 11,220

b. 7,500

c. 5,100

d. 7,650

Chrysanthemum Company instituted a new process in October, 2022. During October 10,000
units were started

in Department A. Of the units, 1,000 were lost by shrinkage in the process, 7,000 were
transferred to

Department B, and 2,000 remained in work in process at October 31. The work in process at
October 31 was

100% complete as to materials and 50% complete as to conversion cost. Materials cost of
P27,000 and

conversion costs of P40,000 were charged to Department A in October.

24. What were the total costs transferred to Department B?

a. 53,900

b. 56,000

c. 61,600

d. 64,000

25. What were the costs of the units in process, October 31?

a. 10,400

b. 11,000

c. 15,000

d. 18,100

QUIZ
Instruction: All answers must be on the Google Form and solutions are to be submitted in the classroom.

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

a. Is the intersection between financial and management accounting

b. Information generated by cost accounting is used by both financial and managerial accounting.

c. Cost accounting provides product cost information to internal parties such as managers for planning
and

controlling.

d. Cost accounting is not important to any company.

2. Financial accounting information is used for reporting to

a. External parties

b. Investors

c. Creditors

d. Managers

3. Management accounting information

a. Pertains to the entity as a whole and is highly aggregated

b. Pertains to subunits of the entity and may be very detailed

c. Is prepared only once a year

d. Is constrained by the requirements of IASB.

4. Internal reports must be communicated

a. Daily

b. Monthly

c. Annually

d. As needed

5. Management accountants would not

a. Assist in budget planning

b. Prepare reports primarily for external users

c. Determine cost behavior

d. Be concerned with the impact of cost and volume on profits

6. Which of the following is not an internal user?

a. Creditor

b. Department manager

c. Cost accountant

d. Controller

7. Financial statements for external users can be described as

a. User-specific

b. General purpose

c. Special purpose

d. Management reports

8. What is the best accumulation procedure to use when many batches, each differing as to product
specification,

are produced?

a. Job order

b. Process

c. Actual

d. Standard

9. Which of the following production operations would be most likely to employ a job order system of
cost

accounting?

a. Toy manufacturing

b. Shipbuilding

c. Crude oil refining

d. Candy manufacturing

10. Which of the following does not occur with process costing?

a. Allocation of cost on a periodic basis

b. Allocation of cost upon completion of job

c. Allocation of cost with regards to stage of completion

d. Calculation of equivalent units

11. Indirect costs are also known as:

a. Differential costs

b. Common costs

c. Opportunity costs

d. Sunk costs

12. Factory rent is

a. A prime cost and an inventoriable cost

b. A prime cost and a period cost

c. A conversion cost and an inventoriable cost

d. A conversion cost and a period cost

13. Cost of goods sold is

a. An expense

b. A period cost

c. Is an asset

d. None of the above

14. For a manufacturing company, the cost of goods available for sale during a given accounting period
is

a. The beginning inventory of finished goods

b. The cost of goods manufactured during the period

c. The sum of the a & b

d. The difference of b & a

15. If the amount of “Cost of goods manufactured” during a period exceeds the amount of “Total
manufacturing

costs” for the period then

a. Ending work in process inventory is greater than or equal to the amount of beginning work in process

inventory.

b. Ending work in process inventory is greater than the amount of beginning work in process inventory.

c. Ending work in process is equal to the cost of goods manufactured.

d. Ending work in process is less than the amount of the beginning work in process inventory.
16. For inventoriable costs to become expenses under the matching principle

a. The product must be finished and in stock

b. The product must be expensed based on its percentage of completion

c. The product to which they attach must be sold

d. All accounts payable must be settled.

17. Cost of goods manufactured in a manufacturing company is analogous to

a. Ending inventory in a merchandising company

b. Beginning inventory in a merchandising company

c. Cost of goods available for sale in a merchandising company

d. Cost of goods purchased in a merchandising company

18. In DingDong Company, the predetermined overhead rate is 80% of direct labor cost. During the
month,

DingDong incurs P210,000 of factory labor costs, of which P200,000 is direct labor and P10,000 is
indirect labor.

Actual overhead incurred was P200,000. The amount of overhead debited to Work in Process Inventory
should

be

a. P200,000

b. P144,000

c. P168,000

d. P160,000

Alaska Company reported the following year-end information

Work in process inventory, January 1 180,000

Raw materials inventory, January 1 50,000

Work in process inventory, December 31 150,000

Raw materials inventory, December 31 80,000

Raw materials purchased 160,000

Direct labor 150,000

Factory overhead applied 120,000

Factory overhead control 100,000

19. Cost of goods manufactured for the year is

a. P380,000

b. P410,000

c. P350,000

d. P430,000

Use the following information for the next four questions:

The financial statements of Brother Company included these items:

Marketing costs 160,000

Direct labor cost 245,000

Administrative costs 145,000

Direct materials used 285,000

Fixed factory overhead costs 175,000

Variable factory overhead costs 155,000

Compute:

20. Prime cost=530,000

21. Conversion cost=575,000

22. Total inventoriable/product cost=860,000

23. Total period cost=305,000

Use the following information for the next four questions:

Resting Company manufactures major appliances. Because of growing interest in its product, it has just
had its most

successful year. In preparing the budget for next year, its controller compiled these data.

Month Volume in Machine Hours Electricity cost

July 6,000 60,000

August 5,000 53,000

September 4,500 49,500

October 4,000 46,000

November 3,500 42,500

December 3,000 39,000

Total 26,000 290,000

Using the high-low method compute:

24. The variable cost rate per machine hour=7

25. The monthly fixed electricity costs=18,000

26. The total electricity costs if 4,800 machine hours are projected to be used next month.=51,600

27. Use the method of least square to estimate the fixed portion of electricity costs based on machine
hours.=48,019.23

Use the following information for the next three questions:

The following information is available for Lisa Company

 Raw materials inventory increased by P15,000

 Work in process inventory decreased by P8,500

 Finished goods inventory decreased by P5,000

 Materials purchased is P180,000

 Direct labor is P220,000

 Manufacturing overhead is P200,000

 Sales amounting to P980,000

Instructions:

28. Compute cost of goods sold=598,500

29. Cost per unit manufactured considering that there are 10,000 units manufactured. = 59.35

30. Compute for the gross profit=381,500

1. Under the job-cost system, purchases of direct materials are debited to:

a. Purchases

b. Work in Process Control

c. Factory Overhead Control

d. None of the above

2. Under the job-cost system, issues of direct materials are debited to:

a. Factory overhead control

b. Work in process control

c. Materials control

d. None of the above

3. In job-order-costing, what journal entry should be made for the return to the stockroom of direct
materials

previously issued to production for use on a particular job?

a. Debit materials and credit factory overhead

b. Debit materials and credit work in process

c. Debit purchase returns and credit work in process

d. Debit work in process and credit materials

4. Under the job-order costing system, the peso amount of the entry involved in the transfer of
inventory from

work in process to finished goods is the sum of the costs charged to all jobs:

a. Started in process during the period

b. In process during the period

c. Completed and sold during the period

d. Completed during the period

5. In a job-order costing system, indirect labor used should be debited to

a. Payroll liability

b. Work in process control

c. Finished goods control

d. Factory overhead control

6. Which of the following is the basic document that is used to accumulate the cost of each order in job
order

costing:

a. Invoice

b. Purchase order

c. Requisition sheet

d. Job cost sheet

7. The most common treatment of under-or overapplied overhead is to close it to:

a. Work in process

b. Retained earnings

c. Cost of goods sold

d. Finished goods

8. A materials requisition form normally does not contain which of the following?

a. Vendor’s name

b. Quantity requisitioned

c. Unit cost

d. Job number

9. A job order cost sheet normally does not contain which of the following?

a. Direct materials

b. Direct labor

c. Actual factory overhead

d. Applied factory overhead

10. Overhead applied was P120,000, while actual overhead was P124,000. Which of the following is
always true?

a. Direct labor activity was overestimated.

b. Overhead was under applied by P4,000.

c. Overhead was over applied by P4,000.

d. The difference must be reported as a loss.

11. Under a job order costing system, the cost of direct materials, direct labor and factory overhead
must first flow

through the

a. Finished goods account

b. Cost of goods sold account

c. Work in process account

d. Cost of goods manufactured account

12. The unit cost of a product, under the job order costing, can be determined only

a. At the end of the manufacturing process

b. Upon completion of a job

c. At the end of the month

d. At the point in time

13. Dalya Company’s 2021 manufacturing costs were as follows:

Direct materials and direct labor 100,000

Depreciation of manufacturing equipment 70,000

Depreciation of factory building 40,000

Janitor's wages for cleaning factory premises 15,000

How much of these costs should be inventories for external reporting purposes?=225,000

14. People Company uses a job order cost system and applies factory overhead to production orders on
the basis of

direct labor cost. The overhead rated for 2021 are 200% for Department A and 50% for Department B.
Job 123,

started and completed during 2021, was charged with the following costs:

Department

AB

Direct materials 25,000 5,000

Direct labor ? 30,000

Factory overhead 40,000 ?

The total manufacturing costs associated with Job 123 should be?= 135,000
15. Jenny Corporation adopts a job order cost system. The following debits (credits) appeared in the
work-in-

process account for the month of March of the current year

March Description Amount

1 Balance 2,000

31 Direct materials 12,000

31 Direct labor 8,000

31 Factory overhead 6,400

31 To finished goods (24,000)

Jenny applies overhead to production at a predetermined rate of 80% based on direct labor cost. Job
No. 30, the

only job still in process at the end of March has been charged with direct labor of P1,000.

The amount of direct materials charged to Job No. 30 was?=2,600

16. Happy Company employs the job order cost system. Relevant data for the month just ended are
summarized

below

Work in process beginning 100,000

Direct materials used for the month 200,000

Direct labor costs for the month 160,000

Overhead applied based on direct labor 120,000

Cost of goods completed 501,800

Ending work in process referred to Job 106 which was charged with direct labor of P12,000 and Job 107
charged

with overhead of P9,600.

The cost of direct materials charged to Jobs 106 and 107 was? = 34,800

The GEM Company uses a job order cost accounting system. Overhead is applied to production at a
predetermined rate
of 80% based on direct labor cost.

The following postings appear in the ledger accounts of the company for the month of September.

Work in process, Sept. 1 30,000

Direct materials 60,000

Direct labor 50,000

Factory overhead 40,000

Cost of goods completed (155,000)

Job No. 327 was the only job not completed in September, and it has been charged P4,600 for factory
overhead.

17. Direct materials charged to Job No. 327 was: = 14,650

18. Direct labor charged to Job No. 327 was: = 5,750

Air Crafts manufactures order using the job order cost system. For the month just ended, it registered
the following

data:

Beginning work in process (5 partially completed jobs) 300,000

Orders completed (18) 2,400,000

Orders shipped (14) 2,000,000

Materials requisitioned for the month 1,700,000

Direct labor cost 800,000

Factory overhead rate 150% of direct labor cost

19. The ending work in process inventory was:

Lamy Corporation has manufactured 100,000 units of compound X in 2021 at the following costs. Labor
of P242,500 ofwhich 93% represents direct labor. Materials of P182,500 of which 90% represents direct
materials. Opening work in process is P88,125. Closing work in process inventory is P67,500. Overhead is
applied at 125% direct labor cost.= 1,600,000

20. The cost of goods manufactured is: = 692,306