Some selected sales and cost data for Acid Manufacturing Company are given below:

Direct materials used P 100,000

Direct labor 150,000
Factory overhead (40% variable) 75,000
Selling and administrative expenses
(50% direct, 60% variable) 120,000
1. Prime cost was:

a. P 175,000
b. P 250,000
c. P 130,000
d. P 225,000

Answer: B

Solution:

Direct materials P 100,000

Direct labor P 150,000
Prime cost P 250,000

2. Conversion cost was:

a. P 150,000
b. P 225,000
c. P 250,000
d. P 270,000

Answer: B

Solution:

Direct labor P 150,000

Factory overhead P 75,000
Conversion cost P 225,000

3. Direct cost was:

a. P 225,000
b. P 250,000
c. P 310,000
d. P 325,000

Answer: C

Solution:

Direct Selling and administrative Expense

 (P 120,000 x 50%) P 60,000
Direct materials 100,000
Direct labor 150,000
Direct cost P 310,000
4. Indirect cost was:

a. P 75,000
b. P 135,000
c. P 195,000
d. P 325,000

Answer: B

Solution:
Indirect Selling and Administrative Expense
(P 120,000 x 50%) P 60,000
Factory overhead 75,000
Indirect cost P 135,000

5. Product cost was:

a. P 135,000
b. P 250,000
c. P 325,000
d. P 370,000

Answer: C

Solution:

Direct materials P 100,000

Direct labor 150,000
Factory overhead 75,000
Product cost P 325,000

6. Variable cost was:

a. P 250,000
b. P 280,000
c. P 352,000
d. P 370,000

Answer: C

Solution:

Variable Selling and Administrative Expense

(P 120,000 x 60%) P 72,000
Direct materials 100,000
Direct labor 150,000
Variable factory overhead (P 75,000 x 40%) 30,000
Variable cost P 352,000