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A traditional costing system would allocate setup costs on the basis of direct manufacturing labor hours (DMLH). An ABC system would
trace costs by spreading the costs per batch over the units in a batch. What is the setup cost per unit of product A under each costing system?
Traditional ABC
a. P 4.80 P 10.00
b. P 2.40 P 10.00
c. P40.00 P200.00
d. P 4.80 P 20.00
9. At economic order quantity, total ordering costs and total carrying costs for the period are equal.
a. True b. Sometimes c. False d. Maybe
10. Below are FLX Corporation’s standard cost to produce one concrete table:
Direct raw materials 2 kgs. P 375 per kg.
Direct labor 30 minutes 31.25 per hour
In September , FLX produced 250 concrete tables. 520 kgs. of raw materials were used at a total cost of P 193,440. A total of 128 direct labor
hours were used at a cost of P 4096. The direct labor rate variance is:
a. P 22.50 b. P 93.00 c. P 64.75 d. P 96.00
11. During the month of March, Late Co. used P300,000 of direct materials. At March 31, Late’s direct materials inventory was P50,000 more that
it was at March 1. Direct material purchases during the month of March amounted to
a. P0 b. P250,000 c. P300,000 d. P350,000
12. Manufacturing costs do not include
a. prime costs c. conversion costs
b. indirect materials d. salary of the company president
Use the following information to answer the next five questions:
Listed below in alphabetical order are certain accounts of the Stable Manufacturing Company with balances for the year ending December 31,
2011.
Administrative expenses P 35,000
Customer returns and allowances 54,400
Depreciation – plant & equipment 38,800
Depreciation – selling 4,300
Direct Labor cost 164,500
Dividends 14,000
Factory heat, light & power 91,500
Factory Supplies expense 24,100
Finished Goods, 1/1/2011 74,400
Finished Goods, 12/31/2011 71,500
Freight In 9,800
Goods In Process, 1/1/2011 20,800
Goods In Process, 12/31/2011 45,600
Indirect Labor 25,750
Insurance & Taxes – Factory 8,900
Interest Expense 9,000
Gain on disposal of Machinery 11,500
Provision for income taxes 24,500
Purchases 270,500
Raw Materials, 1/1/2011 158,300
Raw Materials, 12/31/2011 169,290
Selling Expense 792,500
13. If the cost to manufacture a complete unit in 2011 was P10, how many units were manufactured?
a. 62,286 b. 60,096 c. 67,246 d. 59,806 e. 64,366
14. If the unit cost was P10 (and if the beginning finished goods inventory was valued on the same basis), how many units were sold in 2011?
a. 62, 286 b. 60,096 c. 67,246 d. 59,806 e. 64,366
15. If a unit cost of P10 was applied consistently to both beginning and ending Finished Goods inventories, the net change in Finished Goods
between January 1 and December 31 was:
a. an increase of 2,480 units c. an increase of 290 units
b. an increase of 67,246 units d. a decrease of 290 units
c. a decrease of 2,480 units
16. In 2012, if the total cost of work in process is P728,260, the manufacturing costs incurred are:
a. P656,760 c. P773,860
b. P662,860 d. P682,660 e. P799,760
17. In 2012, if cost of goods available for sale is P694,360, the cost of goods manufactured is:
a. P656,760 c. P773,860
b. P622,860 d. P682,660 e. P799,760
Charlie, Inc. manufactures a product which goes through three consecutive processes: Process 1, Process 2, and Process 3. Data for the month of
September, 2008 are as follows:
Process 1 Process 2 Process 3
Opening Work in Process P 8,000 P13,000 P2,000
Materials Added 20,000 4,000 5,000
Conversion 10,000 10,000 16,000
Closing Work in Process 6,000 9,000 4,000
18. What was the value of the output transferred from Process 3 to finished goods warehouse for the month of September 2005?
a. P63,000 b. P65,000 c. P67,000 d. P69,000
19. Daniel incurred cost of P43,000 for material, P26,000 for labor, and P23,000 for factory overhead. There was no beginning or ending work in
process. 5,000 units were completed and transferred out. The cost per unit is:
a. P8.60 b. P5.20 c. P18.40 d. P4.60
The following information is available for the month of April from the First department of the Twigg Corporation:
Units
Work in process, August 1 (60% complete) 50,000
Started in April 190,000
Work in process, August 30 (40% complete) 80,000
Materials are added in the beginning of the process in the First department.
20. Using the average cost method, what are the equivalent units of production for the month of April?
Materials Conversion
a. 192,000 240,000
b. 190,000 192,000
c. 240,000 208,000
d. 240,000 192,000
Information on ABC Company’s direct labor costs for the month of August is as follows:
37. Yola Co. manufactures one product with a standard labor cost of 4 hours at P12.00 per hour. During June 1,000 units were produced
using 4,100 hours at P12.20 per hour. The unfavorable direct labor efficiency variance was
a. P1,220 b. P820 c. P1,200 d. P400
38. The direct labor standards for producing a unit of a product are two hours at P10 per hour. Budgeted production was 1,000 units. Actual
production was 900 units, and direct labor cost was P19,000 for 2,000 direct labor hours. The direct labor efficiency variance was:
a. P1,000 favorable c. P1,000 unfavorable
b. P2,000 favorable d. P2,000 unfavorable
39. DIGITAL Products produces a product, Digit, and uses standard costing methods. The standard direct labor cost of Digit is one and one-
half hours at P180 per hour. During October, 2010, 500 Digit units were produced in 1,000 hours at P176 per hour. The direct labor efficiency
variance is a favorable (an unfavorable)
a. P30,000 b. P(30,000) c. P45,000 d. P(45,000)
Problem 1
The Best of the Season Corporation makes plastic christmas trees in two departments: Cutting and Boxing. In the Cutting department, wire wrapped
with green needles is placed into production at the beginning of the process and is cut to various lengths depending on the size of the trees being made
at that time. The branches are then transferred to the Boxing department where the lengths are separated into the necessary groups to make a tree.
These are then placed in the boxes and immediately sent to finished goods. The following data are available related to October 2008 production in
each of the two departments:
Percent of Completion
Units Transferred-In Material Conversion
Cutting Department:
Beginning Inventory 8,000 n/a 100 30
Started in process 36,000
Ending inventory 3,600 n/a 100 70
Boxing Department:
Beginning inventory 2,500 100 0 55
Transferred-in ?
Ending inventory 1,200 100 0 60
Boxing Department;
Beginning inventory 41,605 - 2,100
Current period ? 95,910 61,530
Problem 2
Good Company began 2012 with three jobs in process:
TYPE OF COST
Job No. Direct Material Direct Labor Overhead Total
247 77,200 91,400 34,732 203,332
251 176,600 209800 79,724 466,124
253 145,400 169,600 64,448 379,448
During 2012, the following transactions occurred: