Question 1

Which of the following costs is considered as a period cost?

Salaries of warehouse security guard.

Salaries of office secretary
Cost of small tools used in production
Cost of utilities in the warehouse
 
Question 2
A major purpose of cost accounting is to

 provide information to stockholders for investment decisions

 measure, record, and report period costs.
 measure, record, and report product costs.
 classify all costs as operating or non-operating

Question 3
Unit fixed costs:

Are fixed on a per unit basis 

Are determined by dividing total fixed costs by a denominator such as production or sales
volume.
 Vary directly with the activity level when stated on a per unit basis
 Are constant per unit regardless of units produced
 
Question 4
Inventoriable costs:

 Are expensed when products become part of finished goods inventory

 Are regarded as asset before the products are sold.
 Include only the prime costs of manufacturing a product
 Include only the conversion costs of manufacturing a product
 
Question 5
John Johnson decided to leave his former job where he earned P12 per hour to go to a new job
where he will earn P13 per hour. In the decision process, the former wage of P12 per hour would
be classified as a(n)

 Opportunity Cost 
 Fixed Cost
 Direct Cost 
 Sunk Cost
 
Question 6
Differential costs can

only be variable costs

be incremental but not decremental
 only be fixed costs 
 be either fixed or variable
Question 7
Depreciation on a personal computer used in the marketing department of a manufacturing firm
would be classified as:

 a product cost that is variable with respect to the company's output 

 a period cost that is fixed with respect to the company's output
 a period cost that is variable with respect to the company's output
 a product cost that is fixed with respect to the company's output 

Question 8
The costs of the direct labor associated with the manufacture of a product should be classified as
an expense when the:

  Product is sold 
  Employee are paid 
  Labor is performed 
  Product is transferred to finished goods inventory

Question 9
The nursing station on the fourth floor of Central Hospital is responsible for the care of patients
who have undergone orthopedic surgery. The costs of drugs administered by the nursing station to
patients would be classified as:

  period costs of the hospital

  direct costs of the patients
  indirect costs of the patients
  overhead costs of the nursing station

Question 10
In choosing between two options, the first option will incur an interest expense of 12% while the
second option will have a fixed add on of P 1,000. Which of the following describes the 12% if the
second option is chosen?

  Direct cost 
  Opportunity cost
  Imputed cost
  Incremental cost
 
Question 11
An important feature of a job order cost system is that each job

  has its own distinguishing characteristics

  must be completed before a new job is accepted 
  consists of one unit of output 
  must be similar to previous jobs completed
 
Question 12
In a job order cost accounting system, the Raw Materials Inventory account is

  a control account

  not used 
  a period cost 
   an expense
 
Question 13
Cost of raw materials are debited to Raw Materials Inventory when the

  materials are put into production 

  materials are ordered
  the bill for the materials is paid 
  materials are received
 
Question 14
The journal entry to record applying overhead during the production process is

  Finished Goods XXX Manufacturing Overhead XXX

  Manufacturing Overhead XXX Work In Process XXX 
  Work In Process XXX Manufacturing Overhead XXX 
  Manufacturing Overhead XXX Finished Goods XXX
 
Question 15
Favorable overhead means that

  the applied overhead cost was greater than the actual overhead cost
  the applied overhead cost was less than the actual overhead cost 
  the estimated overhead cost was less than the actual overhead cost 
  the estimated overhead cost was less than the applied overhead cost
 
Question 16
Ordering more than the EOQ will result in

  carrying costs lesser than order costs 

  equal safety stock costs and carrying costs
  more frequent order points. 
  carrying costs greater than order costs

Question 17
The materials requisition

  authorizes the storeroom to deliver types and quantities of materials to a given department.
  is the supplier’s authorization to deliver goods and submit a bill 
  informs the purchasing agent of the quantity and type of materials needed 
  is the list of materials requirements for each step in the production cycle.
 
Question 18
A cost of having too few items on hand in inventory is

  payment of additional warehouse space

  frequent stockouts 
  excessive insurance costs 
  spoilage costs
 
Question 19
The purchasing department performs all of the following functions except

  receives purchase requisitions for materials, supplies, and equipment

  compares quantities received with the suppliers' packing list 
  keeps informed concerning sources of supply, prices, and delivery schedules
  arranges for the reporting among the purchasing, receiving, and accounting departments 
  prepares and places purchase orders
 
Question 20
The receiving department does all of the following except:

  matches materials received with descriptions on purchase orders

  arranges for inspection, when necessary
  keeps informed concerning sources of supply, prices, and delivery schedule 
  unloads and unpacks incoming materials
 
Question 1
During the month of February, direct labor cost totaled P13,000 and direct materials cost was 40%
of prime cost. If total manufacturing costs during February were P80,000, the manufacturing
overhead was:

  P 47,500 
  P 32,500 
  P 58,333
  P19,500

Question 2
ABC Corporation has a job order cost system. The following debits (credits) appeared in Work in
Process for the month of July:

July 1, balance                   P   12,000

July 31, direct materials                  40,000
July 31, direct labor                         30,000
July 31, factory overhead                27,000
July 31, to finished goods               (100,000)
ABC Company applies overhead to production at a predetermined rate of 90% based on the direct
labor cost.  Job 1040, the only job still in process at the end of July, has been charged with factory
overhead of P 2,250.  What was the amount of direct materials charged to Job 1040?

  P 4,250 
  P 2,250
  P 6,750
  P 2,500
 
Question 3
Selected cost data (in thousands) concerning the past fiscal year's operations of the Moscow
Manufacturing Company are presented below.

                        Inventories      

Beginning            Ending
Materials                    P 75                  P  85
Work in process         80                       30
Finished goods            90                    110
Materials used, P 326
Total manufacturing costs charged to production during the year (including direct materials, direct
labor, and factory overhead applied at the rate of 60% of direct labor cost), P 686
Cost of goods available for sale, P 826
Selling and general expenses, P 25
The cost of direct materials purchased during the year amounted to:

  P 336 
   P 360 
  P 411 
  P 316

Question 4
The ABC Manufacturing Company makes one model of a product known as Brand A. On January
1, 2018, there were 500 units of the finished product which were included in the finished goods
inventory. Other inventories on January 1, were:
Work in process             P  5,740
Materials             11,620
Among the data available for December 31, 2018 were the following:
Indirect labor   P   12,600
Direct labor            32,640
Freight-in                  5,570
Materials inventory             9,640
Other factory overhead expenses              31,730
Work in process inventory            7,820
Sales (15,000 units)       360,000
Indirect materials             21,390
Total factory costs           194,080
There were 1,500 units of Brand A in the finished goods inventory at December 31, 2018.
Compute the amount of materials purchased (gross) and the gross profit, respectively:
Correct Answer
P109,560; P180,000

  No answer text provided.

  P88,610; P108,000
  P 109,560; P 168,000 
  P88,610; P180,000 
  96,160; P108,000
 

Question 5
ABC Inc., submits the following data for December:

Direct labor cost, P30,000.

Cost of goods sold, P111,000.
Factory overhead is applied at the rate of 150% of direct labor cost.
Inventory accounts showed these beginning and ending balances:
 
                                           December 1 December 31
Finished goods            P15,000             P17,500
Work in process               9,600                13,000
Materials                             7,000                   7,400
Other data:
   Marketing expenses                  P   14,000
   General and administrative expenses                 22,900
   Sales for the month                  182,000
Compute for December the cost of goods available for sale, and operating income, repectively:

  P113,500; P31,500 
  P128,500; P34,100 
  P128,500; P31,500 
  P111,000; P34,100

Question 6
Selected data concerning last year’s operation of ABC Company are as follows:

 Beginning        Ending

Finished goods P    90,000 P    110,000

Work in
  80,000     30,000
process

Materials   75,000     85,000

Other data:

1. Materials used, P326,000.

2. Total manufacturing costs charged to jobs during the year (includes materials, direct labor, and
factory overhead applied at a rate of 60% of direct labor cost), P686,000.
3. Cost of goods available for sale, P826,000.
4. Marketing and administrative expenses, P25,000.

Compute the cost of materials purchased, direct labor cost charged to production, and the cost of
goods manufactured, respectively.

  P336,000; P225,000; P716,000 

  P326,000; P135,000; P736,000 
  P411,000; P326,000; P716,000
  P336,000; P225,000; P736,000

Question 7
The Minisoftware Company uses perpetual inventories and a normal cost system. Balances from
selected accounts were:
 Balances Balances
December 31, December 31,
2018 2019

Factory department overhead control P56,000

Finished goods control P50,000   46,000

Cost of goods sold 180,000

Direct materials control ?   20,000

Work in process control ?   35,000

Factory overhead applied   72,000

 The cost of direct materials requisitioned for production during 2019 was P100,000. The cost of
direct materials purchased during 2019 was P90,000. Factory overhead is applied at 200% of
direct labor cost.
Before considering any year-end adjustments for overapplied or underapplied overhead, compute
the direct materials accounts and work in process account as of December 31, 2018, respectively:

  P35,000; P 0 
  P30,000; P3,000 
  P50,000; P3,000
  P30,000; P38,000

Question 8
Braam Corporation uses direct labor-hours in its predetermined overhead rate. At the beginning of
the year, the estimated direct labor-hours were 11,500 hours. At the end of the year, actual direct
labor-hours for the year were 9,700 hours, the actual manufacturing overhead for the year was
P143,350, and manufacturing overhead for the year was underapplied by P18,220. The estimated
manufacturing overhead at the beginning of the year used in the predetermined overhead rate
must have been:

  P125,130
  P164,023
  P148,350 
  P138,350

Question 9
ABC Corporation uses direct labor-hours in its predetermined overhead rate. At the beginning of
the year, the estimated direct labor-hours were 17,900 hours and the total estimated
manufacturing overhead was P341,890. At the end of the year, actual direct labor-hours for the
year were 16,700 hours and the actual manufacturing overhead for the year was P336,890.
Overhead at the end of the year was:

  P22,920 overapplied
   P22,920 underapplied
  P17,920 overapplied 
  P17,920 underapplied

Question 10
ABC Corporation uses direct labor-hours in its predetermined overhead rate. At the beginning of
the year, the estimated direct labor-hours were 21,800 hours and the total estimated
manufacturing overhead was P497,040. At the end of the year, actual direct labor-hours for the
year were 21,500 hours and the actual manufacturing overhead for the year was P492,040.
Overhead at the end of the year was:

  P6,840 underapplied
  P6,840 overapplied 
  P1,840 overapplied
  P1,840 underapplied

Question 11
ABC Company manufactures tools to customer specifications. The following data pertain to Job
1501 for April:

Direct materials used                                  4,200

Direct labor hours worked                            300
Direct labor rate per hour                              8.00
Machine hours used                                      200
Applied factory overhead rate per machine hour                    15.00
What is the total manufacturing cost recorded on Job 1501 for April?

  P 9,600 
  P 10,300 
  P 5,400 
  P 11,100

Question 12
Selected cost data (in thousands) concerning the past fiscal year's operations of ABC
Manufacturing Company are presented below.

                  Inventories       

               Beginning            Ending
                             Materials                           P75        P  85
                             Work in process                 80          30
                             Finished goods                   90          110
                             Materials used, 326
Total manufacturing costs charged to production during the year (including direct materials, direct
labor, and factory overhead applied at the rate of 60% of direct labor cost), P 686
Cost of goods available for sale, P 826
Selling and general expenses, P 25
The cost of goods sold during the year was:

  P 691 
  736 
  Not among the choices
  P 801
  P 716

Question 13
The factory ledger of ABC Company contains the following cost data for the year-ended December
31, 2018:

Inventories

  Opening      Closing

Raw materials P150,000 P170,000

Work in process 160,000 60,000

Finished goods 180,000 220,000

Total materials used 652,000

Total manufacturing costs charged to production during the year (including raw
materials, direct labor and factory overhead applied at the rate of 50% of direct labor
costs)
1,372,000

Compute the cost of raw materials purchased and the direct labor charged to production during the
year, respectively

  P672,000; P720,000
  P632,000; P240,000 
  P672,000; P480,000 
  P360,000; P480,000

Question 14
ABC Corporation uses direct labor-hours in its predetermined overhead rate. At the beginning of
the year, the estimated direct labor-hours were 11,500 hours. At the end of the year, actual direct
labor-hours for the year were 9,700 hours, the actual manufacturing overhead for the year was
P143,350, and manufacturing overhead for the year was underapplied by P18,220. The estimated
manufacturing overhead at the beginning of the year used in the predetermined overhead rate
must have been:

  P138,350
   P 164,023 
  P125,130 
  P148,350

Question 15
ABC Corporation uses direct labor-hours in its predetermined overhead rate. At the beginning of
the year, the estimated direct labor-hours were 17,900 hours and the total estimated
manufacturing overhead was P341,890. At the end of the year, actual direct labor-hours for the
year were 16,700 hours and the actual manufacturing overhead for the year was P336,890.
Overhead at the end of the year was:

  P22,920 overapplied
  P17,920 underapplied 
  P22,920 underapplied 
  P17,920 overapplied

Question 16
ABC Corporation uses direct labor-hours in its predetermined overhead rate. At the beginning of
the year, the total estimated manufacturing overhead was P423,870. At the end of the year, actual
direct labor-hours for the year were 19,400 hours, manufacturing overhead for the year was
underapplied by P5,650, and the actual manufacturing overhead was P418,870. The
predetermined overhead rate for the year must have been closest to:

  P20.76 
  P21.30 
  P21.59 
  P21.85
 
Question 1
ABC Company keeps an item in stock for which demand is 30,000 units per year. The cost of
placing an order for the item is P40 and the cost of holding one unit of the item is P0.60 per year.
The business uses the economic order quantity (EOQ) approach to derive the optimal order
quantity for the item. Demand for the item is even throughout the year.
What is the combined annual cost of stock holding and stock ordering for the item?

  P1,200
  P40,600
  P41,200
  P1,800

Question 2
ABC company orders 10,000 units (a one-year supply) of XYZ at one time.  XYZ costs P 2 per unit,
and order costs amount to P500 each time an order is placed.  The costs to carry XYZ in inventory
amount to 20% of the materials cost.  For an entire year, the inventory carrying costs and order
costs are:

  P 2,500
  P 1,000
  P 1,500
  P 200
 
Question 3
ABC Company manufactures winter jackets.  Setup costs are P 2.00.  Penguin manufactures
4,000 jackets evenly throughout the year.  Using the economic order quantity approach, the
optimal production run would be 200 when the cost of carrying one jacket in inventory for one year
is:

  P 0.05
  P 0.20
  P 0.10 
  P 0.40
 
Question 4
The following information relates to ABC Company's Material A:
Annual usage in units 7,200
Working days per year 240
Normal lead time in working days 20
Maximum lead time in working days 45
Assuming that the units of Material A will be required evenly throughout the year, the safety stock
and order point would be:

  750 600
  750 1,350
  600 750
  600 1,350
Question 5
The following information pertains to Material X used by ABC Company
Annual usage  20,000
Working days per year       250
Safety stock in units       200
Normal lead time in working days              30
If units of Material X will be required evenly throughout the year, the re-order point is

  3,200
  800 
  2,400 
  2,600

Question 6
The following information pertains to Material Y used by ABC Company
Daily usage         200
Normal lead time            10 days
Maximum lead time            14 days
If units of Material Y will be required evenly throughout the year, the re-order point is

  2,800
  2,000
  2,600 
  200
 
Question 7
The ABC Company uses 20,000 of Material A in making a finished product. The cost place one
order for Material A is P8.00 and the annual cost to carry one Material A is P2.00
The economic order quantity for Material A is

  565 units 
  283 units
  400 units 
  100 units
 
Question 8
One of the products that ABC Corporation sells is “XYZ” floor mats. ABC’s ordering costs related to
the mat is P12.50 per order. The costs of carrying one mat in inventory for one 1 year is P16.00.
ABC sells 40,000 of these mats evenly throughout the year.
What is the economic order quantity of ABC Corporation?

  250 units
  350 units 
  400 units 
  500 units
Question 9
ABC Company produces and sells a single item of product. Inventory at the beginning of
September was 400 units valued at P1.90 per unit. Further receipts and sales during the month
were as follows

Units Cost per unit

September 8 Receipts 600 P2.40

20 Receipts 500 ?

25 Sales 1,300 5

The inventory uses the FIFO method of stock valuation. Gross margin for September was P3,500.
What was the cost per unit of the 500 units received on September 20?

  P 2.67
  P 1.60 
  P 2.40 
  P 2.08
 
Question 10
The following data on materials purchases and issues during the month of April were reported:

April 1 Beginning balance 400 units at P6

5 Received 100 units at P7

11 Received 100 units at P8

13 Issued 400 units

15 Received 200 units at P6

22 Issued 250 units

27 Returned from factory 50 units

30 Received 300 units at P9

Assuming that the company used a perpetual inventory system, the total quantity and costs of
materials purchased for the month of April should be:

  700 units at P 6,200

  700 units at P 5,400 
  700 units at P 5,810 
   700 units at P 5,800
 
Question 11
The ABC Company made the following materials purchases and issues during January:

January 1 Balance on hand, 500 units at P4.00 each

3 Issued 250 units

5 Received 500 units at P4.50 each

6 Issued 150 units

10 Issued 110 units

Factory returned 10 units to the store room that were issued

11
on the 10th

15 Received 500 units at P5.00 each

Returned 300 units to vendor from January

20
15th purchase

26 Issued 100 units

   How much is the ending inventory under FIFO method?

  2,450 
  2,800 
  Not among the choices
  2,755
 
Question 12
The ABC Company made the following materials purchases and issues during January:

January 1 Balance on hand, 500 units at P4.00 each

3 Issued 250 units

5 Received 500 units at P4.50 each

6 Issued 150 units

10 Issued 110 units

 11 Factory returned 10 units to the store room that were issued on the 10th

15 Received 500 units at P5.00 each

20 Returned 300 units to vendor from January 15th purchase

26 Issued 100 units

How much is the cost of materials issued under FIFO method?

  2,800
  2,450 
  Not among the choices 
  2,355
 

Question 13
The ABC Company made the following materials purchases and issues during January:

January 1 Balance on hand, 500 units at P4.00 each

3 Issued 250 units

5 Received 500 units at P4.50 each

6 Issued 150 units

10 Issued 110 units

11 Factory returned 10 units to the store room that were issued on the 10th

15 Received 500 units at P5.00 each

20 Returned 300 units to vendor from January 15th purchase

26 Issued 100 units

How much is the ending inventory under Moving Average method

  2,549 
  Not among the choices 
  2,800 
  2,459
Question 14
The ABC Company made the following materials purchases and issues during January:

January 1 Balance on hand, 500 units at P4.00 each

3 Issued 250 units

5 Received 500 units at P4.50 each

6 Issued 150 units

10 Issued 110 units

11 Factory returned 10 units to the store room that were issued on the 10th

15 Received 500 units at P5.00 each

20 Returned 300 units to vendor from January 15th purchase

26 Issued 100 units

 How much is the cost of materials issued under Moving Average method

  Not among the choices 

  2,459 
  2,800 
  2,549

Question 15
ABC Company had 150 units of product on hand at January 1 costing P21.00 each. Purchasing of
product A during the month of January were as follows:

Units Unit Cost

January 10 200 P 22.00

18 250    23.00

28 100    24.00

Physical count on January 31 shows 250 units of product A on hand.

The cost of the inventory at January 31, under the FIFO method ‘is:

  P 5,550 
  P 5,250
  P 5,350
  P 5,850