COST ACCOUNTING AND CONTROL/ BS ACCOUNTANCY/ M-TEST 2/ SEPTEMBER 30, 2022

“Do not be anxious about anything, but in every situation, by prayer and petition,
with thanksgiving, present your requests to God.” Philippians 4:6

Name: _______________________________ Section: ___________ Score: ____________

Instruction: Read the questions carefully. Write the correct answer for each question on the answer sheet provided at the last page of your test paper.
STRICTLY NO COMPLETE SOLUTIONS, NO POINTS.

Multiple Choice Questions

1. Which cost is NOT subtracted from selling price to calculate contribution margin per unit?
a. Variable manufacturing overhead c. Direct labor
b. Variable selling expenses d. Fixed manufacturing overhead
2. Which of the following would decrease unit contribution margin the most?
a. A 10% increase in variable costs c. A 10% decrease in variable costs
b. A 10% decrease in selling price d. A 10% increase in fixed cost per unit
3. The most likely strategy to reduce the breakeven point would be to
a. Increase both the fixed cost and the contribution margin
b. Decrease both the fixed costs and the contribution margin
c. Decrease the fixed costs and increase the contribution margin
d. Increase the fixed costs and decrease the contribution margin
4. Once the breakeven point has been reached, operating income will increase by the
a. Gross margin per unit for each additional unit sold c. Fixed costs per unit for each additional unit sold
b. Contribution margin per unit for each additional unit sold d. Variable costs per unit for each additional unit sold
5. Which of the following would cause the break-even point to change?
a. Sales increased
b. Total production decreased
c. Total variable costs increased as a function of higher production
d. Fixed costs increased owing to additional equipment in physical plant
6. One of the major assumptions limiting the reliability of breakeven analysis is that
a. Efficiency and productivity will continually increase
b. Total variable costs will remain unchanged over the relevant range
c. Total fixed costs will remain unchanged over the relevant range
d. The cost of production factors varies with changes in technology
7. There are so many assumptions inherent in CVP analysis. Which of the following is not one of these assumptions?
a. Cost and revenues are predictable and are linear over the relevant
b. Variable costs fluctuate proportionately with volume
c. Changes in the beginning and ending inventory are insignificant in amount
d. Sales mix will change as fixed costs increase beyond the relevant range
8. If the sales mix shifts toward higher contribution margin products, the break-even point
a. Decreases c. Remains constant
b. Increases d. Is zero
9. For a profitable company, the amount by which sales can decline before losses occur is known as the
a. Sales volume variance c. Variable sales ratio
b. Hurdle rate d. Margin of safety
10. The margin of safety is a key concept of CVP analysis. The margin of safety is
a. The contribution margin rate
b. The difference between budgeted sales and breakeven sales
c. The difference between the breakeven point in sales and cash flow breakeven
d. The difference between budgeted contribution margin and breakeven contribution margin
11. Operating leverage is greatest in companies that have
a. Low fixed cost, low unit variable cost c. Low fixed cost, high unit variable cost
b. High fixed cost, low unit variable cost d. High fixed cost, high unit variable cos1
12. A higher degree of operating leverage compared with industry average implies that the firm
a. Has higher variable costs c. Is more profitable
b. Has profits that are more sensitive to changes in sales d. Is less risky
volume
13. In a contribution income statement,
a. costs are classified as to function.
b. fixed and variable manufacturing costs are combined as one level item.
c. fixed costs are shown separately from variable costs.
d. fixed manufacturing costs are shown separately from variable manufacturing costs, but fixed and variable operating costs are combined as
one line item.
14. Which of the following is not correct? At break-even,
a. profit equals zero. c. sales equals total costs.
b. gross profit equals zero. d. fixed costs equals contribution margin
15. Which of the following statements is not correct? All other things remaining the same,
a. equal percentage increases in both the selling price and variable cost per unit will cause the break-even point in sales pesos to remain
unchanged.
b. equal percentage increases in both the selling price and variable cost per unit will cause the contribution margin ratio to remain unchanged.
c. equal peso increases in both the selling price and variable cost per unit will cause the break-even point in units to remain unchanged.
d. equal peso increases in both the selling price and variable cost per unit will cause the break-even point in pesos to remain unchanged.
16. Job order costing is:
a. a costing technique c. a cost flow assumption
b. a cost accumulation method d. an inventory system
17. Which of the following is an expense account?
a. factory payroll c. work in process
b. factory overhead d. cost of goods sold
18. When direct materials that were previously issued for a particular job are returned to the storekeeper, the journal entry to record the return is:
a. debit materials inventory and credit factory overhead
b. debit materials inventory and credit work in process inventory
c. debit purchase returns and credit work in process inventory
d. debit work in process inventory and credit materials inventory
19. When materials are issued in the production, the entry to record material usage is:
a. a debit to material inventory and a credit to accounts payable
 COST ACCOUNTING AND CONTROL/ BS ACCOUNTANCY/ M-TEST 2/ SEPTEMBER 30, 2022
b. a debit to materials inventory, a debit to factory overhead and a credit to accounts payable
c. a debit to work in process inventory, a debit to factory overhead and a credit to accounts payable
d. a debit to work in process inventory, a debit to factory overhead and a credit to materials inventory
20. Which of the following entry is prepared to record application of factory overhead to jobs?
a. debit factory overhead control for actual overhead, credit work in process inventory for applied overhead
b. debit factory overhead control for applied overhead, credit work in process inventory for actual overhead
c. debit work in process inventory for applied overhead, credit factory overhead control for actual overhead
d. debit work in process inventory for applied overhead, credit factory overhead control for applied overhead
21. Underapplied factory overhead is:
a. an unfavorable variance c. a credit balance
b. a debit balance d. both a and b
22. Underapplied overhead represents:
a. the amount which the estimated overhead exceeds actual overhead
b. the amount which the actual overhead exceeds applied overhead
c. the amount which the applied overhead exceeds actual overhead
d. the amount which the estimated overhead exceeds applied overhead
23. Overapplied factory overhead represents:
a. an unfavorable variance
b. the amount in which the applied overhead exceeds actual overhead
c. the amount which the actual overhead exceeds applied overhead
d. the amount which the actual overhead exceeds the estimated overhead
24. Which of the following statements is correct?
a. Direct and indirect materials are charged to work in process account.
b. Direct materials and direct labor are debited to work in process account.
c. Direct materials and direct labor are credited to work in process account.
d. Direct materials and direct labor are credited to factory overhead control.
25. Which of the accounts below represent assets?
a. cost of goods sold c. factory overhead
b. work in process inventory d. expired insurance
26. The actual factory overhead is recorded as:
a. Debit: work in process inventory for actual overhead Credit: factory overhead control for actual overhead
b. Debit: work in process inventory for applied overhead Credit: factory overhead control for actual overhead
c. Debit: factory overhead control for actual overhead
d. Credit: work in process inventory for applied overhead
27. In a job order cost system, the use of indirect materials previously purchased usually is recorded as a decrease in
a. raw materials control c. factory overhead control
b. work in process control d. factory overhead applied
28. Which of the following is not a source document used in job order costing systems?
a. Cost of production report c. Job cost sheet
b. Employee time sheet d. Material requisition form
29. Which of the following is a correct journal entry to apply manufacturing overhead cost to jobs?
a. Work in process Dr. & Manufacturing overhead Cr. c. Finished goods Dr. & Manufacturing overhead Cr.
b. Manufacturing overhead Dr & Work in process Cr. d. Work in process Dr. & Finished goods Cr.
30. The correct journal entry to dispose off an overapplied manufacturing overhead balance to cost of goods sold account is:
a. Overapplied Manufacturing overhead Dr. & Cost of goods sold Cr.
b. Cost of goods sold Dr. & Overapplied Manufacturing overhead Cr.
c. Overapplied Manufacturing overhead Dr. & Work in process Cr.
d. Cost of goods sold Dr. & Work in process Cr.
31. In planning its operations for 2021 based on a sales forecast of P6,000,000, Anne, Inc. prepared the following estimated data:
Cost and Expenses
Variable Fixed
Direct Materials P1,600,000
Direct Labor 1,400,000
Factory Overhead 600,000 900,000
Selling Expenses 240,000 360,000
Administrative Expenses 60,000 140,000
P3,900,000 P1,400,000
What would be the amount of peso sales at the break-even point?
a. P2,250,000 c. P4,000,000
b. P3,500,000 d. P5,300,000
32. The following data refer to cost-volume-profit relationship of Albert Co.
Break-even point in units 1,000
Variable cost per unit P250
Total fixed cost P75,000
How much will be contributed to operating income by the 1,001st unit sold?
a. P250 c. P75
b. P325 d. Zero
33. Sher Company is planning to sell 200,000 units of Product F. The fixed cost is P 400,000 and the variable cost is 60% of the selling price. In
order to realize a profit of P 100,000, what should be the selling price per unit?
a. P3.75 c. P6.00
b. P4.17 d. P6.25
34. August Company sells Product Rei for P 5 per unit. The fixed cost is P 210,000 and the variable cost is 60% of the selling price. What amount of
sales is needed to realize a profit of 10% of sales?
a. P700,000 b. P525,000 c. P472,500 d. P420,000
For questions number 35-40
Basic Illustration Corp. produces and sells a single product. The selling price is P25 and the variable costs is P15 per unit. The corporation's fixed
costs is P100,000 per month. Average monthly sales is 11,000 units.
35. The corporation's contribution margin per unit and as a percent of sales (CMR) is
a. P10 per unit; 40% c. 10 units; 40%
b. P40 per unit; 160% d. P10 per unit; 60%
 COST ACCOUNTING AND CONTROL/ BS ACCOUNTANCY/ M-TEST 2/ SEPTEMBER 30, 2022
36. The corporation's break-even point
a. P10,000 c. 10,000 units or P250,000
b. 250,000 units d. 250,000 units or P10,000
37. If the corporation desires to earn profit of P20,000 before tax, it must generate sales of
a. P12,000 c. 10,000 units or P250,000
b. 300,000 units d. 12,000 units or P300,000
38. If the corporation pays corporate income tax at the rate of 30%, and it desires to earn after-tax profit of P21,000, it must generate sales of
a. P325,000 or 13,000 units c. 12,040 units or P301,000
b. P13,000 or 325,000 units d. 16,375 units or P409,375
39. How much sales (in pesos) must be generated to earn profit that is 8% of such sales?
a. P270,000 c. P208,333.33
b. P312,500 d. P230,000
40. With an average monthly sale of 11,000 units, the corporation's margin of safety is
a. 1,000 units or P25,000 c. 11,000 units or P275,000
b. 10,000 units or P250,000 d. P10,000
41. CPA, Inc. sells three products, A, B, and C. The company sells three (3) units of C for each unit of A and two (2) units of B for each unit of C.
Total fixed costs amount to P760,000. Product A's contribution margin per unit is P2, Product B's is 150% of A's, and Product C's is twice as
much as B's. How many units of each product must be sold to break-even?
Product A Product B Product C
a. 2,000 12,000 6,000
b. 20,000 120,000 60,000
c. 29,231 58,462 87,692
d. 69,091 414,546 207,273

For questions number 42-43

42. Following information pertains to X Company's two products:
Digicam Videocam
Break-even point – units 360 240
Selling Price P4,500 P14,250
Variable Costs P2,250 P 5,000
What is the weighted-average contribution margin?
a. P11,500 c. P19.17
b. P5,050 d. P25,250
43. How much is total fixed costs?
a. P3,030,000 c. P5,040,000
b. P2,010,000 d. P5,050,000
44. Dianice Corp. has sales of P300,000, a variable cost ratio of 80% and a margin of safety of P120,000. What is Dianice's fixed cost?
a. P144,000 c. P60,000
b. P24,000 d. P36,000
45. Jing, Inc. has sales of P500,000, a break-even sales ratio of 60%, and a variable cost ratio of 70%. How much is Jing's profit?
a. P90,000 c. P150,000
b. P60,000 d. Cannot be determined from the given data.
46. Paula Company had inventories at the beginning and end of 2023 as follows:
1/1/2023 12/31/2013
Raw Materials P 55,000 P 65,000
Work in Process P 96,000 P 80,000
Finished Goods P 50,000 P 85,000
During 2023 the following costs were incurred:
 Raw materials purchased 400,000
 Direct-labor payroll 220,000
 Factory overhead 330,000
Cost of goods completed
a. P921,000 c. P966,000
b. P956,000 d. P979,000
47. Rizza Company uses a predetermined factory overhead application rate based on direct labor cost. For the year ended December 31, 2023,
Rizza's budgeted factory overhead was P600,000, based on a budgeted volume of 50,000 direct labor hours, at a standard direct labor rate of
P6.00 per hour. Actual factory overhead amounted to P620,000, with actual direct labor cost of P325,000. For 2023, overapplied factory
overhead was
a. P20,000 c. P30,000
b. P24,000 d. P50,000

For questions number 48-49

Armie Corporation manufactures plastic coated metal clips. The following were among Armie's 2023 manufacturing costs

Wages Materials used

Machine operators P200,000 Metal wire P500,000
Maintenance workers 30,000 Lubricant for oiling machinery 10,000
Factory foreman 90,000 Plastic coating 380,000
48. Armie's 2023 direct labor amounted to
a. P200,000 c. P290,000
b. P230,000 d. P320,000
49. Annie's 2023 direct materials amounted to
a. P890,000 c. P510,000
b. P880,000 d. P500,000
50. Wilma Company has underapplied overhead of P45,000 for the year. Before disposition of the underapplied overhead, selected year-end balances
from Wilma's accounting records were:
Sales P 1,200,000
Cost of goods sold 720,000
 COST ACCOUNTING AND CONTROL/ BS ACCOUNTANCY/ M-TEST 2/ SEPTEMBER 30, 2022
Direct materials inventory 56,000
Work-in-process inventory 54,000
Finished goods inventory 90,000
Under Wilma's cost accounting system, over- or underapplied overhead is allocated to appropriate inventories and CGS based on year-end
balances (significant difference). In its year-end income statement, Wilma should report CGS of
a. P682,500 c. P757,500
b. P684,000 d. P765,000
51. Jane Company uses job order costing system and applies manufacturing overhead to work in process using a predetermined annual overhead rate.
During May 2022, Jane's transactions included the
Direct materials issued to production P 50,000
Indirect materials issued to production 4,000
Manufacturing overhead incurred 75,000
Manufacturing overhead applied 80,000
Direct labor costs 60,000
Jane had neither beginning nor ending work in process inventory. What was the cost of jobs completed in May 2022?
a. P190,000 c. P186,000
b. P194,000 d. P189,000
52. Grace Company used a predetermined rate during 2022 of P2.00 per direct labor hour, based on an estimate of 20,000 direct labor hours to be
worked during the year. Actual costs and activity during 2022 were:
Actual manufacturing overhead cost incurred P 38,000
Actual direct labor hours worked 18,000
The under-or overapplied overhead for 2022 would be:
a. P1,000 underapplied c. P3,000 underapplied
b. P2,000 underapplied d. P2,000 overapplied
53. Alaska Company provided the following data was available for the year ended December 31, 2022:
Raw materials purchases P 80,000
Total manufacturing costs 220,000
Decrease in raw materials inventory 4,000
Decrease in work in process inventory 20,000
Increase in finished goods inventory 45,000
Sales 330,000
Gross margin ratio 40%
Factory overhead is applied at 60% of direct labor. How much is the factory overhead cost incurred?
a. P51,000 c. P85,000
b. P54,000 d. P136,000
For questions number 54 to 56
Keri Pa Ba Corporation is a local manufacturer that uses a job order costing. Manufacturing overhead is applied using a predetermined rate based
on direct labor cost. The cost ledger shows the following information for the month of August:
Work in Process Inventory
Balance P650,000 P458,000 Goods Manufactured
Materials used 180,000
Direct Labor 200,000
Applied FOH 180,000
Keri Pa Ba Corp. had three outstanding jobs in ending work in process that are expected to be delivered in the following month:
 Job #108 with direct materials of P65,000 and direct labor of P80,000
 Job #109 with direct materials of P75,000 and direct labor of P90,000
 Job #110 with applied overhead of P99,000
54. The total cost of Job #108 was:
a. P217,000 c. P190,000
b. P180,000 d. P293,000
55. Refer to the data for KPB Corporation. The total cost of Job #109 was
a. P172,250 c. P293,000
b. P246,000 d. P201,250
56. Refer to the data for KPB Corporation. The total cost of Job #110 was:
a. P171,000 c. P389,000
b. P272,250 d. P289,000
For questions number 57 to 60
The following data were obtained for the records of Kapit Lang Company for the month ended July 31, 2022:
Sales P 3,000
Cost of jobs completed and sold 2,400
Factory overhead rate multiplied by actual direct labor hours incurred 900
Purchase of raw materials 1,500
Sales salaries and other expenses 270
Other factory overhead costs incurred 300
Cost of direct materials used 1,050
Cost of supplies used 180
Direct labor cost incurred 450
Cost of indirect labor incurred 240
Net factory payroll after withholding 630
57. Refer to the data for KL Company. If a control account is used for factory payroll, the entry to record the factory payroll is:
a. debit factory overhead P690 / credit factory payroll P690.
b. debit work in process inventory P450 / debit factory overhead P240 / credit salaries payableP630/credit withholding accounts P60.
c. debit factory payroll P690 / credit salaries payable P630/credit withholding accounts P60.
d. debit factor payroll P690 / credit work in process inventory P450 / credit factory overhead P240.
58. Refer to the data for KL Company. The entry to record the distribution of payroll costs is:
a. debit work in process inventory P690/credit factory payroll P690.0
b. debit factory payroll P690 / credit salaries payable P630 / credit withholding accounts P60.
c. debit factory payroll P690 / credit work in process inventory P450 / credit factory overhead P240.
 COST ACCOUNTING AND CONTROL/ BS ACCOUNTANCY/ M-TEST 2/ SEPTEMBER 30, 2022
d. debit work in process inventory P450 / debit factory overhead P240 / credit factory payroll P690.
59. Refer to the data for KL Company. The entry to record applied factory overhead is:
a. debit work in process inventory P900/ credit factory overhead P900.
b. debit work in process inventory P720 / credit factory overhead P720.
c. debit factory overhead P720 / credit work in process inventory P720.
d. debit factory overhead P900 / credit materials control P180 / credit factory payroll P240/credit accounts payable P300/credit overhead
variances P180.
60. Refer to the data for KL Company. The entry to record cost of goods sold is:
a. debit cost of goods sold P2,220/debit net income P180/credit finished goods P2,400.
b. debit cost of goods sold P2,400/debit net income P600/credit sales P3,000.
c. debit cost of goods sold P2,400 / credit finished goods P2,400.
d. debit cost of goods sold P2,220/credit finished goods P2,220.

Pamantasan ng Lungsod ng San Pablo

College of Accountancy
AE 22 - Cost Accounting and Control
Midterm Test #2
September 30, 2022

Name:______________________________ Section:_________ Score:_______

STRICTLY NO ERASURES

1. 11. 21. 31. 6. 7. 17.

2. 12. 22. 32. 7. 8. 18.
3. 13. 23. 33. 8. 9. 19.
4. 14. 24. 34. 9. 10. 20.
5. 15. 25. 35. 1. 11. 21.
6. 16. 26. 1. 2. 12. 22.
7. 17. 27. 2. 3. 13. 23.
8. 18. 28. 3. 4. 14.
9. 19. 29. 4. 5. 15.
10. 20. 30. 5. 6. 16.