Cost Accounting and Control – Quiz 1 (30 pts.

Topics: Cost Concepts and Classifications; Classification of Costs According to its Behavior.

1. Day Mail Order applied the high-low method of cost estimation to customer order data for the
first 4 months of 2015. What is the estimated variable order filling cost component per order?

Month Orders Cost

January 1,200 P 3,120
February 1,300 3,185
March 1,800 4,320
April 1,700 3,895
6,000 P 14,520

a. P 2.00
b. P 2.42
c. P 2.48
d. P 2.50

2. Noriel Company has collected the following information over the last six months:
Month Units Produced Cost
July 10,000 P 20,000
August 12,000 20,500
September 13,000 20,600
October 14,000 21,000
November 11,000 20,050
December 18,000 21,600

Using the high-low method, what is the variable cost per unit?
a. P .20
b. P 1.20
c. P 1.49
d. P 1.59

3. Refer to the data for Noriel Company, using the high-low method, what is the total fixed cost?
a. P 4,135
b. P 5,143
c. P 8,000
d. P 18,000

4. Refer to the data for Noriel Company, using the high-low method, what is the estimated total
cost in a month when 14,000 units are produced?
a. P 20,800
b. P 21,000
c. P 24,800
d. P 25,943

5. Factory overhead includes

a. all manufacturing costs
 b. All manufacturing costs which maybe variable or fixed, except direct material and
direct labor.
c. Indirect materials but not indirect labor
d. Indirect labor but not indirect materials.

6. Which of the following statements is true regarding fixed and variable costs?
a. Both costs are constant when considered on a total basis.
b. Variables costs are constant in total, and fixed costs are constant per unit.
c. Both costs are constant when considered on a per unit basis.
d. Fixed costs are constant in total, and variable costs are constant per unit.

7. Which of the following is a variable cost?

a. A cost that is P 26,000 when production is 65,000 and P 26,000 when production cost is
91,000.
b. A cost that is P 26,000 when production is 65,000 and P 36,400 when production is 91,000.
c. A cost that is P 26,000 when production is 65,000 and P 52,000 when production is 91,000.
d. A cost that is P 52,000 when production is 65,000 and P 52,000 when production is 91,000.

Stone Company is a manufacturing company. During May 2017, the following costs appeared in the
Work in Process Inventory account.
Beginning balance P 12,000
Direct material used 35,000
Direct labor incurred 30,000
Applied overhead 24,000
Cost of goods manufactured 92,500

Stone Company applies overhead on the basis of direct labor cost. There was only one job left in Work in
Process at the end of May which contained P 2,800 of overhead.

8. What amount of direct material was included in this job (in process, end)?
a. P 2,100
b. P 2,200
c. P 4,400
d. P 6,920

For questions 9 – 12:

Green Piece Company manufactures wood file cabinets. The following information is available for June
2016.

Beginning Ending
Raw Material P6,000 P7,500
Work in Process Inventory 17,300 11,700
Finished goods Inventory 21,000 16,300

9. Direct labor is P9.60 per hour and overhead for the month was P9,600. Compute total
manufacturing costs for June, if there were 1,500 direct labor hours and P21,000 of raw material
was purchased.
 a. P58,500
b. P46,500
c. P43,500
d. P43,100

10. Direct labor is paid P9.60 per hour and overhead for the month was P9,600. What are prime
costs and conversion costs, respectively if there were 1,500 direct labor hours and P21,000 of
raw material was purchased?
a. P29,100 and P33,900
b. P33,900 and P24,000
c. P33,900 and P29,100
d. P24,000 and P33,900

11. Direct labor is paid P9.60 per hour and overhead for the month was P9,600. If there were 1,500
direct labor hours and P21,000 raw material purchased, Cost of Goods Manufactured is:
a. P49,100
b. P45,000
c. P51,000
d. P49,500

12. Direct labor is paid P9.60 per hour and overhead for the month was P9,600. If there were 1,500
direct labor hours and P21,000 of raw material purchased, how much is Cost of Goods Sold?
a. P64,500
b. P59,800
c. P38,800
d. P53,800

Planet Manufacturing Corp. is using the following flexible-budget formula for annual indirect labor cost:
Total Cost = P 12,000 + P .75 per machine hour

For the month of June, the operating budget is based upon 10,000 hours of planned machine time.

13. Indirect labor costs included in this planning budget are

a. P 7,500 c. P 17,500
b. P 8,500 d. P 19,500

Quantum Company wishes to determine the fixed portion of its maintenance expense (a semi-variable
expense), as measured against direct labor hours for the first three months of the year. The inspection
costs are fixed, the adjustments necessitated by errors found during inspection account for the variable
portion of the maintenance costs. Information for the first quarter is as follows:
Direct Labor hours Maintenance costs
January 34,000 hours P 61,000
February 31,000 hours 58,500
March 34,000 hours 61,000

14. What is the fixed portion of Quantum Company’s maintenance expense, rounded to the nearest
pesos?
 a. P 28,330 c. P 37,200
b. P 32,667 d. P 40,800

The following summations are available:

Sum of hours 860
Sum of costs 4,120
Sum of hours x cost 890,000
Sum of hours squared 187,000
Number of months analyzed 4

15. Using the least-squares method” for splitting a semi-variable cost, what is the variable rate per
hour?

a. Variable rate per hour, P 3 Fixed Cost, P 500

b. Variable rate per hour, P 2 Fixed Cost, P 600
c. Variable rate per hour, P 2 Fixed Cost, P 500
d. Variable rate per hour, P 4 Fixed Cost, P 600

16. St. Claire Manufacturing expects to produce and sell 6,000 units of Bhe, its only product, for P 20
each. Direct material cost is P 2 per unit, direct labor cost is P 8 per unit, and variable
manufacturing overhead is P 3 per unit. Fixed manufacturing overhead is P 24,000 in total.
Variable selling and administrative expenses are P 1 per unit, and fixed selling and
administrative costs are P 3,000 in total. According to generally accepted accounting principles,
inventoriable costs per unit of Bhe would be:
a. P 13.00 per unit c. P 17.00 per unit
b. P 14.00 per unit d. P 18.50 per unit

17. ANC Company consumed P 450,000 worth of direct materials during May, 20x9. At the end of
the month, the direct materials inventory of ANC Company was P 25,000 lower than the May 1
inventory level. How much was the direct materials procured during May 20x9?
a. P 475,000
b. P 375,000
c. P 400,000
d. P 425,000

18. ABC Company incurred the following costs during the month: direct labor, P 120,000; factory
overhead, P 108,000; and direct materials purchases, P 160,000. Inventories show the following
costs:
Beginning Ending
Finished goods P 27,000 P 30,000
Work in process P 61,500 P 57,500
Direct materials P 37,500 P 43,500

How much is the cost of goods manufactured?

a. P 443,500
b. P 382,000
c. P 386,000
d. P 388,000
19. The following data were taken from the records of ABC Company:

Inventories: 8/31/2018 9/30/2018

Raw materials P? P 50,000
Work in process P 80,000 P 95,000
Finished goods P 60,000 P 78,000

Raw materials purchases, P 46,000

Factory overhead, 75% of direct labor cost, P 63,000
Selling and administrative expenses, 12.5% of sales, P 25,000
Net income for September 2018, P 25,000

What is the cost of raw materials inventory on August 31, 20x8?

a. P 30,000
b. P 40,000
c. P 46,000
d. P 50,000

20. ABC Co. is a manufacturing business using the perpetual inventory system. The following
materials inventory account data is provided:
Beginning balance P 275,000
Other debits to the account 825,000
Excess of ending inventory over
beginning inventory 55,000

How much is the cost of materials issued to production?

a. P 770,000
b. P 1,045,000
c. P 1,100,000
d. P 1,155,000

21. The following selected information pertain to ABC Co.: direct materials, P 62,500; indirect
materials, P 12,500; factory payroll, P 75,000 of direct labor and P 11,250 of indirect labor; and
other factory overhead incurred, P 37,500. The total conversion cost was:
a. P 136,250
b. P 137,500
c. P 250,000
d. P 273,750

22. The following information were taken from the accounting records of ABC Co. for 2019:
Increase in raw materials inventory P45,000
Decrease in finished goods inventory 150,000
Raw materials purchase 1,290,000
Direct labor payroll 600,000
Factory overhead 900,000
Freight-out 135,000

The cost of raw materials used during the period amounted to:
 a. P 1,245,000
b. P 1,290,000
c. P 1,335,000
d. P 1,380,000

23. A credit to work in process inventory represents

a. Work still in process
b. Raw material put into production
c. The application of overhead to production
d. The transfer of completed items to finished goods inventory

24. A journal entry includes a debit to Work in Process Inventory and a credit to Raw Material
Inventory. The explanation for this would be that:
a. Indirect material was placed into production.
b. Raw material was purchased on account.
c. Direct material was into production.
d. Direct labor was used for production.

25. Production overhead does not include the costs of

a. Factory depreciation and supplies
b. Factory employees’ cafeteria departments
c. Production line labor
d. The maintenance department for the factory

26. Watson Company showed cost of goods sold of P 4,320,000 in the statement of comprehensive
income after the first year of operations.

The total manufacturing cost comprised the following:

Materials used 50%
Direct labor incurred 30%
Manufacturing overhead 20%
Goods in process at year-end amounted to 10% of the total manufacturing costs.
Finished goods at year-end amounted to 20% of the cost of goods manufactured.

What is the amount of direct labor cost incurred?

a. P 1,800,000 c. P 3,000,000
b. P 2,400,000 d. P 5,400,000

27. Pak Company provided the following information for the current year:

Increase in raw materials inventory P 150,000

Decrease in goods in process inventory 200,000
Decrease in finished goods inventory 350,000
Raw materials purchased 4,300,000
Direct labor payroll 2,000,000
Factory overhead 3,000,000
Freight – out 450,000
Freight – in 250,000
 How much is the cost of goods sold?

a. P 9,950,000 c. P 9,250,000
b. P 9,550,000 d. P 9,150,000

For questions 28 to 30:

555 Sardines Company incurred the following costs and expenses during the current year:

Raw materials purchases P 4,000,000

Direct labor 1,500,000
Indirect labor – factory 800,000
Factory repairs and maintenance 200,000
Taxes on factory building 100,000
Depreciation – factory building 300,000
Taxes on salesroom and general office 150,000
Depreciation – sales equipment 50,000
Advertising 400,000
Sales salaries 500,000
Office salaries 700,000
Utilities – 60% applicable to factory overhead 500,000

Beginning Ending
Raw materials 300,000 450,000
Work in process 400,000 350,000
Finished goods 500,000 700,000

28. What is the cost of raw materials used?

a. P 3,850,000 c. P 4,150,000
b. P 4,000,000 d. P 4,750,000

29. What is the cost of goods manufactured for the current year?
a. P 7,450,000 c. P 7,100,000
b. P 7,200,000 d. P 7,300,000

30. What is the cost of goods sold for the current year?
a. P 7,300,000 c. P 7,600,000
b. P 6,900,000 d. P 8,300,000