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    26 views286 pages

    Test Banks

    Uploaded by

    Francis Cabas

    Copyright:

    © All Rights Reserved
    Download as PDF or read online from Scribd
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    Chapter 1 Cost Accounting — Basic Concepts and the Job Order Cost Cycle BASIC CONCEPTS — The decounting Systembis the major quantitative information system in al- most every organization. It for use in 2) Internal reporting to managere, for (3) Ba ternal reporting to i rs to management needs and pur- On the other hander use it is principally con- Where does "cosi accounting” fit within the framework? In its broadest sense, cost accounting has the same three major purposes as those described above. However, the third purpose simultaneously deals with costing of products for inventory valuation and income determination. It therefore fulfilis the demands of outsiders and thase of management for such information. When viewed in this way, eae the the extent ti ils p) ict costing function 3 the needs of external reporting. tT asic Concepts and the Job Order Coat Cycle 3 Which one of the following is least likely to be an objective of a cost accounting system? a. Product costing and inventory valuation b. Department efficiency ¢. Sales commission determination d. Income determination In cost terminology, conversion costs consists of a. Direct and indirect labor b, Direct labor and direct materials c. Direct labor and factory overhead d. Indirect labor and variable factory overhead Cost is the amount measured by the current monetary value of eco- nomic resources given up or to be given up in obtaining goods and services. Costs may be classified as unexpired or expired. Which of the following costs is not always considered to be expired immedi- ately upon being recognized? . Cost of goods sold b. Sales salaries c. Depreciation expense for plant machinery | d. Loss from bankruptcy of a major debtor not provided for in the annual adjustment, x Which is the best description of traditional cost accounting? a, The entire general ledger and subsidiary ledgers and related jour- nals, etc., of a manufacturer. — b, The general ledger and subsidiary accounts and related records, ete. used to accumulate the costs of goods or services provided by an entity. ¢. The accounts used to determine the coats of goods sold by an en- tity. d. All of the journals, ledgera, records, and financial statements used by an enterprise to record, classify, summarize, and report eco- nomic activity of an enterprise. a the statement of compstionsive intone includes cost of goods sold. Cost of goods oe bie est bse hiisey adjusted for change in inventory. In a man® facturing COMPANY, the purchases account is replaced by which account? 5. Ina retailing enterprise, a. Inventory b. Cast of goods sold c. Finished goods d. Cost of goods manufactured 6. The information contained in a cost of goods manufactured budget most directly relates to the: a. Materials used, direct labor, overhe: in-process budgets. . b. Materials used. direct labor, overhead applied, and work-in-pro- cess inventories budgets. ; c. Materials used, direct labor, overhead applied, work-in-process inventories, and finished goods inventories budgets. Materials used, dizect labor, overhead applied and finished goods inventory budgets ad applied, and ending work- ct 7. All costs related te the manufacturing function in a company are: a. Prime cost b. Direct. cost ec. Product cost d. Conversion cost 8. Indirect materials are a: Conversion Cost Manufacturing Prime Cost a. Yes ‘Yes Yes b. ¥es Yes No ce. No Yes Yes d. No No No 9. The wages of the factory janitorial staff should be classified as: a, Factory overhead cost b. Direct labor cost c. Period cost d. Prime’ cost Cost Accounting ~ Baste Concepts dnd the Sob Order Cost Cycle 27 10. i. 12. Job-order cost accountin eer: CO i systems and process-cost accounting sys- tems differ in the way: a. Manufacturing costs are assigned to production runs and the number of units for which costs are averaged. b. Orders are taken and the number of units in the orders ¢. Product profitability is determined and compared with planned coste. d. Manufacturing processes can be accomplished and the number of production runs that may be performed in a year, Two basic costing systems for assigning costs ta products or services are job costing and process costing. These two costing systems are usually viewed as being on opposite ends of a spectrum. The funda- mental criterion employed to determine whether job costing or pro- cess costing should be employed is: a. Proportion of direct (traceable) costs expended to produce the product or service. b. Number of cost pools employed to allocate the indirect costs to the product or service. «Type of bases used in allocating the indirect cost pools to the product or service. d. The nature and amount of the product or service brought to the marketplace for customer consumption. A company services office equipment. Some customers bring their equipment to the company's service shop; other customers prefer to have the company's service personnel come to their offices to repair their equipment. The most appropriate costing method for the com- pany is a. A job-order costing system b. An activity-based costing system c. A process costing system d. An operation costing system 28 13. 4. 16. ‘A company experienced a machinery breakdown on one ne 5 hee duction lines. As a consequence of the breakdown, manufacturing fell behind schedule, and a decision was made to schedule overtime to return manufacturing to schedule. Which one of the following methods is the proper way to account for the overtime paid to the direct laborers? a. The overtime hours times the sum of the straight-time wages and overtime premium would be charged entirely to manufac- turing overhead. . . hb. The cvertime hours times the sum of the straight-time wages and overtime premium would be treated as direct labor c. The overtime hours times the overtime premium would be charged to repair and maintenance expense, and the overtime hours times the straight-time wages would be treated as direct labor. d. The overtime hours times the overtime premium would be charged to manufacturing overhead, and the overtime hours times the straight-time wages would be treated as direct labor. In job-order costing, the basic document to accumulate the cost of each order is the . Invoice Purchase order Requisition order dob-cost. sheet Ao ee Companies characterized by the production of heterogeneous prod- ucts will most likely use which of the following methads for the pur- pose of averaging costs and providing management with unit cost data? Process costing Job-order casting Direct costing Absorption costing ae op Cost Accounting — Baste Concepts ani the Job Order Cost Chcle 29 16, 17. 18. 19. 20. soner, advertising agency serves a wide range of clients including ara facturers, restaurs nts, service businesses, department stores, and other retail establishments. The aecounting system the adve tising agency has most likely adopted for ite re in aceu- mulating costs is a. dJob-order costing b. Operation costing c. Relevant costing d. Process costing The work-in-process account is: a. Neither a real nor 2 nominal account. b, An inventory account indicating the beginning and ending in- ventory of goods being processed. c. A hybrid account (both a real and a nominal account). d. A nominal account to whieh indirect costs are charged as in- curred and eredited as these costs are charged to production. Many companies recognize three major categories of costs of manu- facturing a product. These are direct materials, direct labor, and over- head. Which of the following is an overhead cost in the production of an automobile? a. The cost of small tools used in mounting tires on each automo. ' bile b. The cost of the tires on each automobile. c. The cost of the laborers who place tires on each automobile. d. The delivery costs for the tires on each automobile, Many firms use two overhead accounts: factory overhead conirel and factory overhead applied. During the period, which account receives numerous debits and credits? a. Factory overhead applied b. Factory overhead control ce Both qd. Neither In a job-order cost system, the use of direct materials previously purchased usually is recorded as an increase in: Work-in-process account Factory overhead account Faetory overhead applied Material account BP rE os Chapre 30 rt 21. Ina traditional job order cost system, the issue of indirect materials ta a production department increases: a, Material account. b. Work in process account. ec, Factory overhead account. d. Factory overhead applied. 22. Which of the following items is not included in (charged to) factory overhead? a. Factory depreciation and supplies. b. Costs of service departments. ce. Costs of marketing departments. d. Casts of maintenance departments. 23. How does a job-order cost accounting system differ from a process. cost accounting system? a. Subsidiary ledgers for the work-in-process and finished goods inventories are necessary in job-order costing. b. The procedures to apply overhead to product cost are different, ¢. Both the timing and nature of entries to transfer cost from the work-in-process account to the finished goods inventory account are different. d. Moat of the journal entries that require debits and/or-credits to the work-in-process account are different. 24. Ina job-order cost system, direct lakor costs usually are recorded initially as an inerease in: a. Factory overhead applied b. Factory overhead control ¢. Finished goods control d. Work-in-process control 25. Ina job-order cost system, the application of factory overhead is usu- ally reflected in the general ledger as an increase in: Factory overhead control Finished goods control Work-in-process control Cost of goods sold ere Cost decounting ~ Basic Concepts and the Job Order Cost Cycle a 26. 27. 30. In a job-cost system, factory (manufacturing) averhead is: : 2 a Cost of Jobs A Necessary Element of Productian ; o a b No No os Yes Yes d, Yes No A nonmanufacturing organization may use: a. dob-order costing but not process costing. 5. Process costing but not job-order costing. e Either job-order or process costing. d. Neither job-order costing ner process costing. . The debits in work-in-process are BWIP, direct labor, direct materi- als, and factory overhead. The account should be credited for pro- duction that is completed and sent to finished goods in inventory. The balance is: a. Zero b. EWIP (credit) ce. EWIP (debit) d. Total production costs to be accounted for When the amount of overapplied factory overhead is ‘significant, the entry to close overapplied factory overhead will most likely require: a. A debit to cost of goods sold. b, Debits to cost of goods sold, finished goods inventory, and work- in-process inventory. c. A credit to cost of goods sold. d. Credits to cost of goods sold, finished goods inventory, and work- in-process inventory. Under a job-order system of cost accounting, ite Beso amount ite ‘al le r entry involved in the transfer of inventory from work- era heal goods is the sum of the costa charged to all jobs: Started in process during the period, a b. In process during the period. ‘ c, Completed and sold during the period. d. Completed during the period. 32 BP. tno The following cost data were taken from the records of JGG many. facturing company: ~ Depreciation on factory equipment P 1,000 Depreciation on sales office 800 7 Advertising 7,000 ~Freight-out (shipping) 3,000 ~ Wages of production workers 28,000 ~- Raw materials used 47,000, Sales salaries and commissions 10,000 ~ Factory rent 2,000 500 ~ Factory insurance Materials handling 1,500 Administrative salaries 2,000 Based upon this information, the qanufacturing cost incurred dur. ing the year was: a. P18,500 G0,000 80,000 a 80,500 d. 83,000 The following information was taken from Kate Company's account- ing records for the year ended December 31, 2018: —Anerease in materials inventory CR P 16,000 Decrease in finished goods invento: PRT PR 35,000 Raw materials purchased - 430,000 Direct-labor payroll’ —_~ wl ro 900,000 Factory overhead- | ® rand ne 300,000. Freight-out | Csi a fet . ‘Phere wde no otk ie-peomeme Giginning Ge-aniist the year. Kate's ost of goods (a..) P980,000 ™ “re FC. 2 ar5000 | an 5 c. 995,000 43%] 44cr 445 | Gack | coos 445" 44sk asx! Gace aasel qe Cast Accounting ~ Basic Conc anid the Job On VC &. doy Comp. manufactures plastic coated metal clips. The following were among Joy's 2018 manufacturing costs: Wages i 7 Machine operators YL> po0r * Maintenance workers “Factory foreman Materials sed Pree Boe ’ Metal wire o Lubricant for oiling machinery v Plastic coating 200,000 80,000 90,000 P500,000 10,000 380,000 Tn 2018, Joy's direct labor and\direct materials/amounted to: Direet Labor Direct Materials a. P230,000 510,000 b. 220,000 600,000 e. 320,000 880,000 d. 200,000 7 880,000 C. 4 Katherine Company manufactures special machines according to cus- tomers’ specifications. ‘The following data were available at the be- ginning and ending of April: Beginning Ending Materials inventory , _ P82,400 P34,000: Work in process inventory 7,200 16,240 Finished goods inventory 8,000 6,000 During April, direct materials costing P40,000 were purchased, di- rect labor cost totaled P33,000, and factory overhead was P17,160. For April, the cost of good manufactured is : a. P90,560 b. 81,520 c. 79,520 d. 88,660 fi Cc & Chapter! rrr — howe ‘The December 31, 2018 trial balance of Jean Company showed the following informatio jarne and allowances P2000 = ssirrd””SO f Sales 1,400,000 Sales ees 188'000 Fgh Mgoo0 —«Adverbangexpens® 45.000 Direct labor 320,000 Delivery expe Sales salaries 20,000 — December 31, 2018 January 1, 2018 000 Finished goods 46,000 P62, oe 12, Work Ss 13,000, i Materials 19,000 17,000 Compute the (1) total factory costs, and (2) cost of goods sold: a. (1)P749,000 ; (2) P763,000 b. (1) 790,000 ; 3 805,000 ¢. (1) 753,000 738,000 d. (1) 749,000 ; (2) 764,000 The accounting department of Mafe Company provided the follow. ing data for 2018; Sales P144,000 ‘Marketing expenses 7,200 Administrative expense 1440 Other expenses ‘720 Purchases ? Factory overhead 20,000 Direet labor 30,000, Cost of goods sold 100,600. Inventories, January 1: + Finished goods 14,000 Work in process 16,000 teal 16,000 Inventories, December 3: Workin process wen Materials 17.000 Compute for 2018 the cost of materials purchased: a, P82,640 b. 72,000 c 29,200 d. 72,000 Cost Accounting ~ Basie Concepts and the Jab Order Cost Cycle 33 C 7, The following data were taken from the records of Marlene Com- pany for the fiseal year ended December 31, 2018: Moterialé issued rect Factory supplies P10 OO P106,000 Facey payroll So Direct bor 250,000 Indirect labor 50,000 500,000 Machine maintenance and repair — 36,000 Factory rent, light and power ae Depreciation of machinery 10,000 Payroll taxes (factory payroll) a ete actory payroll) 80,000 Inventories: January 1 December 31 Work in process ,000 P40,000 Finished g is eon 60,000 Compute for 2018: (1) the cost of goods manufactured, and (2) the cost of goods sold: a. (1)P470,000 ; (2)P470,000 b. (1) 460,000 ; (2) 470,000 ¢. (1) 470,000 ; (2) 460,000 d. (1) 480,000 ; (2) 460,000 Pp 8. A manufacturing company had inventories at the beginning and end of 2018 as follows: a Materials Pd4,000 P60,000 Leng 80,000 96,000 During 2018, the following costs and expenses were incurred: Raw materials purchased P600,000 Direct! labor cost 240,000 Indirect labor cost, = 120,000 Taxes, utilities and depreciation of factory building 100,000 Sales and office salaries 128,000 The cost of goods sold during the period waa: a. P 1,028,000 b. 042,000 ¢. 1,044,000 d. 1,078,000 36 Be 4 Hop ruet the records of the Yvette Com, sted of having taken some inventy, you have gathered the You have been trying to reconst pany. Some employees are suspec ries. Many records are missing. Nevertheless, following data regarding the current year: Wotkinpracess bennning P200,000 Administrative expenses F400 ,009 Work pesca: Demening F000 | Porchasesof raw materials 890,099 Gross profit 2,500,000 Factory overhead. 700,009 Finished goods inventory, ond 760,000 Sales Cost of goods seld 1,600,000 Direct labor Solling expenses 400,000 Direct materials usod ‘The beginning finished goods inventory was: a. P50,000 b. 610,000 c. 600,000 a. 310,000 A mentally deranged employee, Mr. Arson, put a torch to a factory on February 20, 2018. The resulting fire completely destroyed the plant and its contents. Fortunately, certain accounting records were kept in another building. They revealed the following for the period December 31, 2017 to February 20, 2018: Prime cost, P901,000. Gross profit rate on sales, 20%. Cost of goods available for sale, P460,000. Direct materials purchased, P170,000 Work in process, December 31, 2017, P34,000. Direct materials, December 81, 2017, P16,000. Finished goods, December 31, 2017, P30,000. Factory overhead, 40% of conversion cost. Sales, P500,000. Direct labor, P180,000. The insurance company wanis to know the approximate cost of the inventories as a basis for negotiating a settlement. Compute for February 20, 2018: (1) the direct materials inventory: (2) work in process inventory, and (3) finished goods inventory: a (1) P65,000 ; (2) P25.400 ;(3) Pe0,000 b. (1) 49,000 ; (2) 25,000 ; (3) 30,000 e. (1) 6,000; (2) 25,400 :(3) 30,000 a. (1) 65,000 ; (2) 28,000 :(3) 60,000 Cost Accounting ~ Basic Concopts and the Job Order Cost Cycle iz A 11. . The Angie Manufacturing Company makes one model of 2 product known as Brand A. On January 1, 2018, there was 600 u: The following accounts of Josie M 2 i Josie Manufacturing Co, appeared in it balance sheets on December 31, 2017 and December 31.2018: a 2017 2018 faterials invento; Workin process inventory ree OOO 3s 008 Finished goods inventory 46,000 36,000 Accrued factory payroll 200 7,000 The following amounts appeared in the company's statement of com- prehensive income for 2018: Materialsused ‘600,000 Cost of goods sold 1,840,000 Direct labor “410,000 Indirect labor 140,000 Compute for 2018; (1) the amount of raw materials purchased, (2) the cost of goods manufactured, and (3) the payment of payroll: a. (1) P630,000 ; (2) P1,830,000 ; (3) P549,200 b. (1) 630,000 : (2) 1,876,000 :(3) 550,000 c. (1) 690,000 ; (2) Pi,880,000 ;(3) 560,000 a, (1) 690,000 ; (2) " 1/876,000 ;(8) 549.000 which were included in the finished goods inve: tory. Other inventories on January, I,weres-C Work in process iets Taam Soa IAD Semen) seo 5,740, Materials Sire] 716302 792] saz 24790 11,620 Among the data available for Detiihber 31, 2018 were the following: ~ Indirect labor yee you P12,160 - Direct labor : 32/640 -Freightin ~~ po 5,570 ~Materials inventory <-> 9.640 “Other factory overhead expenses > 31,730 - Work in process inventory m2 7,820 foo Ges, p Sales (1! 000 units) 360,000 Indirect: 21,590 materials F-1 _ Total factory costs_f0 194,080 There were 1,500 units of Brand A in the finished goods inventory at December 31, 2018. ini or the year: (1) the amount of materials purchased) (gross); Soa Pp ) -P180,000 qd) 05,800-7 b. (1) 88,610; (2) — 180,000 Ca a 96,160 ; (2) 108,000 d. G1) 88,610 ; (2) 108,000 arkin proses Be Materials 560 IEe | rou oe, ae GBise0 [G,co0 Teaco Pe eo Work in process 800 Materials Compute for June: (1) tke cost of goods sold) and. (2) income bette Z fie 50,300 ; (2) Pis.7ee- bee _ (oe) (> 53,500; @) 13 ener Time a = ax 50,300 ; (2) 17,020 (ess OPK C14) . (A 623, 800 5 7 2) 1,280 Me Bay 0 YA 14, Bamey Ine., submits th following data for December: Direct labor cost. ! Cost of goods sold, Inventory accounts showed these begi =< and = balances: December I December 31 goes [Le Coes (UR ini P 15,000 P17,500 5 Work in process 13,000. (ass 7°S _~ Materials 7,400 cess 0p CST 2 Pither data: ET MOG ai) ‘Marketing expenses P14,000 ‘General and administrative expenses Q 22,900 Sales for the month 182,000 Compy e elr ber: (1) the cost of goods available for sale, and “4 P128,500 ; (2) /P34,100 noe 111000 ; @ aioe _"* EES FG ¢. (1) >< 113,500 ; (2) 31,500 1 d. @) \ 128,500 ; @) 31,500 ~~ wip 10,258 ] 72,790 0°;920 | 52,000 2 Tt atidecownine = Basic Concer oh sod haa este TSS sso 15. Cost data on the ji follows: (@ Account balances: Imp Finished goods > Workin process » 1 irect material Se ts ? Indirect material aw ©) Transactions in March; t eoSupplies purchased. © Cost of goods sold 280,000 - Raw materials purchased 105,000 few Indirect labor ‘29,000 =» Factory heat, light, and power 11,220 "Factory rent sce 189500 ©} Factory insurance ees qe Sts “2000 2 Sales commissions overnnt_oeok ——* 2? 35.000 Administrative expenses Diasec —adee 25, yea Production supervisor's salary s a = f ove "6 4,250 hours, 250 b Fes ek a he peon a, (1) P75,640 ; (2) P47,662 b. () 78,390 ; (2) 52,800 .. §F 76,390 ; (2) 45,602 a a 78,390 ; (2) 47,662 D 16. Selected data concerning last year's operations of Terry Company are as follows: Inventories Mt ro 4 —por eee ior BZGk | Bur ne charged to jobs during the year (jn, ct de factory overhead appliag cludes material rect labor, amd = at a rate of 60% of direct dabee cost) PE86, 009. (c) Cost of goods available for sale, a _>4@) Marketing and administrative exp 6, P25,000 Compute for: (1) cos) charged to productiona a. (1) P336,000 ; (2) b.p41) 326,000 ; @) «195,000 ; (8) ©. 1) 411,000 ; 2) 326,000 ; (3) (1) 836,000 ; (2) 224,000 ; (8) 73 Soar x07 I9EK C2 ese = ZCAF C, 17. The following data are provided by the controller.ofeie Marlene Corporation; ih 240,000 Accounts receivable 348,000 Inventories; July 12017 — duly $1, 2018 Finished goods P44.200 P66,000 Work in process 29,800 38,800 Y, Materials 88,000 64,000 Material purchased P 366,000 Sales discount 8,000 ~Factory overhead (excluding-depreciation) 468,400 Fos 446,409 Marketing and administrative expenses excluding depreciatio s ‘ * lot 400 Depreciation 0505 anufacturing ~*~ wf £04 doo HA, _B22:by Ao markecng and administrative expences) 116,000 == Sales 1,844,000 Direct labor 523,000 Freighton materials purchased 6,000 ~Rental income 64,000 + Interest on bonds payable 6 Compute for: (15 a. (1)< P 1,522,800 ;¢ i (1)< 1,609,000 ;(2) 1,478,200 (1) “1,491,800 ; (2) - 1,481,000 (1) 1,491,800 ; (2) « 1,484,000 Cott Accatiting — Bast Pers look 18, On December |, the yD als aA, work ing the-Onth, mats 1. cae [Be See Bak ee Ih 6 AWfonmes Le corven.9o Amor Compsn eember was Pad,00 Gane A i ge of Pé46p¢F hour. Marketing and administratiy kPenses for the month amounted to 10%. pemmerieson December 31, were as fatlows: materials, (P20,099; work in aes "8,01 ee finished good: Net sales for December to 200,000, Factory overhead is d ¢ labor hour. eae De app! n the basis CPy Compe (Ft 9 ns) CX Pity O52) -P 90,000 (l)~ 100,000 ; (2) 90,000 sx (1) 100,000 ; (2) x 100'000 dx (x 90,000 : (2) ~~ 100000 ‘The Transporter Company is a small machine shop that uées highly skilled labor and job-order cost system, The total debits and credits in certain ac- counts Just before year-end are: cea lave 6,250 wasnt ® vera 2) December 31 2018 Total Debits Total Credits ~ Direet materials control P 100,000 P70,000 = 25 oe fork in process control 320,000 305,000= Creme Factory department overhead control $5,000 bse 7 ~ Finished goods control 325,000 300,000 = 25% oe Cost of goods sold. 300,000 7 Peetoty department overhoad plied) Ee eae nprucy 90,000 = 016 de Note that “total debits” in the inventory accounts would inelude beginning inven- torybalances,ifany. - The above accounts do not include the following: a. ‘Thedabor cost recapitulation for the December 31 working day: direct labor I Sloe areata Grimey) ey a Tet av boon apptidd nsa:percentnpe dd direct lihee ecg hace 1. « Pees ened wurchaaes during 2018 wereP5,000,) — eer Se = [sx pu * The nosetumns foauppliars, re were . —— + Dizect labor enate during 2018 totaled 1160,000

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