COST ACCOUNTING

COST ACCOUNTING
Not traceable to jobs:
FINAL EXAMINATION Factory materials and supplies 46,000
Indirect labor 235,000
1. The appropriate method for the disposition of Plant maintenance 73,000
underapplied or overapplied factory overhead. Depreciation of factory equipment 29,000
A. is to cost of goods sold only. Other factory cost 76,000 459,000
B. is to finished goods inventory only.
C. is apportioned to cost of goods sold and finished Pane's profit plan for the year included budgeted direct
goods inventory. labor of P320,000 and factory overhead of P448,000.
D. depends on the significance of the amount. Assuming no work-in-process on December 31, Pane's
overhead for the year was
2. During the current accounting period, a manufacturing A. P11,000 overapplied
company purchased P70,000 of raw materials, of which B. 24,000 overapplied
P50,000 of direct materials and P5,000 of indirect C. 11,000 underapplied
materials were used in production. The company also D. 24,000 underapplied
incurred P45,000 of total labor costs and P20,000 of other
factory overhead costs. An analysis of the work-in-process 5. Avery Co. uses a predetermined factory overhead rate
control account revealed P40,000 of direct labor costs. based on direct labor hours. For the month of October,
Based upon the above information, what is the total Avery's budgeted overhead was P300,000 based on a

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amount accumulated in the factory overhead control budgeted volume of 100,000 direct labor hours. Actual

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account? overhead amounted to P325,000 with actual direct labor

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A. 25,000 hours totaling 110,000. How much was the overapplied or

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B. 30,000 underapplied overhead?
C. 45,000 A. P30,000 overapplied

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D. 50,000 B. 30,000 underapplied

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A company allocates overhead to jobs in process using
C. P5,000 overapplied
D. 5,000 underapplied
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direct labor costs, raw material costs, and machine hours.
The overhead application rates for the current year are: 6. Harper Co.'s Job 501 for the manufacture of 2,200 coats,
which was completed during August at the unit costs
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100% of direct labor presented below. Final inspection of Job 501 disclosed 200
20% of raw materials spoiled coats which were sold to a jobber for P6,000.
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P117 per machine hour

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Direct materials P20

A particular production run incurred the following costs: Direct labor 18
Factory overhead (includes an allowance of P1
Direct labor, P8,000 for spoiled work) 18
Raw materials, P2,000 P56
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A total of 140 machine hours were required for the

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production run 7. Using the same information in No. 54, assume instead that
the spoilage loss is attributable to the exacting
What is the total cost that would be charged to the specifications of Job 501 and is charged to this specific job.
production run? What would be the unit cost of the good coats produced in
A. 18,000
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Job 501?
B. 18,400 A. P55.00
C. 34,780
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B. P57.50
D. None of the answers is correct C. P58.60
D. 61.60
4. Pane Company uses a job costing system and applies
overhead to products on the basis of direct labor cost. Job 8. Under Heller Company's job order cost system, estimated
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No. 75, the only job in process on January 1, had the costs of defective work (considered normal in the
following costs assigned as of that date: direct materials, manufacturing process) are included in the predetermined
P40,000; direct labor, P80,000; and factory overhead, factory overhead rate. During March, Job No. 210 for 2,000
P120,000. The following selected costs were incurred hand saws was completed at the following costs per unit:
during the year.
Direct materials P5
Traceable to jobs: Direct labor 4
Direct materials 178,000 Factory overhead (applied at 150% of direct
Direct labor 345,000 523,000 labor cost) 6

FINAL EXAMINATION Page 1

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 COST ACCOUNTING

P15 Completed in April and transferred to

department B 320,000
Final inspection disclosed 100 defective saws, which were Work in process, ending (40% complete) 40,000
reworked at a cost of P2 per unit for direct labor, plus
overhead at the predetermined rate. The defective units fall The equivalent units for the conversion cost calculation
within the normal range. What is the total rework cost and are:
to what account should it be charged?
A. P200 to work-in-process FiFO method Average method
B. P200 to factory overhead control A. 324,000 324,000
C. P500 to work-in-process B. 336,000 336,000
D. P500 to factory overhead control C. 336,000 324,000
D. 324,000 336,000
9. Department II of Charity Manufacturing Company presents
the following production data for the month of May, 2011: 12. Bart Co. adds materials at the end of the process in
Department M. The following information pertain to
Opening inventory, 5/8 completed 4,000 units Department M's work-in-process during April:
Started in process 13,000 units
Transferred 9,000 units Units
Closing inventory,1/2 completed 4,000 units Work in process, April 1 (60% complete as
3/4 completed 4,000 units to conversion cost) 3,000

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Started in April 25,000

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What are the equivalent units of production for the month Completed 20,000

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of May, 2011. Work in process, April 30 (75% complete

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as to conversion cost) 8,000
FiFO method Average method

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A. 12,500 units 13,000 units What are the equivalent units of production for the month
B.
C.
17,000 units
12,500 units rs e
12,500 units
14,000 units
of April?
FIFO Average
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D. 15,000 units 14,000 units Materials Conversion Materials Conversion
A. 28,000 28,000 28,000 28,000
10. Walden Company has a process cost system. All materials B. 20,000 20,000 26,000 26,000
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are introduced at the beginning of the process in C. 20,000 24,200 20,000 26,000
Department One. The following information is available for D. 24,200 20,000 26,000 20,000
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the month of January 2011:

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13. Collins Company, which, on April 1, had 6,000 units of WIP

Work in process 1/1/2011 (40% complete as in Department B, the second and last stage of its
to conversion cost) 500 production cycle. The costs attached to these 6,000 units
Started in January 2,000 were P12,000 of costs transferred in from Department A,
Transferred to department 2 during January 2,100 P2,500 of material costs added in Department B, and
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Work in process, 1/31/2011 (25% complete P2,000 of conversion costs added in Department B.
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as to conversion cost) 400 Materials are added at the beginning of the process in
Department B. Conversion was 50% complete on April 1.
What are the equivalent units of production for the month During April, 14,000 units were transferred in from
of January 2012? Department A at a cost of P27,000, and material costs of
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P3,500 and conversion costs of P3,000 were added in

FIFO Average Department B. On April 30, Department Bhad 5,000 units
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Materials Conversion Materials Conversion of WIP, 60% complete as to conversion costs. The costs
A. 2,500 2,200 2,000 2,000 attached to these 5,000 units were P10,500 of costs
B. 2,500 1,900 2,500 1,900 transferred in from Department A, P1,800 of material costs
C. 2,000 2,200 2,000 2,200 added in Department B, and P800 of conversion costs
D. 2,000 2,000 2,00 2,200 added in Department B.
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11. Department A is the first stage of Mann Company's Using the weighted average method, what were the
production cycle. The following information is available for equivalent units for the month of April?
conversion costs for the month of April 2011:
Transferred-in Materials cost Conversion
Units Cost cost
Work in process, beginning (60% A. 15,000 15,000 15,000
complete) 20,000 B. 19,000 19,000 20,000
Started in April 340,000 C. 20,000 20,000 18,000

FINAL EXAMINATION Page 2

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 COST ACCOUNTING

D. 25,000 25,000 20,000 operations of the Cutting Department for the month of
August show:
14. Using the same information in No. 27, and using the
weighted average method, what was the cost per Beginning Added this
equivalent unit for conversion costs? inventory Period
A. P4,200/15,000 Costs charged to the department:
B. P5,800/18,000 Materials P4,120 P44,880
C. P5,800/20,000 Direct labor 522 12,638
D. P5,000/18,000 Factory overhead 961 18,779

15. The Wilson Company manufactures the famous ticktock During the month, 9,200 units were transferred from the
watch on an assembly line basis. January 1, work-in- Cutting Department to the Fitting Department. The Cutting
process consisted of 5,000 partially compleed. During the Department had 1,000 units still in process at the end of
month an additional 110,000 units were started and July (100% complete as to materials and 40% complete as
105,000 units were completed, the ending work-in-process to conversion costs) and 800 units still in process at the
was 315 complete as to conversion costs. Conversion costs end of August (75% complete as to materials and 25%
are added evenly throughout the process. The following complete as to conversion costs, what is the average cost
conversion costs were incurred. per equivalent unit in the Cutting Department?
A. P6.40
Beginning costs for work-in-process. P1,500 B. P9.50

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Total current conversion costs 273,920 C. P7.40

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D. P8.50

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The conversion costs assigned to ending work-in-process

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totaled P15,360 using the FIFO method of process costing. 18. The following production information for Dept. B of Zenith
What was the percentage of completion, as to conversion Products is for the month of May, 2011:

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costs on the 5,000 units in BWIP?
A. 20%
B. 40% rs e Received from Dept. A
Completed and transferred to Dept. C
600,000 units
500,000 units
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C. 60%
D. 80% Additional information:
a. No beginning work in process.
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16. Barnet Company adds materials at the beginning of the b. Ending work in process is 75% complete.
process in Department M. Conversion costs were 75% c. May's production costs total P2,760,000.
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complete as to the 8,000 units in WIP at May 1 and 50%

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complete as to the 6,000 units in WIP at May 31. During Dept. B's unit cost of production for May, 2011 is:
May, 12,000 units were completed and transferred to the A. P4.60
next department. An analysis of the costs relating to WIP B. P4.80
at May 1 and to production activity for May is as follows: C. P5.02
D. P5.52
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Costs
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Materials Conversion 19. Throop Company had budgeted 50,000 units of output
WIP, May 1 P9,600 P4,800 using 50,000 units of raw materials at a total material cost
Costs added in May 15,600 14,400 of P100,000. Actual output was 50,000 units of product,
requiring 45,000 units of raw materials at a cost of P2.10
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The total cost per equivalent unit for May was: per unit. The direct material price variance and usage
variance were
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FIFO Average
A. P2.68 P2.68 Price Usage
B. 3.16 2.68 A. P4,500 unfavorable P10,000 favorable
C. 3.16 3.16 B. P5,000 favorable P10,500 unfavorable
D. 2.68 3.16 C. P5,000 unfavorable P10,500 favorable
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D. P10,000 favorable P4,500 unfavorable

17. Sonora Manufacturing Company produces a product from 20. Information on Rex Co.'s direct material costs for May is as
two manufacturing processes, the cutting and the fitting. follows:
The product is cut out of precious stones and then bought
to the fitting department where ports are added thereto. Actual quantity of direct materials
In view thereof, a process cost system using average cost purchased and used 30,000 lbs.
flow assumption is put in place. Relevant data on the Actual cost of direct materials P84,000
Unfavourable direct materials usage

FINAL EXAMINATION Page 3

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 COST ACCOUNTING

variance 3,000 B. P800 unfavorable

Standard quantity of direct materials C. P1,000 unfavorable
allowed for May production 29,000 lbs. D. P1,300 unfavorable

For the month of May, what was Rex's direct materials -END-
price variance?
A. P2,800 favorable
B. 2,800 unfavorable
C. P6,000 unfavorable
D. 6,000 favorable

21. 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
b. 1,000 unfavorable
c. P2,000 favorable
d. unfavorable

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22. A company's direct labor costs for manufacturing its only

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product were as follows for October:

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Standard direct labor hours per unit of product 1

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Number of finished units produced 10,000
Standard rate per direct labor hour
Actual direct labor costs incurred rs e P10
P103,500
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Actual rate per direct labor hour P9

23. A debit balance in the labor efficiency variance indicates

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that
A. Standard hours exceed actual hours.
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B. Actual hours exceed standard hours.

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C. Standard rate and standard hours exceed actual rate

and actual hours.
D. Actual rate and actual hours exceed standard rate and
standard hours
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24. When a change in the manufacturing process reduces the

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number of direct labor hour and standards are unchanged,

the resulting variance will be
A. A favorable labor usage variance.
B. An unfavorable labor usage variance.
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C. An unfavorable labor rate variance.

D. A favorable labor rate variance.
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25. Using the information presented below, calculate the total

overhead spending variance.

Budgeted fixed overhead P10,000

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Standard variable overhead (2 DLH at P2 P4 per unit

per DLH)
Actual fixed overhead P10,300
Actual variable overhead P19,500
Budgeted volume (5,000 units x 2 DLH) 10,000 DLH
Actual direct labor hours (DLH) 9,500
Units produced 4,500

A. P500 unfavorable

FINAL EXAMINATION Page 4

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