Cost Accounting and Management.docx

Cost Accounting and Management Write the letter of your choice beside each number. 1.

2.

3.

Jasper Company’s Job 302 for the manufacture of 2,200 shirts was completed during Sept. 2014 at the following unit costs: Direct materials P 20.00 Direct labor 18.00 Factory overhead (includes an allowance of P1 for spoiled work) 18.00 P 56.00 Final inspection of Job 302 discloses 200 spoiled units which were sold to a jobber for P6,000. Assume that spoilage loss is charged to all production during Sept. What would be the unit cost of the good units produced on Job 302? a. P58.00 c. P55.00 b. P56.00 d. P53.00 Assume instead, that the spoilage loss is attributable to exacting specification of Job 302 and is charge to this specific job. What would be the unit cost of the good shirts produced on Job 302? a. P61.60 c. P57.50 b. P58.60 d. P55.00

F 75 The portion of the weekly payroll that should be charged to factory overhead is: a. P217.50 c. P5,275.00 b. P5,217.50 d. P5,325.00 6.

Nocturnal Scents, Inc. uses a job order cost system with machine hours as the overhead base. At the beginning of last year, Nocturnal estimated 38,000 machine hours and P152,000 of manufacturing overhead costs. For the year, only 37,500 machine hours were logged but P153,500 of overhead was incurred. What is Nocturnal under or overapplied manufacturing overhead? a. P3,500 underapplied b. P2,000 underapplied c. P1,500 overapplied d. P1,500 underapplied

7.

Supra Soap produces two types of whitening cleansers: Deluxe and Elite. Both are produced on the same assembly line but are considered separate divisions. The company wants to know how to allocate manufacturing overhead to the products. The relevant data for the possible allocation bases are given below: Deluxe Elite Materials used P 40,000 P 25,000 Direct labor hours 20,000 35,000 Direct labor costs P 100,000 P145,000 Machine hours 6,000 15,000 Output units 25,000 30,000 The company incurred manufacturing overhead of P 48,000. Using direct labor hours, how much overhead will be allocated to the Elite? a. P34,054 c. P30,545 b. P30,455 d. 29,544

8.

Using machine hours, how much overhead will be allocated to the Deluxe? a. P34,286 c. 28,500 b. P17,455 d. 29,544

9.

Joint costs are those costs a. of products requiring the services of two or more processing departments. b. of a product from a common process that has relatively little sales value and only a small effect on profit. c. of production that are combined I the overhead account. d. of two or more products produced from a common process.

D’ Angeles uses a job order cost system with machine hours as an overhead base. The following information relates to D’ Angeles for last year: Estimated machine hours for the year 42,000 Actual machine hours for the year 40,800 Predetermined overhead rate P 1.50 per MH Underapplied factory overhead P 2,600 What is the peso amount of the following items? Estimated OH Applied OH Actual OH a. P63,000 P61,200 P63,800 b. P63,000 P61,200 P58,600 c. P61,200 P63,000 P65,600 d. P61,200 P63,000 P60,400

4.

5.

G & G Company pays time and a half for hours in excess of 40 hours per week. An individual is paid P24.00 per hour and worked 44 hours a week. The weekly earnings of the employee will amount to: a. P1,036 c. P1,032 b. P1,104 d. P960 Arnold Factory provides for an incentive scheme for its factory workers which features a combined minimum guaranteed wage of P875 per week and piece rate of P11.25. Production report for the week show: Employee Units produced A 67 B 78 C 80 D 82 E 72

10. 2.The journal entry to record the requisition of materials for production in the amount of P90,000 and for indirect factory use in the amount of P10,000 is a. Work in Process P100,000 Materials P100,000 b.

Work in Process P90,000 Factory overhead Applied P10,000 Materials P100,000

c.

Work in Process P90,000 Factory overhead Control P10,000 Materials P100,000

d.

Factory overhead Control Work in Process Materials

P90,000 P10,000 P100,000

11. The breakdown of payroll is: Direct Labor P 100,000 Indirect Labor 30,000 Marketing salaries 20,000 Administrative salaries 10,000 The journal entry to record such breakdown is a. Work in Process P160,000 Payroll P160,000 b.

c.

d.

Work in Process P100,000 Factory overhead Control 60,000 Payroll P160,000 Work in Process P100,000 Factory overhead Applied 30,000 Marketing Expenses Control 20,000 Administrative Expenses Control 10,000 Payroll P160,000 Work in Process P100,000 Factory overhead Control 30,000 Marketing Expenses Control 20,000 Administrative Expenses Control 10,000 Payroll P160,000

12. Two of the components of actual factory overhead are the following: Depreciation P 35,000 Expired insurance 5,000 The journal entry is a. Factory Overhead Control P40,000 Accumulated Depreciation P35,000 Prepaid Insurance 5,000 b.

Factory Overhead Applied P40,000 Accumulated Depreciation P35,000

Prepaid Insurance

5,000

c.

Depreciation Expense P35,000 Insurance Expense 5,000 Factory Overhead Applied P40,000

d.

Depreciation Expense P35,000 Insurance Expense 5,000 Accumulated Depreciation P35,000 Prepaid Insurance 5,000

The following data (in thousands of pesos) have been taken from the accounting records of Karlana Corporation for the just completed year. Sales Raw materials inventory, beginning Raw materials inventory, ending Purchases of raw materials Direct labor Manufacturing overhead Administrative expenses Selling expenses Work in process inventory, beginning Work in process inventory, ending Finished goods inventory, beginning Finished goods inventory, ending

P

91 80 20 100 130 200 160 140 40 10 130 150

Use these data to answer the following series of questions. 13. The cost of the raw materials used in production during the year (in thousands of pesos) was: a. P180 c. P120 b. P 40 d. d. P160 14. The cost of goods manufactured (finished) for the year (in thousands of Pesos) was: a. P530 c. P500 b. P520 d. P460 15. The cost of goods sold for the year (in thousands of pesos) was: a. P670 c. P540 b. P500 d. P650 16. The net income for the year (in thousands of pesos) was: a. P410 c. P 40 b. P110 d. P180 The T –accounts below provide selected data about a company’s financial results for the year. Raw Materials Inventory Jan. 1 bal. Php 22,500 Debits 75,000 Dec. 31 bal. Php 18,000

?

Credits

Work in process 18,000 Finished goods 54,000

Finished Goods Jan. 1 bal. Debits Dec. 31 bal.

Php 90,000 ? Php 72,000

Factory Overhead Debits Work-in-Process Jan. 1 bal. Direct mat. Direct labor Overhead Dec. 31 bal.

Php 110,000

?

Credits The following information were available for April, 2014:

?

Php 52,500 Php 282,000 72,000 90,000 112,500 Php ? .

Manufacturing Wages Payable Debits Php 100,500 Php 66,000 99,000 Cost of Goods Sold Debits

Credits

Credits

Jan. 1 bal. Credits

?

18. The amount of indirect materials in the factory overhead account is a. Php 4,500 c. Php 12,000 b. Php 7,500 d. Php 18,000

c. Php 274,500 d. Php 372,000

20. Last month, Pare Company placed P60,000 of materials into production. The Printing Department used 8,000 labor hours at P5.60 per hour and the Binding Department used 4,600 hours at P6.00 per hour. Factory overhead is applied at a rate of P6.00 per labor hour in the Printing Department and P8.00 per labor hour in the Binding Department. Pare’s inventory accounts show the following balances: Beginning Ending Finished goods P22,000 P17,000 Work in process 15,000 17,600 Materials 20,000 18,000 What is the total cost of goods sold? a. P219,600 c. P108,000 b. P214,600 d. P217,200 21. Marilag Company had the following inventories: April 1 April 30 Direct materials P 36,000 P45,000

Direct labor Direct labor rate per hour Overhead rate per direct labor hour Cost of goods manufactured

P 60,000 P7.50 10.00 153,650

What is the prime cost during April, 2014? a. P81,650 c. P90,000 b. P80,000 d. P96,000 22. Trackside Co. employs a job order cost system. Its manufacturing activities in July, 2014, its first month of operation, are summarized as follows:

17. The amount of over- (under-) applied overhead is a. Php (10,500) c. Php 1,500 b. Php (1,500) d. Php 10,500

19. The cost of goods sold is a. Php 300,000 b. Php 282,000

26,000 72,000

JOB NUMBERS 201 202 203 Direct materials P7,000 P5,800 P11,600 Direct labor cost P6,600 P6,000 P 8,400 Direct labor hours 1,100 1,000 1,400 Units produced 200 100 1,000

204 P5,000 P2,400 400 300

Manufacturing overhead is applied at a rate of P2 per direct labor hour for variable overhead, P3 per hour for fixed overhead. Jobs 201, 202 and 203 were completed in July. What is the cost of the completed jobs? a. P62,900 c. P72,900 b. P62,500 d. P65,900 23. Using the same info as in the previous problem, how much is the cost of job-in-process at the end of July? a. P62,900 c. P7,400 b. P8,200 d. P9,400 24. Worrel Corporation has a job order cost system. The following debits (credits) appeared in the ledger account work-in process for the month of March, 2014: March 1, balance P 12,000 31, direct materials 40,000 31, direct labor 30,000 31, factory overhead 27,000 31, to finished goods (100,000) Worrel applies overhead, to production at a predetermined rate of 90% based on the direct labor cost. Job No. 232, the only job still in process at the end of March, 2013, has been charged with factory overhead of P2,250. What was the amount of direct materials charged to Job no. 232? a. P2,250 c. P4,250

b.

P2,500

d. P9,000

25. Worley Company has underapplied overhead of P45,000 for the year ended December 31, 2014. Before disposition of the underapplied overhead, selected December 31, 2014, balances from Worley’s accounting records are as follows: Sales P1,200,000 Cost of goods sold 720,000 Inventories: Direct materials 36,000 Work in process 54,000 Finished goods 90,000 Under Worley’s cost accounting system, over or underapplied overhead is adjusted to cost of goods sold. In his 2014 Income Statement, Worley should report cost of goods sold of a. P682,500 c. P756,000 b. P765,000 d. P757,500 26. Worley Company has underapplied overhead of P45,000 for the year ended December 31, 2014. Before disposition of the underapplied overhead, selected December 31, 2014, balances from Worley’s accounting records are as follows: Sales P1,200,000 Cost of goods sold 720,000 Inventories: Direct materials 36,000 Work in process 54,000 Finished goods 90,000 Under Worley’s cost accounting system, over or underapplied overhead is allocated to appropriate inventories and cost of goods sold based on year-end balances. In his 2014 Income Statement, Worley should report cost of goods sold of a. P682,500 c. P756,000 b. P684,000 d. P757,500 27. Helen Corp. manufactures products W, X, Y and Z from a joint process. Additional Information follow: If Processed Further Units Value at Additional Sales Product Produced Split-off Costs Value W 6,000 P 80,000 P 7,500 P 90,000 X 5,000 60,000 6,000 70,000 Y 4,000 40,000 4,000 50,000 Z 3,000 20,000 2,500 30,000 18,000 P200,000 P20,000 P240,000 Assuming that total joint costs of P160,000 were allocated using the net realizable value approach, what is the amount of joint costs allocated to product W? a. P82,500 c. P240,000 b. P60,000 d. P20,000

28. Helen Corp. manufactures products W, X, Y and Z from a joint process. Additional Informa-tion follow: If Processed Further Units Value at Additional Sales Product Produced Split-off Costs Value W 6,000 P 80,000 P 7,500 P 90,000 X 5,000 60,000 6,000 70,000 Y 4,000 40,000 4,000 50,000 Z 3,000 20,000 2,500 30,000 18,000 P200,000 P20,000 P240,000 Assuming that total joint costs of P160,000 were allocated using the final selling price as allocation base, what is the amount of joint costs allocated to product Y? a. P33,455 c. P33,333 b. P60,000 d. P20,000 29. HAVI Inc. manufactures products F, G and H from a joint process. Additional information Is as follows: Products F G H Total Units produced 8,000 ? 4,000 20,000 Joint cost ? ? P24,000 ? Sales value at split-off ? ? ? P200,000 Joint product costs are allocated using the physical units of production approach. What is the amount of joint costs allocated to product G? a. P36,000 c. P50,000 b. P48,000 d. P24,000 30. HAVI Inc. manufactures products F, G and H from a joint process. Additional information Is as follows: Products F G H Total Units produced 8,000 4,000 2,000 14,000 Joint cost ? ? P18,000 P 120,000 Sales value at split-off P120,000 ? ? P200,000 Joint product costs are allocated using the relative sales-value at split-off approach. What is the amount of joint costs allocated to product G? a. P30,000 c. P50,000 b. P18,000 d. P12,000 31. Kew Co. had 3,000 units in work-in-process at April 1 that were 60% complete as to conversion cost. During April, 10,000 units were completed. At April 30, the 4,000 units in work-in-process were 40% complete as to conversion cost. Direct materials are added at the beginning of the process. How many units were started during April? a. 9,000 c. 10,000 b. 9,800 d. 11,000

32. In department 1 of the XYZ Company, the beginning and ending in-process inventory were 2,000 units and 1,000 units, respectively. The beginning inventory was 70% complete, while the ending inventory is 40% complete. There were 5,000 units started during the period. How much is the equivalent units of production used to allocate the cost added into process this period? a. 5,000 units c. 4,500 units b. 6,000 units d. 1,000 units 33. In department 1 of the XYZ Company, the beginning and ending in-process inventory were 2,000 units and 1,000 units, respectively. The beginning inventory was 70% complete, while the ending inventory is 40% complete. There were 5,000 units were started during the period. The cost expended for the current period were P7,500. The cost expended last period attributable to the beginning inventory of this period is P2,740. How much is the cost assigned to the ending inventory? a. P500 c. P650 b. P600 d. P700 34. In department 1 of the XYZ Company, the beginning and ending in-process inventory were 2,000 units and 1,000 units, respectively. The ending inventory is 40% complete. There were 5,000 units started during the period. The cost expended for the current period were P7,500. How much is the equivalent units of production? a. 5,000 units c. 6,500 units b. 6,400 units d. 5,500 units 35. In department 1 of the XYZ Company, the beginning and ending in-process inventory were 2,000 units and 1,000 units, respectively. The ending inventory is 40% complete. There were 5,000 units started during the period. The cost expended for the current period were P7,500. The cost expended last period attributable to the beginning inventory of this period is P2,740. How much is the cost assigned per equivalent unit of inventory? a. P1.50 c. P1.70 b. P1.60 d. P1.75 36. Using the same info as in the previous item, how much is the cost assigned to ending inventory? a. P10,240 c. P640 b. P540 d. P600 37. Using the same info as in the previous item, how much is the cost assigned to inventory transferred to next department? a. P10,240 c. P9,640 b. P9,600 d. P6,000 38. The following data pertain to a company’s crackingdepartment operations in December: Units Completion

Work-in-process, December 1 Units started Units completed & transferred to the distilling department Work-in-process, December 31

20,000 50% 170,000 180,000 10,000 50%

Materials are added at the beginning of the process and conversion costs are incurred uniformly through-out the process. Assuming use of the FIFO method of process costing, the equivalent units of conversion performed during December were a. 170,000 equivalent units. b. 175,000 equivalent units. c. 180,000 equivalent units. d. 185,000 equivalent units. 39. The Cutting Department is the first stage of Mark Company’s production cycle. BWIP for this department was 80% complete as to conversion costs. EWIP was 50% complete. Conversion costs in the Cutting Department for January were as follows: Units CC WIP at January l 25,000 P 22,000 Units started and costs incurred during January 135,000 143,000 Units completed and transferred to next department during January 100,000 Using the FIFO method, what was the conversion cost of WIP in the Cutting Department at January 31? a. P22,000 c. P39,000 b. P33,000 d. P78,000 40. The following information pertains to Lap Co.’s Palo Division for the month of April: Number of Units Cost of Materials Beginning work-in-process 15,000 P 5,650 Started in April 40,000 18,000 Units completed 42,500 Ending work-in-process 12,500 All materials are added at the beginning of the process. Using the weighted-average method, the cost per equivalent unit for materials is a. P0.59 c. P0.45 b. P0.55 d. P0.43 Next three (3) questions are based on the following data: ERIC Corporation manufactures a product that gives rise to a byproduct called X. The only costs associated with the by-product are selling costs of P1 for each unit sold. ERIC accounts for X sales first by deducting its separable costs from such sales and then by deducting this net amount from cost of sales of the major product. This year, 1,000 units of X were sold at P4 each. 41. If sales and cost of sales of ERIC are P50,000 and P17,000, respectively, prior to adjustment for the by-products net

realizable value, how much is the gross margin of ERIC after adjustment a. P30,000 c. P29,000 b. P36,000 d. P37,000 42. If ERIC changes its method of accounting for X sales by recording the net amount as additional sales revenue, ERIC’s gross margin will a. Be unaffected. c. Decrease by P3,000 b. Increase by P3,000. d. lncrease by P4,000. 43. If ERIC changes its method of accounting for X sales by recording the net amount as other income, ERIC’s gross margin will a. Be unaffected c. Decrease by P3,000. b. Increase by P3,000. d. Decrease by P4,000. The next five (5) questions are based on the following data: Golden Foods produces three supplemental food products simultaneously through a refining process costing P93,000. The joint products, Alpha and Beta, have a final selling price of P4 per pound and P10 per pound, respectively, after additional processing costs of P2 per pound of each product are incurred after the split-off point. Charlie, a by-product, is sold at the splitoff point for P3 per, pound. Alpha: 10,000 pounds of Alpha, a popular but relatively rare grain supplement having a caloric value of 4,400 calories per pound. Beta: 5,000 pounds of Beta, a flavoring material high in carbohydrates with a caloric value of 11,200 calories per pound. Charlie: 1,000 pounds of Charlie, used as a cattle feed supplement with a caloric value of 1,000 calories per pound. 44. Assuming Golden Foods inventories Charlie, the by-product, the joint cost to be allocated to Alpha, using the netrealizable-value method is a. P 3,000 c. P31,000 b. P30,000 d. P60,000 45. Assuming Golden Foods inventories Charlie, the by-product, the joint cost to be allocated to Alpha, using the physical quantity method is a. P 3,000 c. P31,000 b. P30,000 d. P60,000 46. Assuming Golden Foods inventories Charlie, the by-product, the joint cost to be allocated to Beta using the weightedquantity method based on caloric value per pound is a. P39,208 c. P50,400 b. P39,600 d. P52,080 47. Assuming Golden Foods inventories Charlie, the by-product, the joint cost to be allocated to Alpha using the gross marketvalue method is

a. b.

P36,000 P40,000

c. P41,333 d. P50,000

48. Assuming Golden Foods does not adjust the joint cost for the value of Charlie, the by-product, the joint cost to be allocated to Beta using the net-realizable-value method is a. P30,000 c. P52,080 b. P31,000 d. P62,000 49. A job order costing system would probably be appropriate for a firm that produces: a. Automobiles. b. Accounting Firm c. Video cassettes. d. Microcomputers. 50. An industry most likely to use process costing is: a. Sugar Processing b. Textbook publishing. c. Aircraft manufacturing. d. Construction. 51. When a manufacturing firm has a highly automated plant, the most probable basis for applying manufacturing overhead costs to units produced would be: a. Units produced. c. Direct labor cost. b. Machine hours. D. Material cost. 52. Overapplied overhead would result when: a. Overhead costs budgeted for the period exceeds actual overhead cost incurred. b. Actual overhead costs incurred exceed overhead applied to production. c. Overhead applied to production exceeds actual overhead costs incurred. d. The plant operated at fewer hours than were budgeted. 53. Partial or completed units of manufactured goods that do not meet customer specifications and sell at reduced price or simply discarded are called a. spoilage c. scrap b. Rework d. equivalence 54. In process and job costing system, normal spoilage cost is considered as a. conversion costs c. inventoriable costs b. sunk costs d. non inventoriable costs 55. An Unit cost is calculated in costing system by assigning total costs incurred to many similar units is classified as a. accounting period costing system b. process costing system c. job costing system d. none of above

56. Costing system which is a combination of process costing and job costing system is classified as a. weighted costing system b. average costing system c. hybrid costing system d. double costing system 57. Process of tracing direct costs and allocation of indirect costs is classified as a. cost assignment b. direct assignment c. indirect assignment d. economic assignment 58. A joint cost allocation method is based on relative value of total sales at point of split off is classified as a. sales value at split off method b. joint costs at split off point method c. joint products value at split off method d. main product cost at split off method 59. Manufacturing, distribution and marketing costs incur after split off point is classified as a. separable costs b. joint costs c. main costs d. split off costs 60. . In cost terms, direct manufacturing labor cost is included in a. manufacturing costs b. prime costs c. conversion costs d. Both B and C