NATIONAL COLLEGE OF BUSINESS AND ARTS

CUBAO * FAIRVIEW * TAYTAY

2nd PREBOARD EXAMINATION

1st SEMESTER SY 2011-2012

ACCOUNTING 15
Practical Accounting 2
(Cost Accounting)
INSTRUCTION: Select the correct answer for each of the following questions. Mark only one answer for each item by shading the box corresponding to the letter of your choice on the answer sheet provided. STRICTLY NO ERASURES ALLOWED. THE FOLLOWING INFORMATION APPLIES TO QUESTIONS 1 THROUGH 3. The Swiss Clock Shop manufactures clocks on a highly automated assembly line. Its costing system utilizes two cost categories, direct materials and conversion costs. Each product must pass through the Assembly Department and the Testing Department. Direct materials are added at the beginning of the production process. Conversion costs are allocated evenly throughout production. Swiss Clock Shop uses weighted-average costing. Data for the Assembly Department for June 2011 are: Work in process, beginning inventory Direct materials (100% complete) Conversion costs (50% complete) Units started during June Work in process, ending inventory: Direct materials (100% complete) Conversion costs (75% complete) Costs for June 2011: Work in process, beginning inventory: Direct materials Conversion costs Direct materials costs added during June Conversion costs added during June 1. 250 units

800 units 150 units

P180,000 P270,000 P1,000,000 P1,000,000

What are the equivalent units for direct materials and conversion costs, respectively, for June? a. 1,200.5 units; 1,160.64 units b. 1,050 units; 1,012.5 units c. 1,050 units; 1,050 units d. 962 units; 990 units What is the total amount debited to the Work-in-Process account during the month of June? a. P450,000 b. P2,000,000 c. P2,270,000 d. P2,450,000 What amount of direct materials costs and conversion costs assigned respectively to the ending Work-in-Process account for June? a. P168,571.50 and P141,111.00 b. P283,552.50 and P101,956.64 c. P259,530 and P126,450.50 d. P236,850 and P188,148.00

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THE FOLLOWING INFORMATION APPLIES TO QUESTIONS 4 THROUGH 6. The Rest-a-Lot chair company manufacturers a standard recliner. During February, the firm's Assembly Department started production of 75,000 chairs. During the month, the firm completed 80,000 chairs, and transferred them to the Finishing Department. The firm ended the month with 10,000 chairs in ending inventory. There were 15,000 chairs in beginning inventory. All direct materials costs are added at the beginning of the production cycle and conversion costs are added uniformly throughout the production process. The FIFO method of process costing is used by Rest-a-Lot. Beginning work in process was 30% complete as to conversion costs, while ending work in process was 80% complete as to conversion costs. Beginning inventory: Direct materials Conversion costs P24,000 P35,000

Manufacturing costs added during the accounting period: Direct materials P168,000 Conversion costs P278,000 4. How many of the units that were started during February were completed during February? a. 85,000 b. 80,000 c. 75,000 d. 65,000 What is the amount of direct materials cost assigned to ending work-in-process inventory at the end of February? a. P19,200 b. P22,400 c. P25,600 d. P22,500 What is the cost of the goods transferred out during February? a. P417,750 b. P456,015 c. P476,750 d. P505,000 PRECISION, Inc. manufactures specialized precision electronic kits. In late March, Job orders # 0311 and #0322 were started. Estimated materials cost were P90,000 for both orders (60% for #0311) while direct labor hours were estimated at 700 for #0311 and 400 for #0322. Labor rate is P18 per hour while variable overhead rate is P10 per hour. By the end of April, 75% of the required materials have been issued to production in the amount of P90,000 and both job orders have been 50% converted with 360 hours charged to #0311 and 180 hours charged to #0322 at the hourly rates given. The total cost charged to Job order #0311 was: a. P45,800 b. P52,350 c. P64,080 d. P67,600 (Phil. CPA, adapted) THE FOLLOWING INFORMATION APPLIES TO QUESTIONS 8 THROUGH 9. For 2011, Marcottes Animal Supply Manufacturing uses machine-hours as the only overhead cost-allocation base. The accounting records contain the following information: Manufacturing overhead costs Machine-hours Estimated P100,000 20,000 Actual P120,000 25,000

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Using job costing, the 2011 budgeted manufacturing overhead rate is a. P4.00 per machine-hour. b. P4.80 per machine-hour. c. P5.00 per machine-hour. d. P6.00 per machine-hour.

9. Using normal costing, the amount of manufacturing overhead costs allocated to jobs during 2010 is a. b. c. d. P150,000. P125,000. P120,000. P100,000.

THE FOLLOWING INFORMATION APPLIES TO QUESTIONS 10 THROUGH 11. Wayland Manufacturing uses a normal cost system and had the following data available for 2011. Direct materials purchased on account P 74,000 Direct materials requisitioned 41,000 Direct labor cost incurred 65,000 Factory overhead incurred 73,000 Cost of goods completed 146,000 Cost of goods sold 128,000 Beginning direct materials inventory 13,000 Beginning WIP inventory 32,000 Beginning finished goods inventory 29,000 Overhead application rate, as a percent of direct-labor costs 125 percent 10. The ending balance of direct materials inventory is a. P46,000. b. P87,000. c. P41,000. d. P54,000. The ending balance of work-in-process inventory is a. P219,250. b. P73,250. c. P65,000. d. P211,000. Elsa, Inc. instituted a new process in October. During this month, 20,000 units were

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started in Department A. Of the units started, 2,000 were lost in process, 14,000 units were transferred to Department B, and 4,000 units remained in process on October 31. The work in process at October 31 was 100% complete as to material costs and 50% complete as to conversion cost. The material costs of P 54,000 and conversion costs of P80,000 were charge to the Department A in October. What was the total cost transferred to Department B? a. b. c. d. P 93,800 112,000 105,000 114,000

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Oddsends, a local company produces a small standard component in process

operation. There is a quality check control at the end of the processing. Items which fail this check are sold off as scrap for P 1.80 per unit. The expected rate of rejection is 10%. Normal loss is not a given a cost, except that whatever scrap value it has credited to the process account. The cost/value of the abnormal loss or gain, net of scrap value, is written off to the profit and loss account. Data for July are as follows: No work in process at the beginning and end of the period. Materials input Conversion cost Output to finished goods a. b. c. d. P 7,040 7,920 7,200 7,100 1,000 unit P 5,100 P 3,000 800 units

What was full cost of the finished output that passes the quality control check?

Questions 14 through 15 are based on the following information:

The number of units in the ending work-in-process inventory totaled 3,500 compute as follows:
Work-in-process-- May 1 Add-- Units transferred in from the Assembly Department Total units handled Less: Units transferred out Units spoiled Work-in-process, May 31 Units 1,400

14,000 15,400 11,200 700 11,900 3,500

Material is added at the beginning of the process and transferred-in costs are treated as if they were materials added at the beginning of the process. 14. If the total costs of prior departments included in the work-in-process of the Finishing Department on May 1 amounted to P6,300, the total cost transferred in from the Assembly Department to the Finishing Department during May is a. P70,000. b. P62,300. c. P70,700. d. P63,700. (AICPA, adapted) 15. The cost associated with the abnormal spoilage is a. P6,300. b. P1,260. c. P 560. d. P 840. (AICPA, adapted)