Beruflich Dokumente
Kultur Dokumente
COST ACCOUNTING
Multiple Choice: Select the letter of the correct answer. Provide solutions for problems.
Use the following to answer numbers 1-3:
Noritake Household Inc. is a rapidly growing company that has not been profitable despite increases in
sales. It has invited you as a consultant to find ways to improve profitabilty. You believe that the
problems results from the poor cost control and inaccurate estimation of jobs. The company has
essentially no accounting system from which to collect data. You are able, however, to piece together the
following information for August:
> Production
1. Completed Job 82
2. Started and Completed Job 82
3. Started Job 83
> Inventory Values- Work in process
1. July 31: Job 81
Direct Materials
4,000
Labor (960 hours @ P20)
19,200
2. August 31: Job 83
Direct Materials
3,200
Labor (1,040 hours @ P20)
20,800
> Each job in work in process was exactly 50% completed as to direct labor hours, however, all
direct materials necessary to do the entire job were charged to each job as soon as it was started.
> There were no direct material inventories or finished good inventories on either July 31 or
August 31.
> Actual overheas was P40,000.
> Cost of goods sold (before adjustment for over/under applied overhead)
Job 81:
Job 82:
Materials
4,000
Materials
?
Labor
?
Labor
?
Overhead
?
Overhead
?
Total
61,600
Total
?
> Overhead was applied to jobs using a predetermined rate per labor pesos that has been used since
the company began operating.
> All direct materials were purchased for cash and charged directly to work in process when
purchased. Direct materials purchased in August amounted to P9,200.
> Direct labor costs charged to jobs in August were P64,000. All costs were the same per hour for
all laborers in August.
> Assume that any under (over) applied factory overhead is considered insignificant.
1. How much is the total cost of Job 82?
a. P30,000
b. P42,000
2. What is the total cost of goods manufactured?
a. P103,600
b. P126,400
3. What is the total cost of goods sold?
a. P109,600
b. P113,600
c. P36,000
d. cannot be determined
c. P107,600
d. P91,600
c.P106,300
d. P103,600
4. Elton company uses job order costing system and the following information is available from its
records. The company has three jobs in process: #6, #9 and #13.
Raw materials used
P120,000
Direct labor per hour
P8.50
Overhead applied based on direct labor cost
120%
Direct materials were requisitioned as follows for each job respectively: 30%, 25% and 25%; the
balance of the requisitions was considered indirect. Direct labor hours per job are 2,500; 3,100;
and 4,200 respectively. Indirect labor is P33,000. Other actual overhead costs totalled P36,000.
Assume the balance in work in provess was P18,500 on June 1 and P25,297 on June 30. The
balance on June 30 represents one job that contains direct material of P11,250. How many direct
labor hours have been worked on this job?
a. 751
b. 725
c. 775
d. 780
5. During September, Iranian Manufacturing Company completed 50,000 units costing P600,000,
exclusive of spoilage allocation. Of these completed units, 25,000 were sold during the month.
An additional 10,000 units costing P80,000 were 50% complete at September 30. All units were
inspected at the completion of the process. Normal spoilage for the month was P7,000 and
abnormal spoilage was P32,500. How much is the total spoilage that should be charged against
revenue?
a. P39,500
b. P32,500
c. P25,500
d. P36,000
Use the following to answer number 6-7:
Believing that traditional cost system may be providing misleading information, Derrick
Manufacturing Company is considering an activity-based costing approach. It now employs a
full-costing and has been applying its manufacturing overhead on the basis of machine hours. The
organization plans on using 50,000 direct labor hours and 30,000 machine hours in the coming
year. The following data show the manufacturing overhead that is budgeted.
Activity
Materials Handling
Setup
Machining
Quality Control
Cost Driver
No. of parts handled
No. of setups
Machine hours
No. of batches
Budgeted Activity
3,600,000
30,000
20,000
50,000
Costs, sales and production data for one of the organization's products for the coming year are as
follows:
Prime costs:
Direct materials cost per unit
P12.20
Direct labor cost per unit (P1.5 DLH @ P15)
22.50
Sales and production data:
Expected sales
Batch Size
Setups
Total parts per finished unit
Machine hours required
50,000 units
4,000 units
2 per batch
5 parts
1,200 MH per batch
6. If the organization uses the traditional full cost system, the cost per unit for this product for the
coming year will be:
a. P44.50
b. P40.25
c. P43.70
d. P45.30
7. If the organization employs an activity-based costing system, the cost per unit for product
described for the coming year will be:
a. P39.25
b. P44.50
c. P35.50
d. P37.50
Use the following to answer numbers 8-10:
Rosy Manufacturing Company identified the following costs and cost drivers for the coming year:
Overhead Item
Material Handling
Material Inspection
Automated Machinery
Finishing
Packaging
Cost Driver
No. of parts
No. of parts
Machine hours
Direct labor hours
Orders shipped
Budgeted Overhead
225,000
2,475,000
840,000
170,000
170,000
The following information was collected on three jobs that were completed during the year:
Description
Units to be produced
Orders to be shipped
Number of parts per unit
Machine hours per unit
Labor hours per unit
Job 601
10,000
1,000
10
1
2
Job 702
5,000
500
15
3
2
Traditionally, the company allocated factory overhead based on direct labor hours. The company operated
in a competitive market and set product prices at cost plus 50% mark-up.
8. Using traditional costing, how much is the total manufacturing overhead cost of Job 702?
a. P1,141,200
b. P570,600
c. P1,500,000
d. P750,000
9. What is the application rate for the material handling activity and finishing activity?
a. P1 and P5
b. P4500 and P50
c. P4500 and P5
d. P1.01 and P55
10. Using activity-based costing, how much is the MOH per unit cost of Job 601?
a. P137.50
b. P110
c. P164
d. P116.25
Use the following to answer numbers 11-13:
Yakal Furniture produces coffee table in a two-department process: Cutting/ Assembly and Lamination.
Varnish is added in the Lamination Department when the goods are 60% complete as to overhead.
Spoiled units are found on inspection at the end of production. The company uses the weighted average
method in costing inventory.
Production data in the Lamination Department for April 2015:
Beginning inventory (80% complete as to labor, 70% complete as to overhead)
Transferred in during the month
Ending inventory (40% complete as to labor, 20% complete as to overhead)
Normal spoilage (found at final quality inspection)
Abnormal spoilage (found at 30% completion as to labor and 15% as to overhead; the
sanding machine was misalign and scarred the tables)
Cost data for April 2015:
Beginning work in process inventory:
Prior department costs
Varnish
Direct labor
Overhead
Current period cost:
Prior department costs
Varnish
Direct labor
Overhead
11. The cost of transferred out is
a. P297,654
b. P306,666
12. The cost of ending inventory is
a. P36,360
b. P36,828
13. The cost of abnormal loss is
a. P0
b. P4,148.60
15,020
1,900
4,388
11,044
137,080
14,030
46,000
113,564
c. P302,130
d. P301,777
c. P36,214
d. P37,102
c. P4,253.60
d. P4,536
16. Company Q produces three products from a joint process. The products can be sold at split-off or
process further. In deciding whether to sell at split-off or process further, management should
a. allocate the joint cost to the products based on relative sales value prior to making the decision
b. allocate the joint cost to the products based on physical quantity measure prior to making the
decision
c. subtract the joint cost from the total sales value of the products before determining relative sales
value and making the decision
d. ignore the joint cost from making the decision
17. Which of the following statements is true regarding by-products or scrap?
a. Process costing is the only method that should result in by-products or scrap.
b. Job order costing system will never have by-products or scrap.
c. Job order costing system may have instances where by-products or scrap result from the production
process.
d. Process costing will never have by-products or scrap from the production process.
18. Under an acceptable method of costing by-products, inventory costs of the by-product are based on the
portion of the joint production cost allocated to the by-product
a. but any subsequent processing cost is debited to the cost of the main product
b. but any subsequent processing cost is debited to revenue of the main product
c. plus any subsequent processing cost
d. minus any subsequent processing cost
19. Which of the following is a false statement about scrap and by-products?
a. Both by-products and scrap are salable.
b. A by-product has a higher sales value than does scrap.
c. By-products and scrap are the primary reason that management undertakes the joint process.
d. Both scrap and by-products are incidental outputs to the joint process.
20. A product may be processed beyond split-off point if management believes that
a. its marketability will be enhanced.
b. the incremental cost of further processing will be less than the incremental revenue of further
processing.
c. the joint cost assigned to it is not already greater than its prospective selling price.
d. both a and b.
21. Incremental separate costs are defined as all costs incurred between _________ and the point of sale.
a. inception
b. split-off point
c. transfer to finished goods inventory
d. point of addition of disposal costs.
22. The method of pricing by-products/ scrap where no value is assigned to these items until they are
sold is know as the
a. net realizable value at split-off point method
b. sales value at split-off method
c. realized value approach
d. approximated net realizable value at split-off method
23.For purposes of allocating joint costs to joint products using relative sales value at split-off method,
the costs beyong split-off
a. are allocated in the same manner as the joint costs.
b. are deducted from the relative sales value at split-off
c. are deducted from the sales value at the point of sale
d. do not affect the allocation of the joint costs.
24. Relative sales value at split-off is used to allocate
costs beyond split-off
joint costs
a.
yes
yes
b.
yes
no
c.
no
yes
d.
no
no
25. Incremental revenues and costs need to be considered when using which allocation method?
a.
b.
c.
d.
Physical measures
yes
yes
no
no
Job 601
18,000
650,000
700,000
8,740,000
4
Job 702
52,000
325,000
350,000
816,000
6
*Disposal cost of P0.10 per gallon, which is incurred in order to sell the product, have not been deducted to
arrive at this sales value.
26. The production cost per gallon of CH1 is
a. P2.83
b. P1.37
c. P2.62
d. P2.73
27. The value of the Finished goods inventory of CH2 at the end of March is
a. P216,320
b. P320,320
c. P462,000
d. P344,960
Use the following to answer numbers 28-30:
Brooks Company produces joint products M and N, together with a by-product O. M is sold at split-off point,
but N and O undergo additional processing. Production data pertaining these products for the year ended
December 31, 2015 are as follows:
Description
M
N
O
Joint costs
Separable costs
420,000
10,000
Production in pounds
100,000
80,000
20,000
Sales price per pound
P8
P15
P2.20
Inventory end in pounds
18,000
24,000
No materials are spoiled in production. Joint costs are allocated to joint products using the constant margin
approach. Net revenue from by-product is deducted from joint production costs.
28. The joint cost allocated to M and N respectively is
a. P343,200 & P94,800
b. P343,200 & P420,000
c. P343,200 & P128,800
29. The gross profit for M and N respectively is
a. P456,800 & P651,200
b. P456,800 & P685,200
c. P456,800 & P780,000
30. The value of finished goods at the end for M and N respectively is
a. P54,000 & P144,000
b. P154,440 & P61,776
c. P61,776 & P154,440
31. Which of the following statements regarding standard cost systems is true?
a. Favorable variances are not necessarily good variances.
b. Managers will investigate all variances from standard.
c. The production supervisor is generally responsible for material price variances.
d. Standard costs cannot be used for planning purposes since costs normally change in the future.
32. In standard cost system, Work in Process Inventory is ordinarily debited with
a. actual costs of material and labor and a predetermined overhead cost for overhead.
b. standard costs based on level of input activity (such as direct labor hour worked).
c. standard costs based on production output.
d. actual costs of material, labor and overhead.
33. A purpose of standard costing is to
rocess when
annot be determined
costing P600,000,
ow employs a
machine hours. The
s in the coming
Budgeted Cost
360,000
157,500
270,000
112,500
00 MH per batch
it for product
udgeted Overhead
225,000
2,475,000
840,000
170,000
170,000
ng the year:
Job 803
2,000
200
25
5
2
of Job 702?
2,000 units
14,900 units
3,000 units
200 units
400 units
5,000
55,000
49,000
6,000
be sold at split-off or
agement should
making the decision
prior to making the
revenue of further
ocation method?
Job 803
3,000
150,000
170,000
0.70
have not been deducted to
Total
472,000
430,000
200,000
nufacturing overhead
the variance
f Goods Sold
ted annual, or
ance would
Credit
125,000
68,250
2,000
500 units. The amount shown
May. There was no
e management has
cost category
P1,195,000
plied conversion cost for
P1,195,000