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UNIVERSITY OF SAN CARLOS

SCHOOL OF BUSINESS AND ECONOMICS


DEPARTMENT OF ACCOUNTANCY
AC 512 COST ACCOUNTING PART 2
INSTRUCTIONS. WRITE YOUR FINAL ANSWERS ON THE ANSWER SHEET PROVIDED. FOR
PROBLEM SOLVING ITEMS, PLEASE WRITE SOLUTIONS ON THE ANSWER SHEET ALSO.
1. If there was no beginning work in process and no ending work in process under the
weighted-average process costing method, the number of equivalent units for direct
materials, if direct materials were added at the start of the process, would be:
A. Equal to the units started or transferred-in
C. Less than the units completed
B. Equal to the units completed
D. Both a and b are correct
2. Under the weighted-average method, the stage of completion of beginning work in
process:
A. Is relevant in determining the equivalent units
B. Must be combined with the work done during the current period to determine the
equivalent units
C. Is irrelevant in determining the equivalent-unit calculation
D. Can almost always be determined with a high degree of precision
3. A distinct feature of the FIFO process-costing method is that the:
A. Work done on beginning inventory before the current period is blended with the work
done during the current period in the calculation of equivalent units
B. Work done on beginning inventory before the current period is kept separate from the
work done during the current period in the calculation of equivalent units
C. Work done on ending inventory is kept separate from the work done during the current
period in the calculation of equivalent units and is usually not included in the
calculation
D. FIFO process costing method is only minimally different from the weighted-average
process costing method
4. A disadvantage of the weighted-average method compared to the FIFO process costing
method is that:
A. FIFO is computationally simpler
B. FIFO provides better management information for planning and control purposes
C. When unit cost per input prices fluctuate markedly from month to month, its per unit
cost is less representative than FIFO
D. The information it provides about changes in unit prices from one period to the next is
less useful than the information provided by FIFO
5. Which of the industries listed is most likely to use process costing in accounting for
production costs?
A. Electrical contractor
C. Newspaper publishing
B. Clothing manufacturing
D. Road building
6. In comparing the FIFO and weighted-average methods for calculating equivalent units
A. The FIFO method is better than the weighted-average for judging the performance in a
period independently from performance in preceding periods
B. The weighted average is more precise than the FIFO method because the weighted
average method is based only on the work completed in the current period
C. The FIFO method tends to smooth costs out more over time than the weighted average
method
D. The two methods will give similar results even if physical inventory levels and the
production costs (materials and conversion costs) fluctuate greatly from period to
period
7. Shrinkage should be accounted for as
A. Miscellaneous period cost
C. miscellaneous expense
B. An offset to overhead
D. Spoilage
8. Normal spoilage is defined as
A. Uncontrollable waste as a result of a special production run
B. Controllable spoilage
C. Spoilage that results from normal operations
D. Spoilage that arises under inefficient operations
9. Which of the following is a characteristic of a process costing system?
A. Work in process inventory is restated in terms of completed units
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B. Costs are accumulated by order


C. It is used by a company manufacturing custom machinery
D. Standard costs are not applicable
10.Assuming that there was no beginning work in process inventory, and the ending work in
process inventory is 100% complete as to material costs, the number of equivalent units
as to material costs would be
A. The same as the units placed in process
B. The same as the units completed
C. Less than the units placed in process
D. Less than the units completed
11.I. Cost of abnormal spoilage is charged to ending inventory.
II. Normal spoilage is always charged uniformly to finished and transferred units.
A. Only Statement I is True
B. Only Statement II is True
C. Both statements are true.
D. Neither of the statements is true.
12.This consists of the units unfinished in the previous period and the units started in the
current period.
A. Started and Put into Process
B. Total Units Accounted For
C. Started and Completed
D. Total Units to Account For
13.I. Normal continuous losses are treated in the cost production report through the method
of neglect.
II. Costs of abnormal continuous losses are charged as product costs.
A. Only Statement I is True
B. Only Statement II is True
C. Both statements are true.
D. Neither of the statements is true.
14.Costs of finished and transferred units under the FIFO method consist of the following
costs:
A. Beginning inventory, started & completed, and finished & transferred
B. Started & completed and finished & transferred
C. Beginning inventory, costs to complete, started & completed
D. Beginning inventory and started & completed
15.I. Transferred-in units are always treated as 100% completed in EUP computation.
II. Current cost of transferred-in units in the second department is equal to the current cost
of the units finished and transferred of the previous department.
A. Only Statement I is True
B. Only Statement II is True
C. Both statements are true.
D. Neither of the statements is true.
16.I. The weighted average method of process costing can only be used if materials are
added at the beginning of the production process.
II. When assigning costs to partially completed units in the ending work in process
inventory, it is not necessary to consider the percentage completion of the units under the
weighted average method.
A. Only Statement I is True
B. Only Statement II is True
C. Both statements are true.
D. Neither of the statements is true.
17.Which of the following is subtracted from EUP under weighted average to obtain EUP
under FIFO?
A. Beginning WIP EUP completed in current period
B. Beginning WIP EUP produced in prior period
C. Ending WIP EUP not completed
D. Ending WIP EUP completed
18.I. The principal difference between process costing and job costing is that in job costing an
average process is used to compute the unit costs of products or services.
II. A hybrid costing system would be appropriate for a company that manufactures several
varieties of jam.
A. Only Statement I is True
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B. Only Statement II is True


C. Both statements are true.
D. Neither of the statements is true.
19.Normal spoilage is defined as unacceptable production that
A. Arises because of a special job or process
B. Occurs in ongoing operations
C. Is caused specifically by human error
D. Is in excess of that which is expected
20.I. Operation costing is a hybrid costing system that uses both aspects of job order costing
and process costing.
II. A production system in which a single factory manufactures numerous variations of
products through the use of computer-controlled robots is called Flexible Manufacturing
System.
A. Only Statement I is True
B. Only Statement II is True
C. Both statements are true.
D. Neither of the statements is true.
21.ABC Processors is a company that sells food processors, and it manufactures these in a
single continuous processing operation. At the end of August 2014, there were 200 units
on hand with a cost of P30,095 consisting of P25,200 in materials cost. These were 100%
complete as to material, and 25% complete as to conversion cost. During the month of
September 2014, 1200 units were added to production with materials cost of P168,000.
Conversion cost during the month were P158,125. At the end of September 2014, the
processors which have not been completed total 200 units, which were 100% complete as
to materials and 50% complete as to conversion cost. There were no units lost in process.
What were the equivalent units of production for the month of September using FIFO?
Materials
Conversion
A. 1,400 units
1,350 units
B. 1,200 units
1,100 units
C. 1,200 units
1,150 units
D. 1,200 units
1,250 units
For items 22 25:
The following information pertain to the Assembly Department of AAA Company for the month of
Sept.:
Opening
Inventory

Material
Labor
Overhead
Put in Process
Material
Labor

4,000 units
Completion
(%)
All
50
50

Cost
P1,992
1,074
846
20,000
units
P12,000
9,984
100% of
Labor

Overhead
Units completed and
21,000
transferred
units
In process at the end
3,000 units
Material
All
Labor
60
Overhead
60
22.The production equivalent for material is
Weighted Average FIFO
A. 24,000
20,000
B. 20,000
21,000
C. 20,000
24,000
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D. 21,000
20,000
23.The production equivalent for labor and overhead is
Weighted Average FIFO
A. 21,000
20,800
B. 24,000
22,800
C. 22,800
20,800
D. 21,000
21,000
24.The total cost of the work in process at the end is
Weighted Average FIFO
A. P3,577
P3,500
B. P3,477
P3,528
C. P3,528
P3,477
D. P3,500
P3,577
25.What is the entry to record manufacturing costs incurred during September?
A. WIP Assembly Department 31,968
Materials
12,000
Payroll
9,984
Applied Overhead
9,984
B. WIP Assembly Department 35,880
Materials
13,992
Payroll
11,058
Applied Overhead
10,830
C. Materials
12,000
Payroll
9,984
Applied Overhead
9,984
WIP Assembly Department
31,968
D. Materials
13,992
Payroll
11,058
Applied Overhead
10,830
WIP Assembly Department
35,880
E. WIP Assembly Department 3,912
Materials
1,992
Payroll
1,074
Overhead
846
For items 26 -27:
26.For the month of May 2014, the Finishing department, the last department of the process,
of BCD Inc. had in opening work in process 80% complete units and in ending work in
process 50% complete units. Related data for the month:
Units
Conversion Cost
Work in process, May 1
50,000
P88,000
Units started and costs incurred during May 270,000
572,000
Units completed and transferred during May 200,000
May

If the company uses FIFO costing, the conversion cost of the work in process at the end of
would be how much?
A. P132,000
C. P176,000 E. P163,428
B. P156,000
D. P254,000

27.The entry to record the transfer of completed units from the finishing department would
include:
Debit
Credit
A. WIP-Finishing Dept
Finished Goods
B. Cost of Goods Sold
WIP Finishing Dept
C. Finished Goods
WIP Finishing Dept
D. WIP Finishing Dept
Cost of Goods Sold
For items 28 -29:
28.At the CDE Industrial Co., the process begins with the blending of various chemicals and
ends with the canning of the paint after which the gallon cans are sent to the Shipping
Dept. for packing and crating. Direct labor and overhead are continuously added during
processing. Overhead is applied at the rate of P30 per direct labor hour. After blending,
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completed units are transferred to the Heating Department. Data for the month of October
in the Blending Dept:
Physical units:
Work in process, beginning inventory
4,000 gallons
Raw materials chemicals (7% complete)
Direct labor (25% complete)
Overhead (25% complete)
Started in process
21,000 gallons
Completed and transferred
20,000 gallons
Work in process, ending inventory
Raw materials chemicals (100% complete)
Cost:
Work in process, beginning inventory
Raw materials chemicals
P456,000
Direct labor (P100 per hour)
32,500
Overhead
?
Current Costs
Raw materials chemicals
P2,284,000
Direct labor (P100 per hour)
320,000
Overhead
?
Using the weighted-average method, the cost of raw materials-chemicals in the work in
process ending inventory was how much?
A. P438,400
C. P571,000
B. P548,000
D. P687,000
29.What is the entry to record the transfer of completed goods from the blending department
assuming the company uses the weighted-average method?
A. Finished Goods
2,597,750
WIP Blending Department
2,597,750
B. WIP Blending Department
2,597,750
WIP Heating Department
2,597,750
C. WIP Heating Department
2,597,750
WIP Blending Department
2,597,750
D. WIP Blending Department
2,580,000
WIP Heating Department
2,580,000
E. WIP Heating Department
2,580,000
WIP Blending Department
2,580,000
For items 30 33:
EFG Manufacturing Co. makes a single product in two departments. The production department
for Dept.2 for May 2014 follows:
Quantities:
In process, May 1 (40% done)
4,000 units
Received from Dept.1
30,000 units
Finished and Transferred
25,000 units
In process, May 31, (60% done)
6,000 units
Production Costs
May 1
Current
Transferred In
P16,300
P89,100
Materials
3,800
67,500
Conversion cost
1,940
81,000
Materials are added at the start of the process, and losses normally occur during the early
stages of the operation.
30.How much is the cost of the ending work in process inventory using weighted average?
A. P44,640
C. P46,800
B. P45,600
D. P51,680
31.How much is the cost of goods manufactured suing the first-in first-out?
A. P187,250
C. P195,250
B. P193,040
D. P214,040
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32.How much is the total unit cost per EUP using FIFO?
A. P5.50
C. P5.20
B. P8.80
D. P8.60
33.I. The entry to record the cost incurred during May is:
WIP-Dept2 154,240
Materials
71,300
Conversion Cost
82,940
II. Using weighted-average, the entry to record goods completed is:
Finished Goods
215,000
WIP Dept2
215,000
A. Only Statement I is false
B. Only Statement II is false
C. Both statements are false
D. Neither of the statements is true
For items 34 and 35:
34.FGH Products transferred 40,000 units to one department; 20,000 units were in beginning
inventory in that department. At the end of the month, 30,000 units were transferred out
to the next department, 16,000 units remained in work in process, 40% complete as to
conversion costs and the remaining units were lost at the 75% stage of conversion.
Beginning inventory was 60% complete as to conversion costs and lost units were the
result of internal failure. What is the equivalent units of conversion cost using FIFO
costing?
A. 24,400
C. 18,200
B. 17,450
D. 34,900
35.The cost of the lost units in the cost production report will be charged to:
A. Finished and Transferred Only
B. Ending Inventory Only
C. Both finished and transferred and ending inventory
D. Neither of the finished and transferred and ending inventory
36.GHI Manufacturing Co.s second department received 30,000 units. There were 10,000
units during the start of the month in that department. At the end of the month, 24,000
units were transferred out to the 3rd department, 12,000 units remained in work in
process, 40% complete as to conversion costs and the remaining units were lost at the
75% stage of conversion. Beginning inventory was 60% complete as to conversion costs,
and lost units were the result of normal production shrinkage. What is the equivalent units
of conversion cost using FIFO?
A. 11,400
C. 26,800
B. 22,800
D. 14,400
For items 37 - 38:
37.HIJ Inc. instituted a new process in January. During January, 20,000 units were started in
Department A. Of the units started, 2,000 were lost in the process due to normal
production shrinkage, 14,000 were transferred to Department B, and 4,000 remained in
work in process at January 31. The work in process at January 31 was 100% complete as to
material costs and 50% complete as to conversion costs. Material costs of P54,000 and
conversion costs of P80,000 were charged to Department A in January. What were the total
costs transferred to Department B?
A. P134,000
C. P56,000
B. P99,960
D. P112,000
38.How much is the recorded cost of the normal spoilage in the cost production report?
A. P5,400
C. P16,000
B. P14,280
D. 0
For items 39 -40:
IJK Industries manufactures a series of three models of molded plastic chairs: standard (without
arms), deluxe (with arms), and executive (with arms and padding). All are variations of the same
design. The company uses batch manufacturing and has a hybrid costing system. It has an
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extrusion operation and subsequent operations to form, trim, and finish the chairs. Plastic sheets
are produced by the extrusion operation, some of which are sold directly to other manufacturers.
During the forming operation, the remaining plastic sheets are molded into chair seats and the
legs are added; the standard model is sold after this operation. During the trim operation, the
arms are added to the deluxe and executive models, and the chair edges are smoothed. Only the
executive model enters the finish operation where the padding is added. All units produced
receive the same steps within each operation.
The July production run had a total manufacturing cost of P1,796,000. The units of production
and direct material costs incurred were as follows:
Units
Extrusion
Form
Produced Materials
Materials
Plastic sheets
5,000 P120,000
Standard Model 6,000
144,000
P48,000
Deluxe Model
3,000
72,000
24,000
Executive Models 2,000
48,000
16,000
Totals
16,000
P384,000
P88,000

Trim
Materials

Finish
Materials

P18,000
12,000
P30,000

P24,000
P24,000

Manufacturing costs applied during July were as follows:

Direct Labor
Factory Overhead

Extrusion
Operation
P304,000
480,000

Form
Operation
P120,000
144,000

Trim
Operation
P60,000
78,000

Finish
Operation
P36,000
48,000

39.How much is the unit cost of each model?


A.
B.
C.
D.
E.

Plastic Sheet
Standard Model
P73
P32
P36.50
P52.50
P12
P16
P24
P32
P73
P105

Deluxe Model
Executive Model
P33.60
P54
P69.30
P96.30
P19
P25
P38
P50
P138.60
P192.60

40.How much is the total production cost of each of the products?


Plastic Sheet
Standard Model
Deluxe Model
Executive Model
A. P365,000
P192,000
P100,800
P108,000
B. P182,500
P315,000
P207,900
P192,600
C. P60,000
P96,000
P57,000
P50,000
D. P120,000
P192,000
P114,000
P150,000
E. P365,000
P630,000
P415,800
P385,200

~NOTHING COMES WITHOUT HARD WORK AND SACRIFICE~

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UNIVERSITY OF SAN CARLOS


SCHOOL OF BUSINESS AND ECONOMICS
DEPARTMENT OF ACCOUNTANCY
AC 512 COST ACCOUNTING PART 2
ANSWER SHEET
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INSTRUCTIONS:

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