PROCESS COSTING, ACTIVITY BASED COSTING, JOINT PRODUCTS/BY-PRODUCTS, STANDARD COSTING

Multiple Choice Identify the choice that best completes the statement or answers the question.

PROCESS COSTING

____ 1. A process costing system is used by a company that

a. produces items by special request of customers.
b. produces homogeneous products.
c. accumulates costs by job.
d. produces heterogeneous products.
____ 2. Which is the best cost accumulation procedure to use for continuous mass production of like units?
a. actual c. process
b. standard d. job order
____ 3. Equivalent units of production are equal to the
a. units completed by a production department in the period.
b. number of units worked on during the period by a production department.
c. identifiable units existing at the end of the period in a production department.
d. number of whole units that could have been completed if all work of the period had been
used to produce whole units.
____ 4. In a process costing system using the weighted average method, cost per equivalent unit for a given cost
component is found by dividing which of the following by EUP?
a. only current period cost
b. current period cost plus the cost of beginning inventory
c. current period cost less the cost of beginning inventory
d. current period cost plus the cost of ending inventory
____ 5. The weighted average method is thought by some accountants to be inferior to the FIFO method because it
a. ignores work performed in subsequent periods.
b. is more difficult to apply.
c. only considers the last units worked on.
d. commingles costs of two periods.
____ 6. The difference between EUP calculated using FIFO and EUP calculated using weighted average is the
equivalent units
a. uncompleted in Work in Process Inventory.
b. started and completed during the period.
c. residing in ending Work in Process Inventory.
d. residing in beginning Work in Process Inventory.
____ 7. EUP calculations for standard process costing are the same as
a. the EUP calculations for FIFO process costing.
b. the EUP calculations for weighted average process costing.
c. the EUP calculations for LIFO process costing.
d. LIFO inventory costing for merchandise.
____ 8. In a FIFO process costing system, which of the following are assumed to be completed first in the current
period?
a. units transferred out c. units started this period
b. units still in process d. units started last period
____ 9. To compute equivalent units of production using the FIFO method of process costing, work for the current
period must be stated in units
a. started during the period and units transferred out during the period.
b. processed during the period and units completed during the period.
c. completed from beginning inventory, units started and completed during the period, and
units partially completed in ending inventory.
d. completed during the period and units in ending inventory.
____ 10. The FIFO method of process costing will produce the same cost of goods transferred out amount as the
weighted average method when
 a. there is no beginning Work in Process Inventory.
b. beginning and ending Work in Process Inventories are each 50 percent complete.
c. there is no ending Work in Process Inventory.
d. the goods produced are homogeneous.
____ 11. The primary difference between the FIFO and weighted average methods of process costing is
a. in the treatment of current period production costs.
b. in the treatment of beginning Work in Process Inventory.
c. in the treatment of spoiled units.
d. none of the above.
____ 12. Material is added at the beginning of a process in a process costing system. The beginning Work in Process
Inventory for the process was 30 percent complete as to conversion costs. Using the FIFO method of costing,
the number of equivalent units of material for the process during this period is equal to the
a. units started this period in the process plus the beginning Work in Process Inventory.
b. units started and completed this period plus the units in ending Work in Process Inventory.
c. beginning inventory this period for the process.
d. units started this period in the process.
____ 13. In a cost of production report using process costing, transferred-in costs are similar to the
a. cost included in beginning inventory.
b. cost of material added at the beginning of production.
c. cost transferred out to the next department.
d. conversion cost added during the period.
____ 14. In a process costing system, the journal entry to record the transfer of goods from Department #2 to Finished
Goods Inventory is a
a. debit Finished Goods Inventory, credit Work in Process Inventory #1.
b. debit Cost of Goods Sold, credit Work in Process Inventory #2.
c. debit Work in Process Inventory #2, credit Finished Goods Inventory.
d. debit Finished Goods Inventory, credit Work in Process Inventory #2.
____ 15. Transferred-in cost represents the cost from
a. the current period only. c. the last production cycle.
b. all prior departments. d. the last department only.
____ 16. A process costing system does which of the following?

Calculates EUPs Assigns costs to inventories

a. no yes
b. yes yes
c. yes no
d. no no
____ 17. A process costing system

Calculates average cost Determines total units to

per whole unit account for

a. yes yes
b. yes no
c. no yes
d. no no
____ 18. When standard costs are used in process costing,
a. variances can be measured during the production period.
b. process costing calculations are made simpler.
c. total costs rather than current production and current costs are used.
d. the weighted average method of calculating EUPs makes computing transferred-out costs easier.
____ 19. HJRF Co. started 9,000 units in October. The company transferred out 7,000 finished units and ended the
period with 3,500 units that were 40 percent complete as to both material and conversion costs. Beginning
Work in Process Inventory units were
a. 500.
b. 2,000.
 c. 1,500.
d. 600.
____ 20. Winn Co. uses a weighted average process costing system. Material is added at the start of production. Winn
Co. started 13,000 units into production and had 4,500 units in process at the start of the period that were 60
percent complete as to conversion costs. If Winn transferred out 11,750 units, how many units were in ending
Work in Process Inventory?
a. 5,750 c. 3,500
b. 3,000 d. 1,250
____ 21. PFJG Co. uses a weighted average process costing system and started 30,000 units this month. PFJG had
12,000 units that were 20 percent complete as to conversion costs in beginning Work in Process Inventory and
3,000 units that were 40 percent complete as to conversion costs in ending Work in Process Inventory. What
are equivalent units for conversion costs?
a. 40,800 c. 37,800
b. 40,200 d. 42,000
____ 22. MWCG Co. makes small metal containers. The company began December with 250 containers in process that
were 30 percent complete as to material and 40 percent complete as to conversion costs. During the month,
5,000 containers were started. At month end, 1,700 containers were still in process (45 percent complete as to
material and 80 percent complete as to conversion costs). Using the weighted average method, what are the
equivalent units for conversion costs?
a. 3,450 c. 4,610
b. 4,910 d. 4,560
____ 23. MCQV Co. uses a FIFO process costing system. The company had 5,000 units that were 60 percent complete
as to conversion costs at the beginning of the month. The company started 22,000 units this period and had
7,000 units in ending Work in Process Inventory that were 35 percent complete as to conversion costs. What
are equivalent units for material, if material is added at the beginning of the process?
a. 22,000 c. 27,000
b. 18,000 d. 25,000
____ 24. EKFS Co. makes fabric-covered hatboxes. The company began August with 500 boxes in process that were
100 percent complete as to cotton, 80 percent complete as to nylon, and 60 percent complete as to conversion
costs. During the month, 3,300 boxes were started. On August 31, 350 boxes were in process (100 percent
complete as to cotton, 70 percent complete as to nylon, and 55 percent complete as to conversion costs).
Using the FIFO method, what are equivalent units for nylon?
a. 3,595 c. 3,295
b. 3,450 d. 3,395

RTYU Co.

RTYU Co. has the following information for May:

Beginning Work in Process Inventory

(70% complete as to conversion) 6,000 units
Started 24,000 units
Ending Work in Process Inventory
(10% complete as to conversion) 8,500 units

Beginning WIP Inventory Costs:

Material P23,400
Conversion 50,607

Current Period Costs:

Material P31,500
Conversion 76,956

All material is added at the start of the process and all finished products are transferred out.

____ 25. Refer to RTYU Co. How many units were transferred out in May?
 a. 21,500 c. 15,500
b. 24,000 d. 18,000
____ 26. Refer to RTYU Co. Assume that weighted average process costing is used. What is the cost per equivalent
unit for material?
a. P1.05 c. P0.55
b. P1.83 d. P1.31
____ 27. Refer to RTYU Co. Assume that FIFO process costing is used. What is the cost per equivalent unit for
conversion?
a. P5.71 c. P7.03
b. P3.44 d. P4.24

DFGH Co.

Use the following information for questions 28-35.

The DFGH Co. makes wreaths in two departments: Forming and Decorating. Forming began the month with
500 wreaths in process that were 100 percent complete as to material and 40 percent complete as to
conversion. During the month, 6,500 wreaths were started. At month end, Forming had 2,100 wreaths that
were still in process that were 100 percent complete as to material and 50 percent complete as to conversion.
Assume Forming uses the weighted average method of process costing. Costs in the Forming Department are
as follows:

Beginning Work in Process Costs:

Material P1,000
Conversion 1,500
Current Costs:
Material P3,200
Conversion 5,045

The Decorating Department had 600 wreaths in process at the beginning of the month that were 80 percent
complete as to material and 90 percent complete as to conversion. The department had 300 units in ending
Work in Process that were 50 percent complete as to material and 75 percent complete as to conversion.
Decorating uses the FIFO method of process costing, and costs associated with Decorating are:

Beginning WIP Inventory:

Transferred In P1,170
Material 4,320
Conversion 6,210
Current Period:
Transferred In ?
Material P67,745
Conversion 95,820

____ 28. Refer to DFGH Co. How many units were transferred to Decorating during the month?
a. 4,900 c. 5,950
b. 600 d. 7,000
____ 29. Refer to DFGH Co. What was the cost transferred out of Forming during the month?
a. P8,245 c. P6,419
b. P5,341 d. P8,330
____ 30. Refer to DFGH Co. Assume 8,000 units were transferred to Decorating. Compute the number of equivalent
units as to costs in Decorating for the transferred-in cost component.
a. 7,400 c. 8,600
b. 7,700 d. 8,000
____ 31. Refer to DFGH Co. Assume 8,000 units were transferred to Decorating. Compute the number of equivalent
units in Decorating for material.
a. 8,450 b. 8,000
 c. 8,330 d. 7,970
____ 32. Refer to DFGH Co. Assume 8,000 units were transferred to Decorating. Compute the number of equivalent
units in Decorating for conversion.
a. 8,465 c. 8,360
b. 7,925 d. 7,985
____ 33. Refer to DFGH Co. Assume that 8,000 units were transferred to Decorating at a total cost of P16,000. What is
the material cost per equivalent unit in Decorating?
a. P8.50 c. P9.04
b. P8.65 d. P8.80
____ 34. Refer to DFGH Co. Assume that 8,000 units were transferred to Decorating at a total cost of P16,000. What is
the conversion cost per equivalent unit in Decorating?
a. P12.78 c. P11.46
b. P11.32 d. P12.00
____ 35. Refer to DFGH Co. Assume the material cost per EUP is P8.00 and the conversion cost per EUP is P15 in
Decorating. What is the cost of completing the units in beginning inventory?
a. P1,380 c. P1,860
b. P11,940 d. P960

CVBN Co.

CVBN Co. adds material at the start to its production process and has the following information available for
November:

Beginning Work in Process Inventory

(40% complete as to conversion) 7,000 units
Started this period 32,000 units
Ending Work in Process Inventory
(25% complete as to conversion) 2,500 units
Transferred out ?

____ 36. Refer to CVBN Co. Compute the number of units started and completed in November.
a. 36,500 c. 29,500
b. 34,500 d. 39,000
____ 37. Refer to CVBN Co. Calculate equivalent units of production for material using FIFO.
a. 37,125 c. 36,800
b. 32,000 d. 39,000
____ 38. Refer to CVBN Co. Calculate equivalent units of production for conversion using FIFO.
a. 34,325 c. 30,125
b. 39,000 d. 37,125
____ 39. Refer to CVBN Co. Calculate equivalent units of production for material using weighted average.
a. 37,125 c. 32,000
b. 34,325 d. 39,000
____ 40. Refer to CVBN Co. Calculate equivalent units of production for conversion using weighted average.
a. 38,375 c. 34,325
b. 37,125 d. 39,925

RFGX Co.

RFGX Co. adds material at the start of production. February information for the company follows:

Beginning Work in Process Inventory

(45% complete as to conversion) 10,000 units
Started this period 120,000 units
Ending Work in Process Inventory
(80% complete as to conversion) 8,200 units
 Beginning Work in Process Inventory Costs:
Material P24,500
Conversion 68,905

Current Period Costs:

Material P 75,600
Conversion 130,053

____ 41. Refer to RFGX Co. How many units must be accounted for?
a. 118,200 c. 128,200
b. 138,200 d. 130,000
____ 42. Refer to RFGX Co. What is the total cost to account for?
a. P205,653 c. P 93,405
b. P274,558 d. P299,058
____ 43. Refer to RFGX Co. How many units were started and completed in the period?
a. 121,800 c. 111,800
b. 130,000 d. 120,000
____ 44. Refer to RFGX Co. What are the equivalent units for material using the weighted average method?
a. 120,000 c. 123,860
b. 130,000 d. 128,360
____ 45. Refer to RFGX Co. What are the equivalent units for material using the FIFO method?
a. 120,000 c. 111,800
b. 130,000 d. 125,500
____ 46. Refer to RFGX Co. What are the equivalent units for conversion using the weighted average method?
a. 120,000 c. 123,440
b. 130,000 d. 128,360
____ 47. Refer to RFGX Co. What are the equivalent units for conversion using the FIFO method?
a. 122,860 c. 118,360
b. 123,860 d. 128,360
____ 48. Refer to RFGX Co. What is the material cost per equivalent unit using the weighted average method?
a. P.58 c. P.77
b. P.62 d. P.82
____ 49. Refer to RFGX Co. What is the conversion cost per equivalent unit using the weighted average method?
a. P1.55 c. P1.05
b. P1.01 d. P1.61
____ 50. Refer to RFGX Co. What is the cost of units completed using the weighted average?
a. P282,576 c. P237,510
b. P278,400 d. P266,742
____ 51. Refer to RFGX Co. What is the conversion cost per equivalent unit using the FIFO method?
a. P1.05 c. P1.55
b. P.95 d. P1.61
____ 52. Refer to RFGX Co. What is the cost of all units transferred out using the FIFO method?
a. P287,004 c. P191,289
b. P204,624 d. P298,029

YHFN Co.

Beginning inventory (30% complete as to Material B 700 units

and 60% complete for conversion)
Started this cycle 2,000 units
Ending inventory (50% complete as to Material B and 500 units
80% complete for conversion)

Beginning inventory costs:

 Material A P14,270
Material B 5,950
Conversion 5,640

Current Period costs:

Material A P40,000
Material B 70,000
Conversion 98,100

Material A is added at the start of production, while Material B is added uniformly throughout the process.

____ 53. Refer to YHFN Co. Assuming a weighted average method of process costing, compute EUP units for
Materials A and B.
a. 2,240 and 2,700, respectively c. 2,700 and 2,450, respectively
b. 2,000 and 2,240, respectively d. 2,700 and 2,280, respectively
____ 54. Refer to YHFN Co. Assuming a FIFO method of process costing, compute EUP units for Materials A and B.
a. 2,700 and 2,450, respectively c. 2,450 and 2,880, respectively
b. 2,000 and 2,240, respectively d. 2,700 and 2,280, respectively
____ 55. Refer to YHFN Co. Assuming a weighted average method of process costing, compute EUP for conversion.
a. 2,000 c. 2,180
b. 2,700 d. 2,600
____ 56. Refer to YHFN Co. Assuming a FIFO method of process costing, compute EUP for conversion.
a. 2,700 c. 2,240
b. 2,180 d. 2,280
____ 57. Refer to YHFN Co. Assuming a weighted average method of process costing, compute the average cost per
unit for Material A.
a. P31.25 c. P20.10
b. P31.00 d. P20.00
____ 58. Refer to YHFN Co. Assuming a FIFO method of process costing, compute the average cost per EUP for
Material A.
a. P31.25 c. P20.10
b. P31.00 d. P20.00
____ 59. Refer to YHFN Co. Assuming a FIFO method of process costing, compute the average cost per EUP for
Material B.
a. P31.00 c. P20.10
b. P20.00 d. P31.25
____ 60. Refer to YHFN Co. Assuming a weighted average method of process costing, compute the average cost per
EUP for Material B.
a. P31.00 c. P20.10
b. P31.25 d. P20.00
____ 61. Refer to YHFN Co. Assuming a FIFO method of process costing, compute the average cost per EUP for
conversion.
a. P43.03 c. P45.50
b. P45.00 d. P47.59
____ 62. Refer to YHFN Co. Assuming a weighted average method of process costing, compute the average cost per
EUP for conversion.
a. P47.59 c. P39.90
b. P45.00 d. P43.03
____ 63. Which of the following is subtracted from weighted average EUP to derive FIFO EUP?
a. ending WIP EUP completed
b. ending WIP EUP not completed
c. beginning WIP EUP completed in current period
d. beginning WIP EUP produced in prior period
 ACTIVITY BASED COSTING

____ 64. An objective of activity-based management is to

a. institute responsibility accounting systems in decentralized organizations.
b. reduce or eliminate non-value-added activities incurred to make a product or provide a service.
c. eliminate the majority of centralized activities in an organization.
d. all of the above
____ 65. Which of the following is/are part of activity-based management?

Activity analysis Cost driver analysis

a. no yes
b. no no
c. yes yes
d. yes no
____ 66. Which of the following falls under the Activity-Based Management umbrella?

Continuous Business process Activity-based

improvement reengineering costing

a. yes no no
b. no no yes
c. no yes no
d. yes yes yes
____ 67. The sum of the non-value-added time and the value-added time equals
a. production time. c. the product life cycle.
b. cycle time. d. inspection time.
____ 68. Which of the following add customer value?
a. idle time c. setup time
b. storage time d. processing time
____ 69. Lead time minus production time is equal to
a. value-added time. c. storage time.
b. idle time. d. non-value-added time.
____ 70. When a firm redesigns a product to reduce the number of component parts, the firm is
a. decreasing product variety. c. decreasing non-value-added costs.
b. increasing consumer value. d. increasing the value added to the product.
____ 71. Non-value-added activities that are necessary to businesses, but not costs that customers are willing to pay for
are known as
a. long-term variable activities. c. business-value-added activities.
b. short-term variable activities. d. superior business activities.
____ 72. Which of the following would not be considered a value-added activity in the preparation of a tax return?
a. installing tax software c. printing a copy of the return for the IRS
b. checking for accuracy d. printing a copy of the return for the client
____ 73. Which of the following is considered a value-added activity?

Idle time Inspection time Transfer time

a. no yes yes
b. yes yes no
c. yes no yes
d. no no no
____ 74. A process map
a. is also known as a detailed flowchart.
b. is also known as a value chart.
c. should indicate only those steps/processes that are obvious in the production of goods/services.
d. should indicate only value-added activities.
____ 75. A value chart should include which of the following?

Service time Inspection time Transfer time

a. yes no yes
b. no no yes
c. yes yes yes
d. yes yes no
____ 76. The actual time it takes to perform a specific task is called
a. service time. c. inspection time.
b. transfer time. d. quality time.
____ 77. Manufacturing cycle efficiency is a measure of
a. bottlenecks. c. quality.
b. effectiveness. d. efficiency.
____ 78. Which of the following is typically regarded as a cost driver in traditional accounting practices?
a. number of direct labor hours worked
b. number of purchase orders processed
c. number of customers served
d. number of transactions processed
____ 79. When a company is labor-intensive, the cost driver that is probably least significant would be
a. machine hours. c. direct labor hours.
b. direct labor pesos. d. cost of materials used.
____ 80. An activity driver is used for which of the following reasons?

To measure demands To measure resources consumed

a. yes no
b. no no
c. yes yes
d. no yes
____ 81. The term cost driver refers to
a. any activity that can be used to predict cost changes.
b. any activity that causes costs to be incurred.
c. the attempt to control expenditures at a reasonable level.
d. the person who gathers and transfers cost data to the management accountant.
____ 82. Cost allocation bases in activity-based costing should be
a. cost drivers. c. value-added activities.
b. processes. d. activity centers.
____ 83. Costs that are common to many different activities within an organization are known as ____________ costs.
a. product- or process-level c. organizational-level
b. batch-level d. unit-level
____ 84. In activity-based costing, cost reduction efforts are directed at specific
a. cost drivers. c. cost categories.
b. cost pools. d. processes.
____ 85. Setup time is

A batch cost A value-added cost A production cost

a. no no yes
b. yes yes no
c. no yes yes
d. yes no yes
____ 86. Which of the following have an impact on long-term variable costs?

Product variety Product complexity Process complexity

 a. yes no yes
b. no yes yes
c. no no no
d. yes yes yes
____ 87. In allocating variable costs to products,
a. a volume-based cost driver should be used.
b. a company should use the same allocation base that it uses for fixed costs.
c. a company should never use more than one cost driver.
d. direct labor hours should always be used as the allocation base.
____ 88. In which of the following areas does attribute-based costing (ABCII) employ detailed cost-benefit analyses
relating to information on customer needs?

Reliability Durability

a. yes yes
b. no yes
c. no no
d. yes no
____ 89. Which of the following is not a drawback of mass customization?
a. Only a small percentage of available choices is normally selected.
b. The choices are too numerous.
c. The potential for errors is great.
d. All of the above are drawbacks.
____ 90. Simultaneous engineering helps companies accomplish which of the following?

Reduces product Reduces process

complexity complexity

a. no no
b. yes yes
c. yes no
d. no yes
____ 91. For traditional costing purposes, R&D costs are
a. capitalized and allocated over the product life cycle.
b. capitalized and amortized over three years.
c. expensed as incurred.
d. charged to the future accounting periods that receive the benefit of the R&D expenditures.
____ 92. An accounting system that focuses on transactions is
a. an activity-based accounting system. c. a traditional accounting system.
b. a product life cycle costing system. d. all of the above.
____ 93. Traditionally, managers have focused cost reduction efforts on
a. departments. c. activities.
b. processes. d. costs.
____ 94. Today, traditional accounting methods are
a. still appropriate for providing useful cost information to internal managers.
b. outdated for all purposes.
c. still appropriate for financial reporting.
d. still appropriate for both internal and external financial reporting.
____ 95. Product costing systems in use over the last 40 years
a. have been appropriate for managerial decision purposes as long as they met the
requirements of generally accepted accounting principles.
b. concentrated on using multiple cost pools and cost drivers.
c. were often technologically incapable of handling activity-based costing information.
d. have generally been responsive to changes in the manufacturing environment.
____ 96. Traditional overhead allocations result in which of the following situations?
a. The resulting allocations cannot be used for financial reports.
b. Low-volume products are assigned too much, and high-volume products are assigned too
 little overhead.
c. Overhead costs are assigned as period costs to manufacturing operations.
d. High-volume products are assigned too much overhead, and low-volume products are
assigned too little overhead.
____ 97. Traditionally, overhead has been assigned based on direct labor hours or machine hours. What effect does this
have on the cost of a high-volume item?
a. has no effect the product cost
b. under-costs the product
c. over-costs the product
d. cost per unit is unaffected by product volume
____ 98. Relative to traditional product costing, activity-based costing differs in the way costs are
a. allocated. c. incurred.
b. benchmarked. d. processed.
____ 99. Under activity-based costing, benchmarks for product cost should contain an allowance for
a. spoilage. c. idle time.
b. idle time and scrap materials. d. none of the above.
____ 100. In activity-based costing, final cost allocations assign costs to
a. processes. c. activities.
b. departments. d. products.
____ 101. In activity-based costing, preliminary cost allocations assign costs to
a. products. c. departments.
b. activities. d. processes.
____ 102. In allocating fixed costs to products in activity-based costing,
a. direct labor hours should always be used as the allocation base.
b. machine hours should always be used.
c. a company should use the same allocation base that it uses for variable costs.
d. a cost driver that is not volume-related should be used.
____ 103. Of the following, which is the best reason for using activity-based costing?
a. to better assign overhead costs to products
b. to assign indirect service overhead costs to direct overhead cost pools
c. to more accurately assign overhead costs to cost pools so that these costs are better controlled
d. to keep better track of overhead costs
____ 104. ABC should be used in which of the following situations?
a. multiple-product firms with only a single process
b. in all manufacturing firms
c. multiple-product firms with multiple processing steps
d. single-product firms with multiple steps
____ 105. The overhead of manufacturing firms has risen in recent years due to
a. the implementation of activity-based costing.
b. an increase in direct labor.
c. an increase in product variety.
d. the cost of product life cycle planning.
____ 106. Activity-based costing and activity-based management are effective in helping managers do all of the
following except
a. promote excellence standards. c. identify only value-added activities.
b. trace technology costs to products. d. analyze performance problems.
____ 107. Global competition has forced industry to
a. decrease its social responsibility.
b. improve product quality and customer service.
c. seek increased governmental regulation.
d. narrow product lines.
____ 108. The costs of non-quality work do not include
a. warranty costs. c. the cost of handling complaints.
b. the cost of scrap. d. original design costs.
____ 109. In the "new era" of manufacturing, good performance indicators are
a. cost-based. b. production-based.
c. consumer-based.
d. sales-based.
____ 110. Traditional standard costs are inappropriate measures for performance evaluation in the "new era" of
manufacturing because they
a. don't reflect current costs.
b. are based on historical information.
c. build in allowances for non-value-adding activities.
d. are ideal goals.
____ 111. The amount of time between the development and the production of a product is
a. lead time. c. production time.
b. the product life cycle. d. value-added time.
____ 112. For one product that a firm produces, the manufacturing cycle efficiency is 20 percent. If the total production
time is 12 hours, what is the total manufacturing time?
a. 15.0 hours c. 12.0 hours
b. 60.0 hours d. 2.4 hours
____ 113. Activity analysis allows managers to
a. devise ways to minimize or eliminate non-value-added activities.
b. evaluate process performance to gain competitive advantages.
c. classify activities so that processes can be eliminated.
d. all of the above.
____ 114. Which of the following statements about business-value-added activities (BVAs) is true?
a. BVAs reflect the same processes in all organizations.
b. BVAs are actually value-added activities of an organization that relate to administrative
processes.
c. A process map will not reflect BVAs because such activities are not essential to process
performance.
d. It is impossible to eliminate all BVAs in an organization.
____ 115. A value chart indicates
a. the time and cost of all value-added steps in a process.
b. the time and costs of all value-added and non-value-added steps in a process.
c. the value-added steps in a process and the time it takes for them to be completed.
d. all steps in a process and the time it takes for them to be completed.
____ 116. In the pharmaceutical or food industries, quality control inspections would most likely be viewed as
a. value-added-activities.
b. business-value-added activities.
c. non-value-added activities.
d. process-efficiency activities.
____ 117. A just-in-time manufacturing process should have substantially less of which of the following than a
traditional manufacturing process?

Idle time Transfer time Value-added time Cycle time

a. yes yes yes yes

b. no yes yes no
c. yes yes no yes
d. yes no no yes
____ 118. Manufacturing cycle efficiency should be increased by employing which of the following techniques?

JIT Flexible Batch

Inventory Manufacturing Systems Manufacturing

a. yes no yes
b. yes yes yes
c. no no no
d. yes yes no
____ 119. A key concept underlying cost driver analysis is that
a. only costs occurring at the unit-level should be assigned to products or services.
b. the cost of measuring a driver does not exceed the benefits of using it.
c. all cost drivers identified should be used for cost accumulation.
 d. organizational/facility costs are non-value-added and should never be assigned to products
or services.
____ 120. When cost driver analysis is used, organizational profit or loss can be determined by subtracting
a. organizational costs from total product revenue.
b. organizational costs from total margin provided by products.
c. total product costs from total product revenue.
d. total unit, batch, product/process, and organizational level costs incurred for a period from
total product revenue.
____ 121. An activity center is an organizational unit
a. in which only value-added activities are performed.
b. for which management wants separate activity information.
c. that makes a single product or performs a single service.
d. that incurs only unit, batch, or product/process level costs.
____ 122. The following items are used in tracing costs in an ABC system. In which order are they used?

(1) cost object

(2) cost driver
(3) activity driver
(4) cost pool

a. 2, 4, 3, 1 c. 2, 3, 4, 1
b. 1, 2, 3, 4 d. 4, 3, 1, 2
____ 123. The "Rule of One" underlies the premise that all costs are
a. fixed. c. short-term.
b. unit-based. d. variable.
____ 124. Tessia Company makes ten different styles of inexpensive feather masks. Which of the following is this
company most likely to have?
a. Process customization c. Process complexity
b. Product complexity d. Product variety
____ 125. Attribute-based costing (ABC II) employs which of the following in its cost-benefit analyses?
a. Planned costs c. Past costs
b. Long-term variable costs d. Reengineered costs
____ 126. Mass customization can be achieved through the use of
a. flexible manufacturing systems. c. just-in-time inventory.
b. activity-based costing. d. all of the above.
____ 127. Mass customization is closely associated with

Product Product Process Pareto

variety complexity errors principle

a. yes yes yes no

b. yes no no yes
c. yes no yes yes
d. no yes no no
____ 128. The Pareto principle is important to consider when an organization is
a. deciding whether to offer a product in one color versus in ten colors.
b. determining whether simultaneous engineering activities will be impacted by the "Rule of One."
c. evaluating the number of activities that are value-added versus those that are non-value-added.
d. assessing whether to employ activity-based costing versus attribute-based costing.
____ 129. Simultaneous engineering can be used to
a. reduce both product and process complexity.
b. integrate activity-based costing with value chain analysis.
c. reduce the time-to-market of new products through elimination of batch-level activities.
d. reduce manufacturing cycle efficiency by reducing process waste.
____ 130. If only one or two overhead cost pools are used,
a. it will be easy to determine which products or services are creating the most costs.
b. allocations should be made using only unit-based cost drivers.
 c. overhead created by a specific product will be assigned to all products.
d. the reduction in cost accumulation and allocation time will raise company profits.
____ 131. A cost accumulation system should most likely be reevaluated when a company has
a. had its industry deregulated.
b. automated one or more production processes.
c. introduced new products to its customers.
d. all of the above.
____ 132. Engaging in which of the following will result in radical changes being made to an organization's processes?
a. Benchmarking
b. Reengineering
c. Mass customization
d. Continuous improvement
____ 133. Use of activity-based costing and activity-based management requires
a. each process be fully mapped and all activities be identified as value-added or non-value-added.
b. elimination of all non-value-added activities in an organization.
c. that company processes be automated and the use of direct labor be minimal.
d. the creation of an environment for change in an organization.
____ 134. Which of the following is most likely to make the implementation of ABC/ABM slow and difficult?
a. The inability of all employees to understand the computations involved in ABC.
b. An inability to eliminate all business-value-added activities.
c. The need for dual costing systems.
d. A lack of involvement by or support from upper management.
____ 135. Activity-based costing and generally accepted accounting principles differ in that ABC
a. cannot be used to compute an income statement, but GAAP can.
b. does not define product costs in the same manner as GAAP.
c. information is useful only to managers, while GAAP information is useful to all
organizational stakeholders.
d. is concerned only with costs generated from automated processes, but GAAP is concerned
with costs generated from both manual and automated processes.
____ 136. If activity-based costing is implemented in an organization without any other changes being effected, total
overhead costs will
a. be increased because of the need for additional people to gather information on cost
drivers and cost pools.
b. be reduced because organizational costs will not be assigned to products or services.
c. remain constant and simply be spread over products differently.
d. be reduced because of the elimination of non-value-added activities.

WSRF Co.

WSRF Co. produces two products (A and B). Direct material and labor costs for Product A total P35 (which
reflects 4 direct labor hours); direct material and labor costs for Product B total P22 (which reflects 1.5 direct
labor hours). Three overhead functions are needed for each product. Product A uses 2 hours of Function 1 at
P10 per hour, 1 hour of Function 2 at P7 per hour, and 6 hours of Function 3 at P18 per hour. Product B uses
1, 8, and 1 hours of Functions 1, 2, and 3, respectively. WSRF produces 800 units of A and 8,000 units of B
each period.

____ 137. Refer to WSRF Co. If total overhead is assigned to A and B on the basis of units produced, Product A will
have an overhead cost per unit of
a. P123.64. c. P135.00.
b. P 88.64. d. none of the above.
____ 138. Refer to WSRF Co. If total overhead is assigned to A and B on the basis of units produced, Product B will
have an overhead cost per unit of
a. P84.00. c. P88.64.
b. P110.64. d. none of the above.
____ 139. Refer to WSRF Co. If total overhead is assigned to A and B on the basis of direct labor hours, Product A will
have an overhead cost per unit of
 a. P51.32. c. P461.88.
b. P205.28. d. none of the above.
____ 140. Refer to WSRF Co. If total overhead is assigned to A and B on the basis of direct labor hours, Product B will
have an overhead cost per unit of
a. P51.32. c. P510.32.
b. P76.98. d. none of the above.
____ 141. Refer to WSRF Co. If total overhead is assigned to A and B on the basis of overhead activity hours used, the
total product cost per unit assigned to Product A will be
a. P95.00. c. P115.50.
b. P86.32. d. none of the above.
____ 142. Refer to WSRF Co. If total overhead is assigned to A and B on the basis of overhead activity hours used, the
total product cost per unit assigned to Product B will be
a. P115.50. c. P73.32.
b. P34.60. d. none of the above.

OVHK Corp.

OVHK Corp. produces 50,000 units of Product Q and 6,000 units of Product Z during a period. In that period,
four set-ups were required for color changes. All units of Product Q are black, which is the color in the
process at the beginning of the period. A set-up was made for 1,000 blue units of Product Z; a set-up was
made for 4,500 red units of Product Z; a set-up was made for 500 green units of Product Z. A set-up was then
made to return the process to its standard black coloration and the units of Product Q were run. Each set-up
costs P500.

____ 143. Refer to OVHK Corp. If set-up cost is assigned on a volume basis for the department, what is the approximate
per-unit set-up cost for Product Z?
a. P.010. c. P.040.
b. P.036. d. none of the above.
____ 144. Refer to OVHK Corp. If set-up cost is assigned on a volume for the department, what is the approximate per-
unit set-up cost for the red units of Product Z?
a. P.036. c. P.111.
b. P.250. d. none of the above.
____ 145. Refer to OVHK Corp. Assume that OVHK Corp. has decided to allocate overhead costs using levels of cost
drivers. What would be the approximate per-unit set-up cost for the blue units of Product Z?
a. P.04. c. P.50.
b. P.25. d. none of the above.
____ 146. Refer to OVHK Corp. Assume that OVHK Corp. has decided to allocate overhead costs using levels of cost
drivers. What would be the approximate per-unit set-up cost for the green units of Product Z?
a. P0.25. c. P0.04.
b. P1.00. d. none of the above.

JOINT PRODUCT/ BY-PRODUCT

____ 147. If a company obtains two salable products from the refining of one ore, the refining process should be
accounted for as a(n)
a. mixed cost process. c. extractive process.
b. reduction process. d. joint process.
____ 148. Joint costs are allocated to joint products to
a. obtain a cost per unit for financial statement purposes.
b. provide accurate management information on production costs of each type of product.
c. allow the use of high-low analysis by the company.
d. compute variances from expected costs for each joint product.
____ 149. Joint costs are allocated to which of the following products?
 By-products Scrap

a. no yes
b. no no
c. yes no
d. yes yes
____ 150. Joint cost allocation is useful for
a. decision making. c. product costing.
b. evaluating managers' performance. d. control.
____ 151. Joint costs are useful for
a. determining inventory cost for accounting purposes.
b. determining whether to continue producing an item.
c. setting the selling price of a product.
d. evaluating management by means of a responsibility reporting system.
____ 152. Which of the following components of production are allocable as joint costs when a single manufacturing
process produces several salable products?
a. overhead and direct material only
b. direct labor and overhead only
c. direct material, direct labor, and overhead
d. direct material and direct labor only
____ 153. Each of the following is a method to allocate joint costs except
a. average unit cost.
b. relative sales value.
c. relative net realizable value.
d. relative weight, volume, or linear measure.
____ 154. Joint costs are most frequently allocated based upon relative
a. prime costs. c. sales value.
b. conversion costs. d. profitability.
____ 155. When allocating joint process cost based on tons of output, all products will
a. have no disposal costs at the split-off point.
b. have the same joint cost per ton.
c. have a sales value greater than their costs.
d. be salable at split-off.
____ 156. If two or more products share a common process before they are separated, the joint costs should be assigned
in a manner that
a. assigns a proportionate amount of the total cost to each product on a quantitative basis.
b. minimizes variations in unit production costs.
c. does not introduce an element of estimation into the process of accumulating costs for each
product.
d. maximizes total earnings.
____ 157. Scrap is defined as a
a. residual of the production process that has limited sales value.
b. residual of the production process that can be reworked for sale as an irregular unit of product.
c. finished unit of product that has no sales value.
d. residual of the production process that has no sales value.
____ 158. Waste created by a production process is
a. accounted for as an abnormal loss.
b. discarded rather than sold.
c. material that can be sold as an irregular product.
d. accounted for in the same manner as defective units.
____ 159. While preparing a salad, you remove the core of a head of lettuce. This core would be classified as
a. waste. c. defective.
b. shrinkage. d. scrap.
____ 160. Which of the following is/are synonyms for joint products?

Main products Co-products

 a. no yes
b. no no
c. yes no
d. yes yes
____ 161. In a lumber mill, which of the following would most likely be considered a primary product?
a. sawdust c. 2 ´ 4 studs
b. wood chips d. tree bark
____ 162. Company Q produces three products from a joint process. The products can be sold at split-off or processed
further. In deciding whether to sell at split-off or process further, management should
a. allocate the joint cost to the products based on a physical quantity measure prior to making
the decision.
b. ignore the joint cost in 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. allocate the joint cost to the products based on relative sales value prior to making the
decision.
____ 163. By-products are
a. allocated a portion of joint production cost.
b. not sufficient alone, in terms of sales value, for management to justify undertaking the
joint process.
c. the primary reason management undertook the production process.
d. also known as scrap.
____ 164. 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 systems will never have by-products or scrap.
c. Job order costing systems 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.
____ 165. Which of the following has sales value?

By-products Waste

a. no yes
b. yes no
c. no no
d. yes yes
____ 166. 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 revenue of the main product.
b. plus any subsequent processing cost.
c. minus any subsequent processing cost.
d. but any subsequent processing cost is debited to the cost of the main product.
____ 167. Which of the following is a false statement about scrap and by-products?
a. Both scrap and by-products are incidental outputs to the joint process.
b. A by-product has a higher sales value than does scrap.
c. Both by-products and scrap are salable.
d. By-products and scrap are the primary reason that management undertakes the joint
process.
____ 168. The split-off point is the point at which
a. some products may first be sold.
b. output is first identifiable as individual products.
c. joint costs are allocated to joint products.
d. all of the above.
____ 169. A product may be processed beyond the 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.
____ 170. Which of the following would not be considered a sunk cost?
a. joint cost c. direct material cost
b. direct labor cost d. building cost
____ 171. The definition of a sunk cost is
a. considered the original cost of an item.
b. also known as an opportunity cost.
c. a cost that cannot be recovered regardless of what happens.
d. a cost that relates to money poured into the ground.
____ 172. The net realizable value approach mandates that the NRV of the by-products/scrap be treated as
a. a sunk cost.
b. an increase in joint costs.
c. a cost that can be ignored totally.
d. a reduction of joint costs.
____ 173. The net realizable value approach is normally used when the NRV is expected to be

insignificant significant

a. yes no
b. no yes
c. no no
d. yes yes
____ 174. Approximated net realizable value at split-off for joint products is computed as
a. selling price at split-off minus allocated joint processing costs.
b. final selling price minus a normal profit margin.
c. final selling price minus further processing and disposal costs.
d. selling price at split-off minus further processing and disposal costs.
____ 175. Which of the following is a commonly used joint cost allocation method?
a. regression analysis
b. high-low method
c. weighted average quantity technique
d. approximated sales value at split-off method
____ 176. Incremental separate costs are defined as all costs incurred between ___________ and the point of sale.
a. transfer to finished goods inventory
b. point of addition of disposal costs
c. inception
d. split-off point
____ 177. All costs that are incurred between the split-off point and the point of sale are known as
a. sunk costs. c. committed costs.
b. joint cost. d. incremental separate costs.
____ 178. Incremental revenues and costs need to be considered when using which allocation method?

Physical measures Sales value at split-off

a. yes yes
b. no no
c. no yes
d. yes no
____ 179. The method of pricing by-products/scrap where no value is assigned to these items until they are sold is
known as the
a. realized value approach.
b. net realizable value at split-off point method.
c. approximated net realizable value at split-off method.
d. sales value at split-off method.
____ 180. Relative sales value at split-off is used to allocate
 costs beyond split-off joint costs

a. no yes
b. no no
c. yes no
d. yes yes
____ 181. For purposes of allocating joint costs to joint products using the relative sales value at split-off method, the
costs beyond split-off
a. do not affect the allocation of the joint costs.
b. are allocated in the same manner as the joint costs.
c. are deducted from the sales value at the point of sale.
d. are deducted from the relative sales value at split-off.
____ 182. Not-for-profit organizations are required by the _______ to allocate joint costs.
a. GASB c. BIR
b. PICPA d. SEC

TGDL Co.

TGDL Co. produces two products from a joint process: X and Z. Joint processing costs for this production
cycle are P8,000.

Disposal
Sales price cost per Further Final sale
per yard at yard at processing price per
Yards split-off split-off per yard yard
X 1,500 P6.00 P3.50 P1.00 P 7.50
Z 2,200 9.00 5.00 3.00 11.25

If X and Z are processed further, no disposal costs will be incurred or such costs will be borne by the buyer.

____ 183. Refer to TGDL Co. Using a physical measure, what amount of joint processing cost is allocated to X (round
to the nearest peso)?
a. P4,757 c. P4,000
b. P3,243 d. P5,500
____ 184. Refer to TGDL Co. Using a physical measure, what amount of joint processing cost is allocated to Z (round to
the nearest peso)?
a. P4,757 c. P4,000
b. P5,500 d. P3,243
____ 185. Refer to TGDL Co. Using sales value at split-off, what amount of joint processing cost is allocated to X
(round to the nearest peso)?
a. P3,243 c. P5,500
b. P4,000 d. P2,500
____ 186. Refer to TGDL Co. Using sales value at split-off, what amount of joint processing cost is allocated to Z
(round to the nearest peso)?
a. P5,500 c. P4,000
b. P4,757 d. P2,500
____ 187. Refer to TGDL Co. Using net realizable value at split-off, what amount of joint processing cost is allocated to
X (round to the nearest peso)?
a. P5,610 c. P2,390
b. P4,000 d. P5,500
____ 188. Refer to TGDL Co. Using net realizable value at split-off, what amount of joint processing cost is allocated to
Z (round to the nearest peso)?
a. P5,610 c. P4,000
b. P5,500 d. P2,390
____ 189. Refer to TGDL Co. Using approximated net realizable value at split-off, what amount of joint processing cost
is allocated to X (round to the nearest peso)?
a. P4,000 c. P5,204
b. P3,090 d. P2,390
____ 190. Refer to TGDL Co. Using approximated net realizable value at split-off, what amount of joint processing cost
is allocated to Z (round to the nearest peso)?
a. P2,796 c. P4,000
b. P4,910 d. P2,390
____ 191. Refer to TGDL Co. Which products would be processed further?
a. neither X or Z c. both X and Z
b. only X d. only Z

HFGE Co.

HFGE Co. produces three products: Bo, Mo, and Lo from the same process. Joint costs for this production run
are P2,100.

Disposal
Sales price cost per Further Final
per lb. at lb. at processing sales price
Pounds split-off split-off per pound per pound
Bo 800 P6.50 P3.00 P2.00 P 7.50
Mo 1,100 8.25 4.20 3.00 10.00
Lo 1,500 8.00 4.00 3.50 10.50

If the products are processed further, HFGE Co. will incur the following disposal costs upon sale: Bo, P3.00;
Mo, P2.00; and Lo, P1.00.

____ 192. Refer to HFGE Co. Using a physical measurement method, what amount of joint processing cost is allocated
to Bo (round to the nearest peso)?
a. P700 c. P927
b. P679 d. P494
____ 193. Refer to HFGE Co. Using a physical measurement method, what amount of joint processing cost is allocated
to Mo (round to the nearest peso)?
a. P679 c. P494
b. P700 d. P927
____ 194. Refer to HFGE Co. Using sales value at split-off, what amount of joint processing cost is allocated to Mo?
a. P725 c. P700
b. P959 d. P416
____ 195. Refer to HFGE Co. Using sales value at split-off, what amount of joint processing cost is allocated to Lo?
a. P416 c. P725
b. P959 d. P700
____ 196. Refer to HFGE Co. Using NRV at split-off, what amount of joint processing cost is allocated to Bo?
a. P700 c. P706
b. P951 d. P444
____ 197. Refer to HFGE Co. Using NRV at split-off, what amount of joint processing cost is allocated to Lo?
a. P951 c. P444
b. P700 d. P706

DED Co.

DED Co. is placing an ad in the local paper to advertise its products. The ad will run for one week at a total
cost of P5,500. DED has four categories of products as follows:

% of floor space Expected sales

 occupied value
Hardware 20% P35,000
Hand Tools 15 15,000
Lawn Furniture 45 64,500
Light Fixtures 20 25,500

____ 198. Refer to DED Co. What amount of advertising cost should be allocated to hardware, assuming DED allocates
based on percent of floor space occupied?
a. P 825 c. P2,475
b. P1,100 d. P1,375
____ 199. Refer to DED Co. Assume that DED decides to allocate based on expected sales value. What amount of
advertising cost should be allocated to light fixtures (round to the nearest peso)?
a. P1,002 c. P2,534
b. P589 d. P1,375

CDEG

CDEG produces four products from the same process: Cep, Dap, Eek, and Gok. Joint product costs are
P9,000. (Round all answers to the nearest peso.)

Disposal Final
Sales price cost Further sales
per barrel per barrel processing price
Barrels at split-off at split-off costs per barrel
Cep 750 P10.00 P6.50 P2.00 P13.50
Dap 1,000 8.00 4.00 2.50 10.00
Eek 1,400 11.00 7.00 4.00 15.50
Gok 2,000 15.00 9.50 4.50 19.50

If CDEG sells the products after further processing, the following disposal costs will be incurred: Cep, P2.50;
Dap, P1.00; Eek, P3.50; Gok, P6.00.

____ 200. Refer to CDEG. Using a physical measurement method, what amount of joint processing cost is allocated to
Dap?
a. P2,447 c. P3,495
b. P1,311 d. P1,748
____ 201. Refer to CDEG. Using a physical measurement method, what amount of joint processing cost is allocated to
Eek?
a. P1,311 c. P3,495
b. P1,748 d. P2,447
____ 202. Refer to CDEG. Using sales value at split-off, what amount of joint processing cost is allocated to Dap?
a. P1,108 c. P1,182
b. P2,276 d. P4,433
____ 203. Refer to CDEG. Using sales value at split-off, what amount of joint processing cost is allocated to Gok?
a. P2,276 c. P1,182
b. P1,108 d. P4,433
____ 204. Refer to CDEG. Using net realizable value at split-off, what amount of joint processing cost is allocated to
Cep?
a. P2,170 c. P4,263
b. P1,550 d. P1,017
____ 205. Refer to CDEG. Using net realizable value at split-off, what amount of joint processing cost is allocated to
Eek?
a. P4,263 c. P1,017
b. P1,550 d. P2,170
 HHJF Co.

HHJF Co. produces three products from the same process that has joint processing costs of P4,100. Products
RR, SS, and TT are produced in the following gallons per month, respectively: 250, 400, and 750. HHJF also
incurred advertising costs of P60,000; the ad was used to run sales for all three products. They occupy floor
space in the following ratio: 5:4:9. (Round all answers to the nearest peso.)

____ 206. Refer to HHJF Co. Using gallons as the physical measurement, what amount of joint processing cost is
allocated to SS?
a. P732 c. P1,171
b. P1,367 d. P2,196
____ 207. Refer to HHJF Co. Using gallons as the physical measurement, what amount of joint processing cost is
allocated to TT?
a. P2,196 c. P1,171
b. P1,367 d. P732
____ 208. Refer to HHJF Co. Assume that HHJF chooses to allocate its advertising cost among the three products. What
amount of advertising cost is allocated to RR using the floor space ratio?
a. P1,139 c. P16,667
b. P17,806 d. P20,000
____ 209. Refer to HHJF Co. Assume that HHJF chooses to allocate its advertising cost among the three products. What
amount of advertising cost is allocated to SS using the floor space ratio?
a. P14,244 c. P20,000
b. P911 d. P13,333
____ 210. FGDF Co. manufactures products A and B from a joint process. Sales value at split-off was P700,000 for
10,000 units of A, and P300,000 for 15,000 units of B. Using the sales value at split-off approach, joint costs
properly allocated to A were P140,000. Total joint costs were
a. P98,000. c. P200,000.
b. P350,000. d. P233,333.
____ 211. DGSS Co. manufactures products X and Y from a joint process that also yields a by-product, Z. Revenue
from sales of Z is treated as a reduction of joint costs. Additional information is as follows:

Products
X Y Z Total
Units produced 20,000 20,000 10,000 50,000
Joint costs ? ? ? P262,000
Sales value at
split-off P300,000 P150,000 P10,000 P460,000

Joint costs were allocated using the sales value at split-off approach. The joint costs allocated to product X
were
a. P150,000. c. P168,000.
b. P75,000. d. P100,800.

STANDARD COSTING

____ 212. The standard cost card contains quantities and costs for
a. direct material and direct labor only.
b. direct material, direct labor, and overhead.
c. direct labor only.
d. direct material only.
____ 213. Which of the following statements regarding standard cost systems is true?
a. Managers will investigate all variances from standard.
b. Standard costs cannot be used for planning purposes since costs normally change in the future.
 c. Favorable variances are not necessarily good variances.
d. The production supervisor is generally responsible for material price variances.
____ 214. A purpose of standard costing is to
a. replace budgets and budgeting.
b. eliminate the need to account for year-end underapplied or overapplied manufacturing overhead.
c. simplify costing procedures.
d. eliminate the need for actual costing for external reporting purposes.
____ 215. Standard costs
a. are difficult to use with a process costing system.
b. are estimates of costs attainable only under the most ideal conditions.
c. require that significant unfavorable variances be investigated, but do not require that
significant favorable variances be investigated.
d. can, if properly used, help motivate employees.
____ 216. The term standard hours allowed measures
a. budgeted output at actual hours. c. budgeted output at standard hours.
b. actual output at standard hours. d. actual output at actual hours.
____ 217. A large labor efficiency variance is prorated to which of the following at year-end?

WIP FG
Cost of Goods Sold Inventory Inventory

a. no no no
b. no yes yes
c. yes yes yes
d. yes no no
____ 218. If actual direct labor hours (DLHs) are less than standard direct labor hours allowed and overhead is applied
on a DLH basis, a(n)
a. favorable variable overhead efficiency variance exists.
b. favorable variable overhead spending variance exists.
c. unfavorable volume variance exists.
d. favorable volume variance exists.
____ 219. If all sub-variances are calculated for labor, which of the following cannot be determined?
a. reason for the labor variances c. efficiency of the labor force
b. actual hours of labor used d. labor rate variance
____ 220. FDFS Corp. incurred 2,300 direct labor hours to produce 600 units of product. Each unit should take 4 direct
labor hours. Ronald applies variable overhead to production on a direct labor hour basis. The variable
overhead efficiency variance
a. will be unfavorable.
b. will be favorable.
c. will depend upon the capacity measure selected to assign overhead to production.
d. is impossible to determine without additional information.
____ 221. A variable overhead spending variance is caused by
a. using more or fewer actual hours than the standard hours allowed for the production achieved.
b. paying a higher/lower average actual overhead price per unit of the activity base than the
standard price allowed per unit of the activity base.
c. larger/smaller waste and shrinkage associated with the resources involved than expected.
d. both b and c are causes.
____ 222. A company may set predetermined overhead rates based on normal, expected annual, or theoretical capacity.
At the end of a period, the fixed overhead spending variance would
a. be the smallest if theoretical capacity had been selected.
b. not occur if actual capacity were the same as the capacity level selected.
c. be the same regardless of the capacity level selected.
d. be the largest if theoretical capacity had been selected.
____ 223. Fixed overhead costs are
a. mostly incurred to provide the capacity to produce and are best controlled on a total basis
at the time they are originally negotiated.
b. best controlled on a unit-by-unit basis of products produced.
 c. best controlled as to spending during the production process.
d. constant on a per-unit basis at all different activity levels within the relevant range.
____ 224. Total actual overhead minus total budgeted overhead at the actual input production level equals the
a. total overhead volume variance.
b. total overhead spending variance.
c. variable overhead spending variance.
d. total overhead efficiency variance.
____ 225. A favorable fixed overhead spending variance indicates that
a. budgeted fixed overhead is greater than applied fixed overhead.
b. applied fixed overhead is greater than budgeted fixed overhead.
c. actual fixed overhead is less than budgeted fixed overhead.
d. budgeted fixed overhead is less than actual fixed overhead.
____ 226. An unfavorable fixed overhead volume variance is most often caused by
a. an increase in the level of the finished inventory.
b. normal capacity exceeding actual production levels.
c. actual fixed overhead incurred exceeding budgeted fixed overhead.
d. an over-application of fixed overhead to production.
____ 227. The overhead variance calculated as total budgeted overhead at the actual input production level minus total
budgeted overhead at the standard hours allowed for actual output is the
a. spending variance. c. efficiency variance.
b. budget variance. d. volume variance.
____ 228. In a just-in-time inventory system,
a. practical standards become ideal standards.
b. variances will not occur because of the zero-defects basis of JIT.
c. ideal standards become expected standards.
d. standard costing cannot be used.

JYDY Company

JYDY Company has the following information available for October when 3,500 units were produced (round
answers to the nearest peso).

Standards:
Material 3.5 pounds per unit @ P4.50 per pound
Labor 5.0 hours per unit @ P10.25 per hour

Actual:
Material purchased 12,300 pounds @ P4.25
Material used 11,750 pounds
17,300 direct labor hours @ P10.20 per hour

____ 229. Refer to JYDY Company. What is the labor rate variance?
a. P865 F c. P865 U
b. P875 F d. P875 U
____ 230. Refer to JYDY Company. What is the labor efficiency variance?
a. P2,040 U c. P2,050 U
b. P2,040 F d. P2,050 F
____ 231. Refer to JYDY Company. What is the material price variance (based on quantity purchased)?
a. P3,075 U c. P3,075 F
b. P2,938 F d. P2,938 U
____ 232. Refer to JYDY Company. What is the material quantity variance?
a. P2,250 U c. P225 F
b. P2,250 F d. P2,475 U
____ 233. Refer to JYDY Company. Assume that the company computes the material price variance on the basis of
material issued to production. What is the total material variance?
a. P5,188 F
b. P2,850 F
 c. P5,188 U
d. P2,850 U

KHGF Manufacturing

The following March information is available for KHGF Manufacturing Company when it produced 2,100
units:

Standard:
Material 2 pounds per unit @ P5.80 per pound
Labor 3 direct labor hours per unit @ P10.00 per hour

Actual:
Material 4,250 pounds purchased and used @ P5.65 per pound
Labor 6,300 direct labor hours at P9.75 per hour

____ 234. Refer to KHGF Manufacturing. What is the material price variance?
a. P630.00 F c. P630.00 U
b. P637.50 F d. P637.50 U
____ 235. Refer to KHGF Manufacturing. What is the material quantity variance?
a. P290 F c. P290 U
b. P275 U d. P275 F
____ 236. Refer to KHGF Manufacturing. What is the labor rate variance?
a. P0 c. P1,575 U
b. P1,575 F d. P1,594 U
____ 237. Refer to KHGF Manufacturing. What is the labor efficiency variance?
a. P731.25 F c. P731.25 U
b. P750.00 F d. none of the above
____ 238. Actual fixed overhead is P33,300 (12,000 machine hours) and fixed overhead was estimated at P34,000 when
the predetermined rate of P3.00 per machine hour was set. If 11,500 standard hours were allowed for actual
production, applied fixed overhead is
a. P33,300.
b. not determinable without knowing the actual number of units produced.
c. P34,500.
d. P34,000.
____ 239. One unit requires 2 direct labor hours to produce. Standard variable overhead per unit is P1.25 and standard
fixed overhead per unit is P1.75. If 330 units were produced this month, what total amount of overhead is
applied to the units produced?
a. cannot be determined without knowing the actual hours worked
b. P1,980
c. P990
d. P660
____ 240. BRKA Company uses a standard cost accounting system. The following overhead costs and production data
are available for August:

Standard fixed OH rate per DLH P1

Standard variable OH rate per DLH P4
Budgeted monthly DLHs 40,000
Actual DLHs worked 39,500
Standard DLHs allowed for actual production 39,000
Overall OH variance-favorable P2,000

The total applied manufacturing overhead for August should be

a. P199,500. c. P197,500.
b. P195,000. d. P197,000.
____ 241. SDKD Company uses a standard cost system and prepared the following budget at normal capacity for
January:

Direct labor hours 24,000

Variable OH P48,000
Fixed OH P108,000
Total OH per DLH P6.50

Actual data for January were as follows:

Direct labor hours worked 22,000
Total OH P147,000
Standard DLHs allowed for capacity attained 21,000

Using the two-way analysis of overhead variances, what is the controllable variance for January?
a. P10,500 U c. P9,000 F
b. P5,000 F d. P3,000 F
____ 242. The following information is available from the IIFC Company:

Actual OH P15,000
Fixed OH expenses, actual P7,200
Fixed OH expenses, budgeted P7,000
Actual hours 3,500
Standard hours 3,800
Variable OH rate per DLH P2.50

Assuming that IIFC uses a three-way analysis of overhead variances, what is the overhead spending variance?
a. P1,500 U c. P750 U
b. P750 F d. P950 F
____ 243. DSJF Company uses a two-way analysis of overhead variances. Selected data for the April production activity
are as follows:

Actual variable OH incurred P196,000

Variable OH rate per MH P6
Standard MHs allowed 33,000
Actual MHs 32,000

Assuming that budgeted fixed overhead costs are equal to actual fixed costs, the controllable variance for
April is
a. P6,000 F. c. P4,000 F.
b. P2,000 F. d. P4,000 U.
____ 244. KLJD Inc. uses a standard cost system. Overhead cost information for October is as follows:

Total actual overhead incurred P12,600

Fixed overhead budgeted P3,300
Total standard overhead rate per MH P4
Variable overhead rate per MH P3
Standard MHs allowed for actual production 3,500

What is the total overhead variance?

a. P1,200 F c. P1,400 U
b. P1,400 F d. P1,200 U

LDFS Company

LDFS Company has developed standard overhead costs based on a capacity of 180,000 machine hours as
follows:
 Standard costs per unit:
Variable portion 2 hours @ P3 = P 6
Fixed portion 2 hours @ P5 = 10
P16

During April, 85,000 units were scheduled for production, but only 80,000 units were actually produced. The
following data relate to April:

Actual machine hours used were 165,000.

Actual overhead incurred totaled P1,378,000 (P518,000 variable plus P860,000 fixed).
All inventories are carried at standard cost.

____ 245. Refer to LDFS Company. The variable overhead spending variance for April was
a. P23,000 U. c. P38,000 F.
b. P38,000 U. d. P15,000 U.
____ 246. Refer to LDFS Company. The variable overhead efficiency variance for April was
a. P23,000 U. c. P38,000 F.
b. P15,000 U. d. P38,000 U.
____ 247. Refer to LDFS Company. The fixed overhead spending variance for April was
a. P60,000 U. c. P40,000 U.
b. P60,000 F. d. P40,000 F.
____ 248. Refer to LDFS Company. The fixed overhead volume variance for April was
a. P60,000 U. c. P60,000 F.
b. P100,000 F. d. P100,000 U.
____ 249. The sum of the material mix and material yield variances equals
a. the material quantity variance.
b. the total material variance.
c. the material purchase price variance.
d. none of the above.
____ 250. The sum of the labor mix and labor yield variances equals
a. the labor rate variance.
b. the labor efficiency variance.
c. nothing because these two variances cannot be added since they use different costs.
d. the total labor variance.

13. B 32. D 51. A 70. C

14. D 33. A 52. A 71. C
Answer Section 15. B 34. D 53. C 72. A
16. B 35. C 54. B 73. D
17. C 36. C 55. D 74. A
18. D 37. B 56. B 75. C
1.
19. C 38. A 57. C 76. A
B
20. A 39. D 58. D 77. D
2. C
21. B 40. B 59. D 78. A
3. D
22. B 41. D 60. A 79. A
4. B
23. A 42. D 61. B 80. C
5. D
24. C 43. C 62. C 81. B
6. D
25. A 44. B 63. D 82. A
7. A
26. B 45. A 64. B 83. C
8. D
27. D 46. D 65. C 84. A
9. C
28. A 47. B 66. D 85. D
10. A
29. D 48. C 67. B 86. D
11. B
30. D 49. A 68. D 87. A
12. B
31. D 50. A 69. D 88. A
 89. D 122. A 154. C 187. C 219. A
90. B 123. D 155. B 188. A 220. B
91. C 124. D 156. A 189. B 221. D
92. C 125. A 157. A 190. B 222. C
93. D 126. A 158. B 191. B 223. A
94. C 127. C 159. A 192. D 224. B
95. C 128. A 160. D 193. A 225. C
96. D 129. A 161. C 194. A 226. B
97. C 130. C 162. B 195. B 227. C
98. A 131. D 163. B 196. D 228. C
99. D 132. B 164. C 197. A 229. A
100. D 133. D 165. B 198. B 230. D
101. B 134. D 166. B 199. A 231. C
102. D 135. B 167. D 200. D 232. B
103. A 136. C 168. D 201. D 233. A
104. C 137. B 169. D 202. C 234. B
105. C 138. C 170. D 203. D 235. C
106. C 139. B 171. C 204. D 236. B
107. B 140. B 172. D 205. D 237. D
108. D 141. C 173. B 206. C 238. C
109. C 142. A 174. C 207. A 239. C
110. C 143. B 175. D 208. C 240. B
111. A 144. C 176. D 209. D 241. D
112. B 145. C 177. D 210. C 242. B
113. A 146. B 178. B 211. C 243. B
114. D 147. D 179. A 212. B 244. B
115. D 148. A 180. A 213. C 245. A
116. A 149. B 181. A 214. C 246. B
117. C 150. C 182. B 215. D 247. D
118. D 151. A 183. B 216. B 248. D
119. B 152. C 184. A 217. C 249. A
120. B 153. A 185. D 218. A
121. B 186. A 250.
B