Cost Accounting Systems

(A. Traditional Cost Accounting)

COST ACCOUNTING SYSTEMS A. a training program for salespersons.

B. executive travel expenses.
A. TRADITIONAL COST ACCOUNTING C. property taxes on the factory building.
D. new product research and development.
THEORIES:
Basic concepts Discretionary fixed cost
Cost Accounting B8. Which of the following is an example of discretionary fixed cost?
A1. Cost accounting involves the measuring, recording, and reporting of A. direct labor C. property taxes on a factory building
A. product costs C. future costs B. insurance on a building D. depreciation on a factory building
B. manufacturing process D. managerial accounting decisions
Controllable costs
Cost management D10. Controllable costs are:
D3. The cost management function is usually under A. Costs that management decides to incur in the current period to enable the company to
A. the chief information officer. C. purchasing manager. achieve operating objectives other than the filling of orders placed by customers.
B. treasurer. D. controller. B. Costs that are governed mainly by past decisions that established the present levels of
operating and organizational capacity and that only change slowly in response to small
D2. The cost management information system provides information changes in capacity.
A. that the accountant needs to prepare the financial statements. C. Costs that will unaffected by current managerial decisions.
B. that the manager needs to effectively manage the firm. D. Costs that are likely to respond to the amount of attention devoted to them by a
C. that the manager needs to effectively manage not-for-profit organization. specified manager.
D. b and c.
A11. Controllable costs for responsibility accounting purposes are directly influenced only by
C4. The main focus of cost management information must be A. A given manager within a given period.
A. usefulness and accuracy. C. usefulness and timeliness. B. A change in activity.
B. timeliness and accuracy. D. relevance and good format. C. Production volume.
D. Sales volume.
B5. With regard to the task of management’s decision making, cost management information is
needed to Imputed costs
A. make sound strategic decisions regarding choice of products, methods, and techniques. B12. An imputed cost is
B. support recurring decisions regarding replacement of equipment, managing cash flow, A. The difference in total costs which results from selecting one choice instead of another.
etc. B. A cost that does not entail any cash outlay but which is relevant to the decision-making
C. provide a fair and effective basis for identifying inefficient operations. process.
D. provide accurate accounting for inventory, receivables, and other assets. C. A cost that may be shifted to the future with little or no effect on current operations.
D. A cost that continues to be incurred even though there is no activity.
Product costing
D6. Product costing system design or selection: Cost According to Behavior
A. requires an understanding of the nature of the business Semi-variable costs
B. should provide useful cost information for strategic and operational decision needs D14. Semi-variable costs
C. should be cost effective in design and selection A. per unit remain the same regardless of total output
D. all the above answers are correct B. remain the same within the relevant range of output
C. increase in steps as the amount of the cost driver volume increases
Cost concepts D. have both fixed and variable components in them
Committed vs. Discretionary fixed costs
Commited fixed costs Step cost
B7. Which of the following is an example of a committed fixed costs? D15. A step cost is
A. direct materials C. supervisor’s salary A. the same as semi-fixed cost
B. depreciation on a factory building D. insurance on a building B. the same as mixed cost
C. a cost that increases in steps as the amount of cost-driver volume increases
C16. An example of a committed fixed cost is: D. a and c only.

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B. detailed activity information D. focus on managing activities

Product Cost vs. Period Cost
Period cost D23. Which of the following is typically regarded as a cost driver in traditional accounting
D18. Which of the following would NOT be a period cost for a manufacturing firm? practices?
A. Selling expenses A. number of purchase orders processed C. number of transactions processed
B. Salary paid to the CEO of the company B. number of customers served D. number of direct labor hours worked
C. Repairs to the Receptionist's computer
D. Utilities in manufacturing plant C21. Which of the following is not a trait of a traditional cost management system?
A. unit-based drivers C. focus on managing activities
Direct vs. indirect costs B. allocating intensive D. narrow and rigid product costing
C17. What kind of costs can be conveniently and economically traced to a cost object or pool?
A. Indirect Costs. C. Direct Costs. D24. Which of the following is not typical of traditional costing systems?
B. Relevant Costs. D. Overhead Costs. A. Use of a single predetermined overhead rate.
B. Use of direct labor hours or direct labor cost to assign overhead.
D47. Direct product expenses C. Assumption of correlation between direct labor an incurrence of overhead cost.
A. are incurred for the benefit of the business as a whole D. Use of multiple cost drivers to allocate overhead.
B. cannot be identified readily with a given product
C. can be assigned to product only by a process of allocation Overhead allocation
D. would not be incurred if the product did not exist A35. Conventional product costing uses which of the following procedures?
A. Overhead costs are traced to departments, then costs are traced to products.
C9. The distinction between direct and indirect costs depends on whether a cost B. Overhead costs are traced to activities, then costs are traced to products.
A. is controllable or non-controllable. C. Overhead costs are traced directly to product.
B. is variable or fixed. D. All overhead costs are expensed as incurred.
C. can be conveniently and physically traced to a cost object under consideration.
D. will increase with changes in levels of activity. C36. The overhead rates of the traditional approach to product costing use
A. nonunit-based cost drivers C. unit-based cost drivers
B19. Of most relevance in deciding how indirect costs should be assigned to products is the B. process costing D. job-order costing
degree of
A. Linearity. C. Avoidability. Effect of Traditional overhead allocation
B. Causality. D. Controllability. B22. The use of unit-based activity drivers to assign costs tends to
A. overcost low-volume products. C. overcost all products.
Comprehensive B. overcost high-volume products. D. undercost all products.
D13. Almos, Inc. makes ski-boards in Davao. Identify the correct matching of terms.
A. Fiberglass is factory overhead B30. Traditional overhead allocations result in which of the following situations?
B. Plant real estate taxes are a period cost A. Overhead costs are assigned as period costs to manufacturing operations.
C. Depreciation on delivery trucks is a product cost B. High-volume products are assigned too much overhead, and low-volume products are
D. Payroll taxes for workers in the Packaging Dept. are direct labor assigned too little overhead.
C. Low-volume products are assigned too much, and high-volume products are assigned
Traditional Costing Accounting too little overhead.
C28. An accounting system that focuses on transactions is D. The resulting allocations cannot be used for financial reports.
A. an activity-based accounting system. C. a traditional accounting system.
B. a product life cycle costing system. D. all of the above. C32. Product costs can be distorted if a unit-based cost driver is used and
A. nonunit-based overhead costs are a significant proportion of total overhead
D29. Traditionally, managers have focused cost reduction efforts on B. the consumption ratios differ between unit-based and nonunit-based input categories
A. activities. C. departments. C. both a and b
B. processes. D. costs. D. neither a nor b

A33. Which of the following is a trait of a traditional cost management system? Process Costing
A. unit-based drivers C. tracing is intensive B40. Which of the following items is not a characteristic of a process cost system?

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A. Once production begins, it continues until the finished product emerges A. the two systems can show different overhead budget variances.
B. The products produced are heterogeneous in nature B. only normal costing can be used with absorption costing.
C. The focus is on continually producing homogeneous products C. the two systems show different volume variances if standard hours do not equal actual
D. When the finished product emerges, all units have precisely the same amount of hours.
materials, labor, and overhead D. normal costing is less appropriate for multiproduct firms.

Actual Costing, Normal costing, & Standard Costing Standard Costing

Predetermined overhead rate C20. The product cost which is determined in a conventional standard cost accounting system
D39. The formula for computing the predetermined manufacturing overhead rate is estimated is a(an)
annual overhead costs divided by an expected annual operating activity, expressed as A. Joint cost. C. Expected cost.
A. direct labor cost C. direct labor hours B. Fixed cost. D. Direct cost.
B. machine hours D. any of these
DPlant-wide vs. Department-side Overhead Rates
B37. The two main advantages of using predetermined factory overhead rates are to provide 44. Volume-based plant-wide rates produce inaccurate product cost when:
more accurate unit cost information and to: A. a large share of factory overhead cost is not volume-based
A. simplify the accounting process B. firms produce a diverse mix of product
B. provide cost information on a timely basis C. large volumes of production occur
C. insure transmission of correct data D. Both a and b are correct.
D. adjust for variances in data sources
Activity-based Costing
D34. The effect of uniform production levels on production cost per unit can be achieved A25. An activity that has a direct cause-effect relationship with the resources consumed is
A. by using a factory overhead rate based on different production levels for each year a(n)
B. by using a factory overhead rate based on selling price A. cost driver. C. cost pool.
C. by closing the factory overhead at the end of the accounting period B. overhead rate. D. product activity.
D. by using a factory overhead rate based on long-run normal production activity level
D27. The term cost driver refer to:
A38. No matter which method is used, underapplied or overapplied overhead usually is A. any activity that can be used to predict cost changes.
adjusted only: B. the attempt to control expenditures at a reasonable level.
A. at the end of a year. C. the person who gathers and transfers cost data to the management accountant.
B. monthly during the year D. any activity that causes costs to be incurred.
C. if the difference exceeds P1,000 or one percent of total overhead.
D. when the company's profit projections require an adjustment C26. Each group of overhead costs should be applied based on
A. direct labor hours or cost.
Actual Costing B. units produced.
D43. Disadvantages of actual costing include C. whatever activity drives those specific overhead costs.
A. actual cost systems cannot provide accurate unit cost information on a timely basis D. machine time.
B. actual cost systems produce unit costs that fluctuate from period to period
C. estimates must be used when calculating the actual overhead rate C31. Which of the following statements is true?
D. a and b A. The traditional approach to costing uses many different cost drivers.
B. Costs that are indirect to products are by definition traceable to directly to products.
Normal Costing C. Costs that are indirect to products are traceable to some activity.
C42. The principal difficulty with normal costing is that D. All of the above statements are true.
A. the unit cost information is not received on a timely basis
B. it can result in fluctuating per-unit overhead costs A41. Why is it better to use separate overhead rates?
C. estimated overhead and estimated activity are likely to differ from actual overhead and A. Some departments are labor-intensive, some are machine-intensive.
actual costs, resulting in underapplied or overapplied overhead B. Labor rates vary considerably among departments.
D. there is no difficulty associated with using normal costing C. The resulting overhead rates are all about the same.
D. All jobs require about the same percentage of time in all departments.
C46. Normal costing and standard costing differ in that

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Operating Leverage product A, batch-related overhead for product A per unit amounts to
B45. If company A has a higher degree of operating leverage than company B, then: A. P20 C. P60
A. the company A has higher variable expenses. B. P40 D. P80
B. the company A's profits are more sensitive to percentage changes in sales.
C. the company A is more profitable. vii
. ABC Company had a total overhead of P360,000 and selling and administration expense of
D. the company A is less risky. P140,000 for the year. 1,000 units of A and 3,000 units of B were produced. Assuming that
30% of overhead is product related overhead - 20% of which is related to product A,
PROBLEMS: product-related overhead per unit of A amounts to
Total manufacturing costs A. P30 C. P50
i
. Direct materials and direct labor costs total P120,000, conversion costs total P100,000, and B. P40 D. P60
factory overhead costs total P400 per machine hour. If 150 machine hours were used for Job
#201, what is the total manufacturing cost for Job #201? Total overhead variance
A. 120,000 C. 180,000 viii
. Cooke Company uses the equation P450,000 + P1.50 per direct labor hour to budget
B. 160,000 D. 280,000 manufacturing overhead. Cooke has budgeted 150,000 direct labor hours for the year. Actual
results were 156,000 direct labor hours and P697,500 total manufacturing overhead. The
Overhead total overhead variance for the year is
Budgeted overhead A. P4,500 favorable. C. P4,500 unfavorable.
ii
. Machine hours used to set the predetermined overhead rate were 25,000, actual hours were B. P18,000 favorable. D. P18,000 unfavorable.
24,000, and overhead applied was P60,000. Budgeted overhead for the year was
A. P57,600. C. P60,000. Over(under)-applied overhead
B. P59,000. D. P62,500. ix
. If estimated annual factory overhead is P800,000, estimated annual direct labor hours are
400,000, actual June factory overhead is P82,000, and actual June direct labor hours are
Overhead per unit 38,000, then overhead is:
iii
. ABC Company had a total overhead of P360,000 and selling and administrative expense of A. P6,000 overapplied C. P1,800 underapplied
P140,000 for the year. 1,000 units of A and 3,000 units of B were produced. A requires 3 B. P1,800 overapplied D. P6,000 underapplied
machine hours and B requires one machine hour per unit. What is overhead chargeable per
unit of A Gross profit
A. P 60 C. P120 x
. BKY Company predicted that factory overhead for 2006 and 2007 would be P60,000 for each
B. P 90 D. P180 year. The predicted and actual activity for 2006 and 2007 were 30,000 and 20,000 direct
labor hours, respectively.
iv
. ABC Company had a total overhead of P360,000 and selling and administration expense of 2006 2007
P140,000 for the year. 1,000 units of A and 3,000 units of B were produced. A requires 3 Sales in units 25,000 25,000
and B requires one machine hours per unit. A requires 6 direct labor hours and B requires 4 Selling price per unit P10 P10
direct labor hours per unit. 40% of overhead is related to labor and the balance to machines. Direct materials and direct labor per unit P 5 P 5
Labor-related overhead per hour amounts to The company assumes that the long-run production level is 20,000 direct labor hours per
A. P 8 C. P18 year. The actual factory overhead cost for the end of 2006 and 2007 was P60,000. Assume
B. P12 D. P24 that it takes one direct labor hour to make one finished unit.
When the annual estimated factory overhead rate is used, the gross profits for 2006 and
v
. ABC Company had a total overhead of P360,000 and selling and administration expense of 2007, respectively, are
P140,000 for the year. 1,000 units of A and 3,000 units of B were produced. A requires 3 A. P 75,000 and P 75,000 C. P125,000 and P125,000
and B requires one machine hours per unit. A requires 6 direct labor hours and B requires 4 B. P 75,000 and P 55,000 D. P 75,000 and P 50,000
direct labor hours per unit. 40% of overhead is related to labor and the balance to machines.
The overhead per unit of B amounts to Process costing
A. P 60 C. P156 Work in process
B. P 68 D. P180 xi
. Britney Company has unit costs of P10 for materials and P30 for conversion costs. If there
are 2,500 units in ending work in process, 40% complete as to conversion costs, and fully
vi
. ABC Company had a total overhead of P360,000 and selling and administration expense of complete as to materials cost, the total cost assignable to the ending work in process
P140,000 for the year. 1,000 units of A and 3,000 units of B were produced. Assuming that inventory is
20% of all overhead are batch-related for 1,000 batches, 40% of which was for producing A. P 45,000 C. P 75,000

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B. P 55,000 D. P100,000 A. Both 50,000 units C. 75,000 units and 60,000 units
B. 60,000 units and 50,000 units D. 60,000 units and 75,000 units
Overhead component
xii
. In the Star Company, the predetermined overhead rate is 80% of direct labor cost. During xvi
. The cost of goods completed and transferred out to the Refining department was
the month, P210,000 of factory labor costs are incurred, of which P180,000 is direct labor A. P1,930,750 C. P1,600,500
and P30,000 is indirect labor. Actual overhead incurred was P200,000. The amount of B. P1,350,000 D. P1,550,500
overhead debited to Work in Process Inventory should be
A. P120,000 C. P168,000 xvii
. The Amor Company’s accounting records reflected the following data for April 2003. The
B. P144,000 D. P160,000 company accounts its production using First-in, First-out cost flow method:
Work in process, March 31,2003, 60% completed as to
Equivalent unit of production materials and conversion costs ? units
xiii
. The Assembling Department’s output during the period consists of 20,000 units completed Work in process, April 30, 2003, 30% completed as to
and transferred out, and 5,000 units in ending work in process 60% complete as to materials materials and conversion costs 24,000 units
and conversion costs. Beginning inventory is 1,000 units, 40% complete as to materials and Equivalent units of production for April 2003 64,000
conversion costs. The equivalent units of production are Units started and completed in April 50,000
A. 22,600 C. 24,000 How many units were in the beginning work-in-process?
B. 23,000 D. 25,000 A. 6,800 C. 17,000
B. 11,333 D. 24,000
xiv
. The Amor Company has 2,000 units in beginning work in process, 20% complete as to
conversion costs, 23,000 units transferred out to finished goods, and 3,000 units in ending xviii
. Had the company used the weighted-average method of accounting for its production, the
work in process one-third complete as to conversion costs. The beginning and ending equivalent units should be
inventory is fully complete as to materials costs. Equivalent units for materials and A. 74,200 C. 81,000
conversion costs are B. 57,200 D. 53,800
A. 22,000 and 24,000 C. 24,000 and 26,000
B. 26,000 and 24,000 D. 26,000 and 26,000 Units to be accounted for
xix
. In the Newman Company, there are zero units in beginning work in process, 7,000 units
xv
. Dodge Company has a mixing department and a refining department. Its started into production, and 500 units in ending work in process 20% completed. The
physical units to be accounted for are
process-costing system in the mixing department has two direct materials cost A. 7,000 C. 7,600
categories (material J and material P) and one conversion costs pool. The B. 7,360 D. 7,340
company uses First-in, First out cost flow method. The following data pertain Cost of Finished Goods Transferred
to the mixing department for November 2006 xx
. For the month of May, the Production Control Department of La Mesa, Inc. reported the
Units following production data for Finishing Department (second department):
Work in process, November 1: 50 percent completed Transferred-in from Assembly Department 75,000
15,000 Transferred-out to Packaging Department 59,250
Work in process, November 30, 70 percent completed 25,000 In-process end of May (with 1/3 labor and factory overhead) 15,750
Units started 60,000 All materials were put into process in Assembly Department. The Cost Accounting
Completed and transferred 50,000 Department collected these figures for Finishing Department.
Costs Unit cost for unit transferred-in from Assembly Department P 2.70
Work-in-process, November 1 P218,000 Labor cost in Finishing Department 41,280.00
Material J 720,000 Applied factory overhead 112.5% of labor cost
Material P 750,000 How much was the cost of Finished goods transferred out to the Packaging Department?
Conversion Costs 300,000 A, P240,555 C. P260,580
Material J is introduced at the start of operations in the Mixing department, and Material P is B. P 80,580 D. P159,975
added when the product is three-fourths completed in the mixing department. Conversion
costs are added uniformly during the process. Comprehensive
The respective equivalent units for Material J and Material P in the mixing department for Use the following data to answer question Nos. 18 through 20.
November 2006, are Mergy Company uses process costing in accounting for its production department, which uses

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two raw materials. Material Alpha is placed at the beginning of the process. Inspection is at the Beginning direct materials inventory P 20,000
85% completion stage. Material Bravo is then added to the good units. Normal spoilage units Beginning WIP inventory 20,000
amount to 5% of good output. The company records contain the following information for April: Beginning finished goods inventory 40,000
Ending direct materials inventory 10,000
Started during the period 20,000 units Ending WIP inventory 100,000
Material Alpha P26,800 Ending finished goods inventory 50,000
Material Beta P22,500 Purchases 140,000
Direct labor cost P75,160 Direct labor 160,000
Factory overhead P93,950 Factory overhead 200,000
Transferred to finished goods 14,000 xxvi
. What is the amount of direct materials used during the period?
Work in process (95% complete), April 30 4,000 A. P140,000 C. P 60,000
xxi
. How much were Material cost per equivalent unit for Alpha and Beta, respectively? B. P130,000 D. P150,000
A. P1.40; P1.36 C. P1.34; P1.06 xxvii
. What is the amount of cost of goods manufactured during the period?
B. P1.40; P1.06 D. P1.34; P1.25 A. P430,000 C. P470,000
xxii
. The equivalent units of production for Material Alpha and Beta are B. P420,000 D. P510,000
Alpha Beta xxviii
. What is the amount of cost of goods sold during the period?
A. 18,000 14,000 A. P430,000 C. P470,000
B. 18,000 18,000 B. P420,000 D. P510,000
C. 20,000 18,000
D. 20,000 14,000
xxiii
. The number of normal and abnormal lost units are:
Normal Abnormal
A. 700 1,400
B. 1,400 700
C. 900 1,100
D. 1,100 900

Material cost
Unit material cost
xxiv
. Catridge Company has no beginning work in process; 9,000 units are transferred out and
3,000 units in ending work in process are one-third finished as to conversion costs and fully
complete as to materials cost. If total materials cost is P60,000, the unit materials cost is
A. P5.00 C. P5.45
B. P6.00 D. P5.35
Lost units
xxv
. Lapid Company uses process costing. All materials are added at the beginning of the process.
The product is inspected when it is 90 percent converted, and spoilage is identified only at
that point. Normal spoilage is expected to be 5% of good output.
The following are extracted from the production records of Lapid Company for May 2003:
Units put into process 21,000
Units transferred to finished goods 14,000
In-process, May 31, 75% complete 6,000
How many are considered abnormal lost units?
A. Zero C. 15
B. 300 D. 850
Statement of Cost of Goods Manufactured & Sold
Use the following information that pertains to beta manufacturing company to answer questions
21 through 23:

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i
. Answer: C
Direct materials and direct labor P120,000
Factory overhead P400 x 150 60,000
Total manufacturing cost P180,000

ii
. Answer: D
Overhead rate per hour (P60,000 ÷ 24,000) P2.50
Budgeted overhead (25,000 x P2.50) P62,500

iii
. Answer: D
Total number of hours: (1,000 x 3) + (3,000 x 1) 6,000
Overhead cost per hour (P360,000 ÷ 6,000) P 60
Overhead charged per unit of product A: 3 hrs. x P60 P180

iv
. Answer: A
Labor-related overhead: (P360,000 x 0.40) P144,000
Total number of labor hours: (1,000 x 6) + (3,000 x 4) 18,000
Labor-related overhead per DLH: (P144,000 ÷ 18,000) P 8

v
. Answer: B
Machine-related overhead: (P360,000 x 0.6) P216,000
Total number of machine hours (1,000 x 3) + 3,000 6,000
Machine-related OH per MH: (P216,000 ÷ 6,000) P36

Overhead applied per unit of Product B:

Labor-related (4 hours x P8) P32
Machine-related (1 x P36) 36
Overhead per unit P68

The overhead is broken down into two volume-based cost pools. This is a more modified example of traditional
costing

vi
. Answer: B
Batch related costs: (360,000 + 140,000) × 20% P100,000
Batch related costs, Product A: 100,000 × 40% 40,000
Batch-related overhead per unit of Product A: 40,000 / 1,000 P 40
In ABC costing, there is no need to make a distinction between manufacturing and non-manufacturing costs in
computing the relevant product costs

vii
Answer: A
Product-related overhead cost (360,000 + 140,000) × 30% P150,000
Product-related overhead cost, Product A: 150,000 × 20% P 30,000
Product-related overhead cost per unit, Product A: 30,000 / 1,000 P 30

viii
. Answer: A
Variable overhead P1.50
Predetermined fixed overhead (P450,000 ÷ 150,000) 3.00
Total overhead rate P4.50
Actual overhead P697,500
Applied overhead (156,000 hours x P4.50) 702,000
Total overhead variance, favorable P 4,500

ix
. Answer: D
Applied overhead 38,000 x P2 P76,000
Actual overhead 82,000
Underapplied overhead P6,000

Overhead rate per direct labor hour (P800,000 ÷ 400,000) P2.00

x
. Answer: B
Gross Profit:
2006: (25,000 x 10) - 175,000 = P75,000
2007: (25,000 x 10) - 195,000 = P55,000

Overhead application rates:

2006: 60,000/30,000 = P2.00
2007: 60,000/20,000 = P3.00

Unit Costs:
2006: 5 + 2 = P7.00
2007: 5 + 3 = P8.00

Costs of goods sold:

2006: 25,000 x P7 P175,000
2007: (5,000 x P7) + (20,000 x P8) P195,000
Note: In 2007 the company has a beginning inventory of 5,000 units at unit cost of P7.

xi
. Answer: B
Materials cost (2,500 x P10) P25,000
Conversion cost (2,500 x 0.4 x P30) 30,000
Total costs of Work in Process P55,000

xii
. Answer: B
The amount of overhead applied to production should be 80 percent of direct labor cost (P180,000 x 0.80) =
P144,000
xiii
. Answer: B
Completed units 20,000
Work in process, End (5,000 x 0.6) 3,000
Total equivalent units, average 23,000

xiv
. Answer: B
Units completed and transferred out 23,000
Work in Process, End 3,000

MaterialsConversion Costs% of CompletionEUP% of CompletionEUPCompleted units10023,000100.0023,000WIP - End100

3,00033.33 1,000Weighted-Average EUP26,00024,000
xv
. Answer: B
Computation of equivalent units
Material JMaterial PWork-in-process, Nov. 1-15,000Units started and completed35,00035,000Work-in-process, Nov.
3025,000-EUP60,00050,000
xvi
. Answer: C
Work in process-beginning
Cost, Nov. 1P218,000Cost, November Material P (15,000 x P5)225,000 Conversion 7,500 x P5 37,500262, 500P
480,500Started, completed 35,000 P32
1,120,000Cost of goods transferred out
P1.600,500Unit Costs
Material J720,000/60,000P12 Material P750,000/50,00015 Conversion costs300,000/60,0005
TotalP32
xvii
. Answer: C
Equivalent units for April64,000Less: EU – started and completed during: April50,000 Work-in-process, end
(24,000 x 3)7,20057,200Equivalent units - work-in-process end Mar 316,800Number of units in process as of
March 31 6,800  4017,000
xviii
. Answer: A
Equivalent units – FIFO 64,000
Add equivalent units in March 31 (17,000 x .6) 10,200
Weighted Average EUP 74,200

xix
. Answer: A
The number of units to be accounted should be the sum of the units in beginning work in process and the number of
units that have been started during the period

xx
. Answer: A
EUP:
Transferred out to Packaging Dept. 59,250
In process, end 15,750 x 1/3 5,250
Total 64,500
Unit Cost:
Transferred in 2.70
Labor and overhead 87,720/64,500 1.36
Total 4.06
Cost of finished goods transferred out 59,250 x 4.06 P240,555

xxi
. Answer: D
Equivalent units AlphaBeta Transferred to F.G.14,00014,000 End Process 4,000 4,000 Normal lost
units 9000 Abnormal lost unit 1,100 0 Total20,00018,000Unit cost
Alpha P26,800  20,000 = P1.34
Beta P22,500  18,000 = P1.25

xxii
. Answer: C
Equivalent unitsAlphaBetaTransferred to F.G.14,00014,000End Process 4,000 4,000Normal lost units 900Abnormal lost
unit 1,100 ______Total20,00018,000
xxiii
. Answer: C
Total lost units (20,000 – 18,000) 2,000
Total lost units 5% x 18,000 900
Abnormal lost units 1,100

xxiv
. Answer: A
Completed and transferred out 9,000
Units in work-in-process, End (3,000 x 100%) 3,000
Equivalents units of production - Materials 12,000
Materials cost per EUP (P60,000 ÷ 12,000) P5.00

xxv
. Answer: B
Total lost units (21,000 – 20,000) 1,000
Less normal lost units 5% of 14,000 700
Abnormal lost unit 300

xxvi
. Answer: D
Beginning materials inventory P 20,000
Add Materials Purchased 140,000
Total cost of materials available for use 160,000
Deduct Materials inventory, End 10,000
Cost of materials used P150,000

xxvii
. Answer: A
Direct materials used P150,000
Direct labor 160,000
Overhead 200,000
Total manufacturing costs 510,000
Add Work in process, beginning 20,000
 Total costs placed in process 530,000
Deduct Work in process, end 100,000
Cost of goods manufactured P430,000

xxviii
. Answer: B
Cost of goods manufactured P430,000
Add finished goods inventory, beginning 40,000
Total cost of goods available for sale 470,000
Deduct finished goods inventory, end 50,000
Cost of goods sold P420,000