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19. An event, action, transaction or unit of work Straight –Line depreciation 60,000
that consumes resources and with a specific of factory equipment
Straight –Line depreciation 40,000
purpose.
of factory building
A) Activity Janitors’ salaries for 12,000
B) Cost object cleaning factory premises
C) Cost driver Salesmen’s commission 20,000
D) Direct Labor based on sales
Straight line depreciation 15,000
20. Under both absorption and variable costing, for delivery van
variable overhead and variable operating
expenses; respectively, would be treated as a How much of these costs should be
product cost. inventoried for external reporting purposes?
A) Yes, Yes A) P512,000
B) Yes, No B) P400,000
C) No, no C) P547,000
D) No, Yes D) P412,000
21. Kings Company has provided information 24. Dimolam Corporation produced 10,000 units
concerning its projections for the coming year of Product A during the month of August.
as follows: Costs incurred during the month were as
Net Sales P10,000,000 follows:
Fixed Manufacturing Costs Direct Material Used P20,000
Direct Labor 16,000
P1,000,000
Variable Manufacturing 8,000
Kings projects variable manufacturing costs of
Overhead
60% of net sales. Assuming no change in Fixed Manufacturing 10,000
inventory, what will be the projected cost of Overhead
good sold be? Variable Selling and 2,400
A) P5,000,000 administrative expenses
B) P6,000,000 Fixed Selling and 9,000
C) P7,000,000 administrative expenses
Total P65,400
D) P8,000,000
What were Product A’s product cost per unit
22. Kings Company manufactures a single product
under absorption and variable costing?
using standard costing. Variable production
costs are P12 and fixed production costs are Absorption Costing Variable Costing
P125,000. Kings uses a normal activity of A) P6.54 P5.64
12,500 units to set its standard costs. Kings B) 4.40 5.40
began the year with 1,000 units in inventory, C) 3.60 4.64
produced 11,000 units, and sold 11,500 units. D) 5.40 4.40
The standard costs of goods sold under
absorption costing would be 25. Dinyalam Company produces a single product.
A) P115,000 Last Year, the company’s net operating
B) P132,000 income computed by the absorption costing
method was P36,000. The company’s unit
product cost was P18 under variable costing Machine
and P22 under absorption costing. During the Assembling 200,000 hrs 50,000 hrs
period, inventory increased by 5,000 units. Products
The company’s income under variable costing Inspecting FG 12,000 hrs 8,000 hrs
Total Units 5,000 units 2,000 units
must have been:
Produced
A) P20,000
B) P56,000
Required:
C) P16,000
1. Allocate overhead costs using:
D) P41,000
a. Plantwide allocation
Increase in inventory 5,000 b. Department allocation
X Fixed Oh cost per unit (2-18) 5 c. ABC
Difference in income 2. Determine the unit product cost of Basic
20,000 Model and Deluxe Model assuming the
AC income following:
=36,000-20,000 Basic Model=DM: P1,000/ unit
=16,000 DL: P600/ unit
*Inventory increase, therefore production Deluxe Model: DM: P1,300/unit DL: P750/
was greater than sales, and absorption unit
costing income was greater than variable
costing income 27. Lamkuna Corporation has provided the
26. The following data are taken from the records following data from its activity-based costing
of HLG Company, a company that produces system:
two models of sailboat, the Basic Model and
the Deluxe Model. Activity Cost Total Cost Total
Pool Activity
Overhead Allocation Base
Assembly P313,490 29,000
Fabrication P3,000,000 60,000 machine
machine-hours
Department hrs
Processing P49,476 1,400 orders
Assembling 5,000,000 217,000 DLH
orders
Department
Inspection P73,882 1,060
inspection-
Total estimated DLH for the whole plant-250,000 DLH hours
ACTIVITY COST EST. OH EST. COST
DRIVER COSTS DRIVER The company makes 490 units of product B2 a
Purchasing Purchase 1,200,000 10,000
year, requiring a total of 1,080 machine-
materials Requisitions requisitions
Setting up Machine 1,600,000 2,000 hours, 60 orders, and 20 inspection-hours per
Machine Setups setups year. The product's direct material cost is
Running Machine 2,700,000 90,000 hrs P46.42 per unit and its direct labor cost is
Machine Hrs P20.22 per unit.
Assembling DL Hrs 1,500,000 250,000 hrs According to the activity-based costing
Products system, the average cost of product B2 is
Inspecting Inspection 1,000,000 20,000 hrs closest to:
FG Hrs
A) P97.63 per unit
B) P66.64 per unit
Allocation of cost driver activities are as follows:
C) P93.31 per unit
BASIC DELUXE
Purchasing 7,000 3,000 D) P94.79 per unit
materials requisition requisition
Setting up 1,100 setups 900 setups
Machine
Running 50,000 hrs 40,000 hrs