REGINA MONDI COLLEGE, INC.

Iriga City

BACHELOR OF SCIENCE IN ACCOUNTANCY

Midterm Exam Cost Accounting & Control

Name: Mieryle N. Diocton Permit No.__________ Course/Year: BSA- 1st Year

Instructions: Encircle the letter of the best answer. Computational problems – 3 points each.
Please present supporting computations. Correct answer without solution – 1 point only. Strictly
no erasures allowed. Good luck!

1. Yvette Co. uses a job order cost system. The following debits (credits) appeared in Yvette’s
work-in-process account for the month of April 2015:

April Description Amount

1 Balance P4,000
30 Direct materials 24,000
30 Direct labor 16,000
30 Factory overhead 12,800
30 To finished goods (48,000)

Yvette applies factory overhead to production at a predetermined rate of 80% of direct labor
costs. Job no. 5, the only job still in process on April 30, 2015, has been charged with direct
labor of P2,000. What was the amount of direct materials charged to Job No. 5?
a. P3,000
b. 5,200
c. 8,800
d. 24,000

2. A company has been ordering more than the economic order quantity. This would result in:
a. More frequent order points.
b. Carrying costs greater than order costs.
c. Equal safety stock costs and carrying costs.
d. Carrying costs less than order costs.

3. The factor need not be considered when calculating an inventory economic order quantity (EOQ)
is:
a. Safety stock level.
b. Annual stock level.
c. Annual sales of a product.
d. Order-placing costs.

4. There are 1,000 trolls in stock, and 1,500 are due in from orders that were placed
previously. The company sells trolls at the rate of 100 per day and finds that it takes an
average of 20 days for an order to be received. Because usage and lead times are known with
certainty and because the company has determined that an order must be placed now, the desired
safety stock quantity must be equal to:
a. 500 units
b. 1,000 units
c. 2,500 units
d. 100 units

5. Jess Company has a plant that manufactures transistor radios. One component is an XT
transistor. Expected demand is for 5,200 of these transistors in March 2015. Jess estimates the
ordering cost per purchase order to be P250. The carrying cost for one unit of XT in stock is
P5. What is the EOQ for the XT transistor?
a. 721
b. 521
c. 520
d. 720

6. Mars Company has developed the following data to assist in controlling one of its material
inventory items:

Economic order quantity 1,000 liters

Average daily use 100 liters
Maximum daily use 120 liters
Working days per year 250 days
Safety stock 140 liters
Cost of carrying inventory P1.00 per liter per year
Lead time 7 working days

What is the reorder point?

a. 840 liters
b. 800 liters
 c. 900 liters
d. 830 liters

7. During July 2015, Jump Products Company had returned P13,480 in direct materials and P550 in
indirect materials. What is the journal entry to record the cost of materials returned to
storeroom for the month?
a. Materials 14,030
Work in process 13,480
Mfg. overhead control 550
b. Work in process 14,030
Mfg. overhead control 550
Materials 14,030
c. Materials 14,030
Work in process
d. Materials 14,030
Direct materials 13,480
Mfg. overhead control 550

8. Which inventory costing method charges current costs against current revenues?
a. FIFO
b. LIFO
c. Moving average
d. Specific identification

9. AMG Manufacturing Company which uses the periodic inventory system showed the following
transactions during the month of May.

Date Units purchased Units cost Units issued

5/1 10 P15 -
5/5 20 20 -
5/15 - - 15
5/19 - - 10
5/24 15 18 -
5/30 - - 15

What is the cost of ending inventory under the weighted average costing method?
a. P91.11
b. 89.12
c. 90.50
d. 88.50

10. Using the data in no. 9, what is the cost of the units issued under the FIFO costing method?
a. P730
b. 850
c. 830
d. 700

11. Assuming the same data in no. 9, except that AMG Company now uses a perpetual inventory
system. What is the cost of ending inventory under the moving average method?
a. P75.50
b. 80.65
c. 90.42
d. 91.11

12. The overtime premium spent on a regular job order that cannot be completed in the regular
working hours should be charged to:
a. Manufacturing overhead control account
b. Work-in-process account
c. Selling expense account
d. General expense account

13. Mike G., a production employee is paid P180 per hour for a regular work of 40 hours. During
the week ended March 23, Mike G. worked 50 hours and earned time and a half for overtime hours.

What is the amount that should be charged to Work in Process account if the overtime premium is
charged to production worked on during the overtime hours?
a. P9,000
b. 9,900
c. 8,900
d. 9,500

14. The payslip of Jing Garcia, employee No. 106 who works on the production line, showed the
following for a 2-week pay period:

Gross earnings P4,560.00

Income tax withheld 611.68
SSS premiums withheld 342.00
Phil. Health premiums withheld 112.16
Pag-ibig premiums withheld 222.00
Union dues 44.00
Jing Garcia works a regular 40-hours week and is paid P48 per hour regular time, and time and a
half for overtime.

She is also paid an additional P1,092.80 in benefits for the 2 week pay period with regard to
the employer’s contribution to the company’s SSS and Phil. Health premiums.

What is the amount to be charged to Work in Process for employee No. 106 for the 2-week period,
assuming that any overtime work is not traceable to a particular job order?
a. P6,840
b. 8,880
c. 3,840
d. 4,320

15. Using the same information in no. 14, how much is to be charged to Manufacturing Overhead
Control account for the 2-week period for employee No. 106?
a. P1,092.80
b. 4,320.00
c. 4,560.00
d. 1,332.80

16. A company produces stereo speakers for automobile manufacturers. The automobile
manufacturers emphasize total quality control (TQC) in their production processes and reject
approximately 3% of the stereo speakers received as being unacceptable quality. The company
inspects the rejected speakers to determine which ones should be reworked and which ones should
be discarded. The discarded speakers are classified as:
a. Waste
b. Scrap
c. Spoilage
d. Rework costs

17. Waste materials consist of:

a. Raw materials remaining from the production cycle but not usable for any purpose.
b. Finished goods that do not meet quality control standards and cannot be reworked.
c. Defective units that may be used or sold.
d. Raw materials remaining from the production cycle but usable for purposes other than the
original purpose.

18. The recovery value of scrap that is significant in economic value, abnormal, and due to the
nature of particular jobs should be credited to:
a. Materials
b. Work in process
c. Manufacturing overhead
d. Loss from abnormal spoilage

19. The disposal value of spoilage that is normal and due to the nature of particular jobs
should be debited to:

a. Materials
b. Work in process
c. Manufacturing overhead
d. Applied manufacturing overhead

20. ILU Company’s Job 506 for the manufacture of 2,200 coats was completed during August at the
unit costs presented as follows. Final inspection of Job 506 disclosed 200 spoiled coats, which
were sold to a jobber for P6,000.

The following information was available:

Direct materials P20
Direct labor 18
Manufacturing overhead (includes an allowance of P1 for spoiled work) 18

What would be the unit cost of goods coats on Job 506, if (1) the spoilage loss is charged to
all production during August, and (2) if the spoilage is attributable to exacting specifications
of Job 506?
a. (1) P56.00; (2) P57.50
b. (1) P57.50; (2) P56.00
c. (1) P56.00; (2) P57.57
d. (1) P58.60; (2) P57.50

For items 21-22. MJ Lumber & Wood Products, Inc. manufactures custom wooden cabinets and
furniture. During the current period, 160 tables were incorrectly shaped on job number 222 and
had to be replaced. Although the defective table legs cannot be used on the job, they can be
sold to a local lumber company for P2 each. The cost of the 160 defective table legs is:

Materials (160 legs x P5.00) P800.00

Labor (4 hours x P24.00 per hour) 96.00
Manufacturing overhead (4 hours x P48.00 per hour) 192.00

21. The journal entry to record the above information would be:
a. Spoiled goods inventory 320
 Work in process 320
b. Spoiled goods inventory 1,088
Work in process 1,088
c. Spoiled goods inventory 768
Work in process 768
d. Spoiled goods inventory 320
Manufacturing Overhead Control 768
Work in process 1,088

22. What is the journal entry if the spoilage loss is due to exacting specifications:
a. Spoiled goods inventory 320
Work in process 320
b. Spoiled goods inventory 1,088
Work in process 1,088
c. Spoiled goods inventory 768
Work in process 768
d. Spoiled goods inventory 320
Manufacturing Overhead Control 768
Work in process 1,088

23. The sale of scrap from a manufacturing process is recorded as a(n):

a. Decrease in manufacturing overhead control
b. Increase in manufacturing overhead control
c. Decrease in finished goods control
d. Increase in finished goods control

Prepared by:

ARNEL N. MORAN
Instructor