Interworld Colleges Foundation Inc.

Burgos St, Paniqui, Tarlac

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COST ACCOUNTING
PRELIMINARY EXAMINATION

I. Multiple Question: 1 point each

1. Out-of-pocket cost
a) Are not recoverable
b) Are under the influence of a supervisor
c) Require expenditures of cash
d) Are irrelevant
2. Work in process is a (an)

a) Inventory account
b) Cost of good sold account
c) Productivity measure
d) Nominal account
3. The cost of direct labor associated with the manufacture of a product should be classified as an
expense when the
a) Labor is performed
b) Product is transferred to finished goods inventory
c) Product is sold
d) Employees are paid
4. All cost related to the manufacturing function in a company
a) Product cost
b) Opportunity cost
c) Direct labor cost
d) Material cost
5. King Mfg. Corp produced 16,000 units of a kitchen gadget at the total cost of P10,000. 10,500
units have been sold, and the rest still on hand. The cost of goods sold was:
a) P3,250.00
b) P3,437.50
c) P6,562.50
d) P6,750.00
 6. Courageous co. produced 200,000 gallons of a chemical at a total cost of P112,000. If ¾ of the
production is sold, the cost of the inventory of finished goods would be:
a) P22,400
b) P28,000
c) P84,000
d) P89,600
7. A sunk cost is
a) Not avoidable
b) Avoidable
c) Usually relevant
d) Direct to segment
8. Which costing system is most likely to be used by a company that mass-produces heterogenous
product?
a) Actual costing
b) Process costing
c) Job order costing
d) Standard costing
9. Period cost
a) Are always expensed in the same period in which they incurred
b) Vary from one period to the next.
c) Remain unchanged over a given period of time.
d) Are associated with the periodic inventory method.
10. The following information were taken from the accounting records of KAYA MO YAN Company
for 2020.
Increase in raw material inventory P45,000
Decrease in finished goods inventory P135,000
Raw material purchases P 1,290,000

II. Problem Solving (5 Points each)

11. A distraught employee. Mang A. Arson, put a torch to a factory a blustery February 12. The
resulting blaze completely destroyed the plant and its contents. Fortunately, certain accounting
records were kept in another building. They revealed the following for the period from
December 31,2020 to February 12, 2021.
Direct materials purchased, P160,000
Work in process, 12/31/20 P34,000
Direct materials, 12/31/20 P16,000
Finished Goods, 12/31/20 P30,000
Factory Overhead, 40% of direct labor cost
Sales P500,000
Direct Labor P180,000
Direct materials P114,000
Sales return P20,000
Gross profit percentage based on net sales 20%
Cost of goods available for sale, P450,000
 The lost was fully covered by insurance by insurance. The insurance company want to know the
historical cost of the inventories as a basis for negotiating settlement, which is really to be based
on replacement cost not historical cost. Based on the above information. Calculate the
a) Finished goods inventory cost on February 12, 2021.
b) Work in process inventory cost on February 12,2021.
c) Total manufacturing cost incurred up to date of fire.

12. The Diamond Company uses a Job Order accounting system. Overhead applied to production is
at a predetermined rate of 80% based on direct labor cost. The following posting appear in the
ledger accounts of the company for the month of October,2020.
Debit
Work in process , October 1, P30,000
Direct Materials 60,000
Direct labor 50,000
Factory Overherad 40,000

On October 31, 2020 finished goods completed from work in process P160,000. Job no. 143 was
the only job not completed in October and has been charged P4,600 for factory overhead.

Calculate the
a) Direct Materials charged to job no. 143.
b) Direct labor charged to job no. 143.
c) The cost of job no. 143 at October 31, 2020.

13. The following data were collected from the records of the shipping department of a company.
Month Units shipped cost of shipping supplies
1 7,000 P35,000
2 3,000 14,900
3 13,000 65,000
4 15,000 74,900

Compute the Variable cost and fixed cost Using High and Low method.