COST ACCOUNTING

Quiz 1
Date: 18 February 2022
Lecturer: Mila Austria Reyes

Problem 1 Multiple Choice

Required: (10 minutes)

On your answer sheet please write the letter of the correct answer after each number.
Be sure you WRITE LETTERS ONLY after each number.

1. Which of the following statements is/are correct?

a. Managers carry out their planning function by mobilizing the organization's
resources and overseeing day-to-day operations.
b. Managers carry out their decision making function by obtaining feedback to
ensure that the plans are being followed.
c. The planning, directing and motivating, and controlling functions of a manager
are kept separate from such manager's decision activities.
d. The manager's planning function involves setting of the organizations' goals
and identifying alternatives and selecting the alternative that best furthers
such goals set for the organization.

2. In which of the following aspects is managerial accounting similar to financial

accounting?
a. users of reports
b. emphasis between the past and future
c. type of data provided to users
d. reliance on the accounting database

3. Which of the following describes management accounting information?

a. It is prepared for shareholders.
b. It is reliable and verifiable.
c. It is prepared in accordance with GAAP.
d. It provides reasonable and timely estimates.

4. The American Institute of Management Accountants came up with the Standards

of Ethical Conduct for Management Accountants which have four sections,
namely
a. competence, confidentiality, integrity, and objectivity.
b. competence, security, integrity, and objectivity.
c. competence, confidentiality, integrity, and maturity.
d. compliance, confidentiality, integrity, and objectivity.
5. Financial and managerial accounting differ in a number of ways. In contrast to
financial accounting, managerial accounting
a. focuses on providing data for external users.
b. emphasizes relevance and flexibility rather than precision.
c. is mandatory.
d. is governed by Generally Accepted Accounting Principles.

6. Provisions in this section of Ethical Standards for Management Accountants

require management accountants to develop their knowledge and skills and to
do their task in accordance with relevant laws, regulations, and standards.
a. Competence c. Integrity
b. Confidentiality d. Objectivity

7. Which of the following statements relating to Standard of Ethical Conduct for

Management Accountants is correct?
a. A management accountant should refuse all gift and hospitality offered
by one of the company's suppliers.
b. A management accountant should inform his superiors regarding the
confidentiality of information acquired in the course of their work and
monitor their activities to assure the maintenance of that confidentiality.
c. A management accountant should prepare complete and clear reports
and recommendations before appropriate analysis of relevant and
reliable information.
d. Management accountants have a a responsibility to disclose fully all
relevant information that could reasonably be expected to influence an
intended user's understanding of the reports, comments, and
recommendations presented.

8. Management accounting is used by a company's management for multitude

of purposes, which are as follows, except
a. evaluation c. marketing
b. planning d. reporting

9. If a management accountant has a problem in resolving an ethical conflict,

the first action that should normally be taken is to
a. resign from the company.
b. notify the police.
c. discuss the problem with his/her immediate superior.
d. remain silent.

10. In comparing management and financial accounting, which of the following

more accurately describes management accounting information?
a. comparable, verifiable, monetary
b. budgeted, informative, adaptable
c. required, estimated, internal
 d. historical, precise, useful

11. An activity that causes resources to be consumed is called a

a. non-value-added activity c. just-in-time activity
b. cost driver d. extracurricular activity

12. It refers to anything (a product, product line, a business segment) for which
cost is computed.
a. Cost object c. Cost control
b. Cost driver d. Cost variance

13. It is a grouping of individual cost items, or an account in which a variety of

similar costs are accumulated.
a. Cost driver c. Cost object
b. Cost variance d. Cost pool

14. Product costs or inventoriable costs

a. are charged to expense when products become part of the finished goods
inventory.
b. include only the prime costs of producing a product.
c. are treated as assets before the products are sold.
d. include only the conversion costs of producing the products.

15. For product costing purposes, an indirect factory cost

a. is not directly chargeable to the company.
b. is chargeable to prime costs.
c. is chargeable to conversion costs.
d. is never included in the computation of product cost.

16. Which of the following is a direct product cost?

a. Wood in a furniture factory.
b. Salary of the foreman in the assembly division of an automobile.
c. Depreciation of factory equipment.
d. Salesman's commission.

17. Indirect materials and indirect labor are

Prime Conver- Manufac-

Cost sion Cost turing Cost
a. Yes Yes Yes
b. No No Yes
c. No Yes Yes
d. Yes No No
18. For decision making purposes, relevant costs are
a. variable past costs.
b. all fixed and variable costs.
c. anticipated future costs that will differ among various alternatives.
d. costs incurred within the relevant range of production.

19. Differential costs

a. are variable costs.
b. anticipated future costs that will differ among various alternatives.
c. are the differences in costs between any two alternative courses of
action.
d. are costs that differ under alternatives.

20. An income or benefit that is given up when one alternative is selected over
another is called
a. loss. c. relevant cost.
b. opportunity costs. d. differential cost.

21. Which of the following costs would be considered relevant in short-term

decision-making?
a. Production costs of goods available for sale
b. Incremental fixed costs
c. Acquisition cost of idle asset to be used in a proposed project.
d. Variable costs

22. Depreciation computed using the straight-line method is classified as

a. fixed cost. c. relevant cost.
b. variable cost. d. opportunity cost

23. When production (in units) decreases, the average cost per unit of product
increases. This increase in the average cost per unit is due to the
a. increase in variable cost per unit.
b. increase in fixed cost per unit.
c. increase in total variable costs.
d. increase in total fixed costs.

24. These costs are long-term in nature and cannot be eliminated even for short
periods of time without affecting the profitability of long-term goals of the firm.
a. Avoidable costs c. Variable costs
b. Committed fixed costs d. Controllable costs

25. Which of the following statement is correct?

a. The accounting system is part of cost accounting that measures costs
for decision-making and financial reporting purposes.
b. Cost accumulation involves collecting costs by natural classification, such
 as materials and labor.
c. Cost allocation or cost assignment involves tracing and assigning costs
to cost drivers, such as direct labor hours or number of units.
d. Cost and managerial accounting are goods in the economic sense and
as such, their costs must exceed their benefits.

Problem 2

Balance Sheet Classification

Presented below are various classification:

I. Classification

A. Current Assets H. Deferred Revenues

B. Investments I. Preferred Shares
C. Plant, Property and Equipment J. Common Shares
D. Intangibles K. Additional Paid-in capital
E. Other Assets L. Retained Earnings
F. Current Liabilities M. Excluded from Balance sheet
G. Long-term Debt

B. Balance sheet accounts

G 1. 20% Bonds Payable, due 5 years 16. Land

F 2. Accrued interest on Notes Payable 17. Machineries
A 3. Accrued interest on Notes Receivables 18. Manufacturing supplies
E/A 4. Advances to officers and employees 19. Merchandise inventory (unsalable)
A 5. Advances to suppliers 20. Plant facilities-idle
C 6. Building 21. Prepaid insurance
A 7. Cash and Cash Equivalent 22. Prepaid rent
E 8. Cash in closed bank 23. Raw materials
J 9. Common shares issued and outstanding 24. Trade accounts payable
D 10. Copywrite 25. Trade Accounts Receivables
M 11. Dividends in arrears on Preferred shares 26. Trade Notes Receivables
F 12. Dividends payable 27. Trades notes payable
A 13. Finished goods 28. Unappropriated retained earnings
A 14. Goods in process 29. Unearned leasehold revenue
B 15. Investment in stock 30. Long-term refundable deposit

Required:
Classify the above accounts in (B) according to the preferred balance sheet
presentation in (A). WRITE LETTERS ONLY after each number.
Problem 3

Baker Corporation had inventories as follows:

Beginning Ending

Raw materials $ 22,000 $ 30,000

Work in process 40,000 48,000
Finished goods 25,000 18,000

During the year, the following costs were incurred:

Raw materials purchased $ 300,000

Direct labor 120,000
Indirect labor 60,000
Taxes and depreciation of factory building 20,000
Taxes and depreciation of on sales room and office 15,000
Salesmen's salaries 40,000
Office salaries 24,000
Utilities: (60% applicable to factory; 20% applicable
to storeroom; 20% to office) 50,000

Required:
Compute of the cost of good sold for the year.

Baker Corporation
Schedule of Cost of Goods Manufactured anD Sold
For the Year ended December 31, xxxx

Raw Materials:
Raw materials balance, beginning $ 22,000
Add: Raw materials purchased during the year $ 300,000
Total raw materials available for use $ 322,000
Less: Raw materials balance, ending $ 30,000
Total raw materials used
Direct labor
Manufacturing overhead:
Indirect labor $ 60,000
Taxes and depreciation of factory building 20,000
Utilities: (60% applicable to factory) 30000
Total Manufacturing overhead
Total manufacturing costs
Add: Work in process balance, beginning
Total costs placed in process
Less: Work in process balance, ending
Total cost of goods manufactured
Add : Finished goods balance, beginning
Total goods available for sale
Less: Finished goods inventory balance, ending
Total cost of goods sold
ch number.
 C
C
A
ory (unsalable) M
E
A
A
A
F
A
A
F
ined earnings L
F
G
$ 292,000
120,000

110,000
$ 522,000
40,000
$ 562,000
 48,000
$ 514,000
25,000
$ 539,000
18,000
$ 521,000