QUIZ ON COST ACCOUNTING CYCLE

Name: Score:
Year and Section: Passing Score: 70%
I. Multiple Choice (Theories)
1. In cost terminology, conversion consists of:
a. Direct and indirect labor
b. Direct labor and direct materials
c. Direct labor and factory overhead
d. Indirect labor and variable factory overhead
2. Cost is the amount measured by the current monetary value of economic resources given up or to be given up in obtaining
goods and services. Costs may be classified as unexpired or expired. Which of the following costs is not always considered to
be expired immediately upon being recognized?

a. Cost of goods sold c. Depreciation expense for machinery

b. Sales salaries d. Loss from bankruptcy

3. Which is the best description of traditional cost accounting?

a. The entire general ledger and subsidiary ledgers and related journals, etc., of a manufacturer
b. The general ledger and subsidiary accounts and related records, etc used to accumulate the cost of goods or services
provided by an entity
c. The accounts used to determine the costs of goods sold by an entity
d. All of the journals, ledgers, records and financial statements used by an enterprise to record, classify, summarize and
reports economic activity of an enterprise.
4. The information contained in a cost of goods manufactured budget most directly relates to the :
a. Materials used, direct labor, factory overhead applied, and ending work in process
b. Materials used, direct labor, overhead applied and work in process
c. Materials used, direct labor, overhead applied, work in process and finished goods
d. Materials used, direct labor, overhead applied and finished goods
5. A company services office equipment. Some customers bring their equipment to the company’s service shop; other
customers prefer to have the company’s service personnel come to their offices to repair their equipment. The most
appropriate costing method for the company is:

a. A job order costing c. Process costing

b. An activity based costing d. Operation costing

6. Many firms use two overhead accounts: Factory overhead control and factory overhead applied. During the period, which
account receives numerous debits and credits?

a. Factory overhead applied c. Factory overhead applied

b. Factory overhead control d. Material account

7. The work in process account is:

a. Neither a real nor a nominal account c. A hybrid account (real and nominal)
b. An inventory account d. A nominal account

8. The use of direct materials previously purchased usually is recorded as an increase in:

a. Work in process account c. Factory overhead applied

b. Factory overhead account d. Materials

9. A non manufacturing organization may use:

a. Job order costing but not process costing
b. Process costing but not job order costing
c. Either job order or process costing
d. Neither job order costing nor process costing
10. The issue of indirect materials will result to increase of:

a. Factory overhead applied c. Work in process

b. Factory overhead control d. Materials

II. Multiple Choice Problems

Athally Company
The following information has been taken from the cost records of Athally Company for the past year:

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 Raw material used in production P326
Total manufacturing costs charged to production during the year
(includes direct material, direct labor, and overhead equal to 60% of direct labor cost) 686
Cost of goods available for sale 826
Selling and Administrative expenses 25
Inventories Beginning Ending
Raw Material P75 P 85
Work in Process 80 30
Finished Goods 90 110
1. Refer to Athally Company. The cost of raw material purchased during the year was
a. P316. b. P336. c. P360. d. P411.

2. Refer to Athally Company. Direct labor cost charged to production during the year was
a. P135. b. P216. c. P225. d. P360.
3. Refer to Athally Company. Cost of Goods Manufactured was
a. P636. b. P716. c. P736. d. P766.

4. Refer to Athally Company. Cost of Goods Sold was

a. P691. b. P716. c. P736. d. P801.

For items 5-8

Luna Company manufactures wood file cabinets. The following information is available for June 2001:
Beginning Ending
Raw Material Inventory P 6,000 P 7,500
Work in Process Inventory17,300 11,700
Finished Goods Inventory 21,000 16,300
5. Refer to Luna Company. Direct labor is P9.60 per hour and overhead for the month was P9,600. Compute total
manufacturing costs for June, if there were 1,500 direct labor hours and P21,000 of raw material was purchased.
a. P58,500 b. P46,500 c. P43,500 d. P43,100
6. Refer to Luna Company. Direct labor is paid P9.60 per hour and overhead for the month was P9,600. What are
prime costs and conversion costs, respectively if there were 1,500 direct labor hours and P21,000 of raw material
was purchased?
a. P29,100 and P33,900 c. P33,900 and P29,100
b. P33,900 and P24,000 d. P24,000 and P33,900
7. Refer to Luna Company. Direct labor is paid P9.60 per hour and overhead for the month was P9,600. If there were
1,500 direct labor hours and P21,000 of raw material purchased, Cost of Goods Manufactured is:
a. P49,100. b. P45,000. c. P51,000. d. P49,500.
8. Refer to Luna Company. Direct labor is paid P9.60 per hour and overhead for the month was P9,600. If there were
1,500 direct labor hours and P21,000 of raw material purchased, how much is Cost of Goods Sold?
a. P64,500. b. P59,800. c. P38,800. d. P53,800.
9. Enry Company manufacturers desks. The beginning balance of Raw Material Inventory was P4,500; raw material
purchases of P29,600 were made during the month. At month end, P7,700 of raw material was on hand. Raw
material used during the month was
a. P26,400. b. P34,100. c. P37,300. d. P29,600.
10. Garen Company manufacturers tables. If raw material used was P80,000 and Raw Material Inventory at the
beginning and end of the period, respectively, was P17,000 and P21,000, what was amount of raw material was
purchased?
a. P76,000 b. P118,000 c. P84,000 d. P101,000
11. Judy Ann Company manufacturers computer stands. What is the beginning balance of Finished Goods Inventory if
Cost of Goods Sold is P107,000; the ending balance of Finished Goods Inventory is P20,000; and Cost of Goods
Manufactured is P50,000 less than Cost of Goods Sold?
a. P70,000 b. P77,000 c. P157,000 d. P127,000
For items 12-14
Marienella Enterprises
Inventories: March 1 March 31
Raw material P18,000 P15,000
Work in process 9,000 6,000
Finished goods 27,000 36,000
Additional information for March:
Raw material purchased P42,000
Direct labor payroll 30,000
Direct labor rate per hour 7.50
Overhead rate per direct labor hour 10.00
12. Refer to Marienella Enterprises. For March, prime cost incurred was
a. P75,000. b. P69,000. c. P45,000. d. P39,000.
13. Refer to Marienella Enterprises. For March, conversion cost incurred was
a. P30,000. b. P40,000. c. P70,000. d. P72,000.
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 14. Refer to Marienella Enterprises. For March, Cost of Goods Manufactured was
a. P118,000. b. P115,000. c. P112,000. d. P109,000.
15. The accounting department of the Aira Company provided the following data for June: Sales, P72,000; marketing
expenses, 5%; administrative expenses, 1%; other expenses, 5% of all sales; purchases, P36,000; factory overhead,
2/3 of direct labor, P15,000

Beginning inventories:
Finished goods P7,000
Work in process 8,000
Materials 8,000
Ending inventories:
Finished goods P10,200
Work in process 15,000
Materials 8,500
Compute for June (1) cost of goods sold, and (2) income before income tax:

a. 1. P50,000 ; 2. P13,780 c. 1. 50,300 ; 2. 17,020

b. 1. 55,500 ; 2. 13,780 d. 1. 62,800 ; 2. 1,280

III. Journal Entries

Problem 1:
The general ledger of Dumon Bearings Company contained the following accounts, among others on January 1: Finished
goods, P15,000; Work in process, P30,000; Materials, P25,000. During January the following transactions were
completed:
a. Materials were purchased on account at a cost of P13,500
b. Steel in the amount of P17,500 was issued from factory
c. Requisitions for indirect materials and supplies amounted to P1,800
d. The total payroll for January amounted to P27,000, including marketing salaries of P5,000 and administrative
salaries of P3,000. Job time tickets show that P17,000 of the labor cost was direct labor.
e. Various indirect manufacturing costs totaling P2,508 were paid in cash
f. Various indirect manufacturing costs totaling P8,500 were incurred on account
g. Total factory overhead is charged to Work in process
h. Cost of production completed in January totaled P60,100, and finished goods on January totaled P15,100
i. Customers to whom shipments were made during the month were billed for P75,000
Required:
1. Prepare journal entries for the transaction
2. Prepare a cost of goods sold statement

Problem 2:
Selected transactions of the Pascua Company for the month of February are as follows:
a. Materials purchased and received P64,000
b. Materials requisitioned: P37,000 for production and P5,600 for indirect use
c. The payroll amounted to P100,000. The following are the deductions 14% withholding tax, and the employees share
of 5% SSS contribution, 0.5% Philhealth contribution; and Pag-ibig contribution of 0.5%. The wages due the
employees were paid.
d. Of the total payroll, 55% was direct labor, 18% was indirect factory labor, 17% was sales salaries and 10% was
administrative salaries.
e. Employers contribution for all employees categories:
SSS 5%
Phil.health 1%
ECC ½%
Pag-ibig ½%
f. Factory overhead charged to production, P44,000
g. Other factory overhead consisted of P18,000 depreciation factory building
h. Work completed and transferred to finished goods amounted to P103,000
i. Sales on account totaled P168,750 with a mark-up of 35% on the cost of goods sold.
j. Cash collections for accounts receivable totaled P145,000
Required:
1. Prepare journal entries for the above transactions
2. Prepare a cost of Cost of goods sold statement for the month of February.
“True education lies on your understanding of the text and not on your ability to get answers for every question.”

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