Cebu Roosevelt Memorial Colleges

Cost Accounting and Control

Prelim Examination 2021-2022

Instruction: All answers should be in the Google Form. Submit your answers on time.

1. Planning is a function that involves

a. Hiring the right people for a particular job
b. Coordinating the accounting information system

c. Setting goals and objectives for an entity

d. Analyzing financial statements

2. Managerial accounting is applicable to

a. Service entities

b. Manufacturing entities

c. Merchandising entities

d. All of these

3. Which of the following statements about internal reports is not true?

a. The content of internal reports may extend beyond the double-entry accounting system.

b. Internal reports may show all amounts at market values.

c. Internal reports may discuss prospective events.

d. Most internal reports are summarized rather than detailed.

4. Indirect labor is a

a. Prime cost

b. Conversion cost

c. Period cost

d. Non-manufacturing cost
 5. In a job cost system, manufacturing overhead is

a. A direct cost of jobs and a necessary element of production.

b. A direct cost of jobs but not a necessary element of production.

c. An indirect cost of jobs and a necessary element of production.

d. An indirect cost of jobs but not a necessary element of production.

6. Costs that vary inversely with changes in volume include

a. Total variable costs

b. Total variable costs divided by volume

c. Total fixed costs

d. Total fixed costs divided by volume

7. For a manufacturing company, which of the following is an example of a period rather than a
product cost?

a. Depreciation of factory equipment

b. Wages of a sales person

c. Wages of machine operators

d. Insurance on factory equipment

8. The variable portion of the semi-variable cost of electricity for a manufacturing plant is a:

a. Conversion cost and a Period cost

b. Conversion cost and a Product cost

c. Prime cost and a Period cost

d. Prime cost and a Product cost

9. The distinction between indirect and direct costs depends on

a. Whether a costs is controllable or non-controllable

b. Whether a cost is variable or fixed

c. Whether a cost is a product or a period cost

d. Whether a cost can be conveniently and physically traced to a unit under consideration.

10. The wage of a time keeper in the factory would be classified as

a. Prime cost

b. Direct labor

c. Indirect labor

d. Administrative expense

11. As current technology changes manufacturing processes, it is likely that direct

a. Labor will increase

b. Labor will decrease

c. Materials will increase

d. Materials will decrease

12. A manufacturing company reports cost of goods manufactured as

a. A current asset on the balance sheet

b. An administrative expense on the income statement

c. A component in the calculation of cost of goods sold

d. A component of the raw materials inventory on the balance sheet

13. It’s two o’clock in the morning and you’ve been studying job-order costing for the past three
hours. You drift off

to sleep and in your first dream you visit JOB-ORDER COSTING LAND. You are a direct labor peso and are

traveling through a giant ledger. By the time you finish your journey, which accounts will you travel
through and

in what order?

a. Work in process, Cost of goods manufactured, Finished goods, and Cost of goods sold

b. Direct labor, Work in process, Finished goods, and Cost of goods sold

c. Work in process, Finished goods, and Cost of goods sold

d. Direct labor, Work in process, Finished goods, Cost of goods manufactured and Cost of goods sold
 14. Someone told you that under- or overapplied manufacturing overhead can be allocated to
three accounts. What

are those three accounts?

a. Raw materials, Work in process, and Finished goods

b. Raw materials, Finished Goods, and Cost of goods sold

c. Cost of goods sold, Work in process, and Finished goods

d. Cost of goods sold, Work in process, and Raw materials

15. Which of the following statements are False?

I. A manufacturing company can use direct labor hours as an overhead base in one department and
machine

hours as an overhead base in another.

II. A debit balance in the work in process account indicates that not all goods completed during the
period

were sold.

III. The predetermined OH rate is computed by dividing estimated units in the overhead base by
budgeted or

estimated manufacturing overhead costs.

a. I only

b. II only

c. II and III only

d. I, II, and III

16. Which of the following statements pertaining to job-order costing are TRUE?

I. The issuance of indirect materials from the storeroom is recorded on job-cost sheets.

II. Overapplied factory overhead can be properly disposed off with a debit to cost of goods sold and a
credit to

factory overhead.

III. Both an overstated forecast of overhead and an understated forecast of units of the overhead base
can

cause overhead to be overapplied.

a. I only

b. II only

c. III only

d. II and III only

17. Cost of raw materials are debited to Raw materials inventory when

a. The materials are ordered

b. The materials are received

c. Materials are put into production

d. The bill for the materials are paid

18. When a job is completed and all costs have been accumulated on a job cost sheet, the
journal entry that should

be made.

a. Finished goods inventory

Direct materials

Direct labor

Factory overhead

b. Work in process inventory

Direct materials

Direct labor

Factory overhead

c. Raw materials inventory

Work in process inventory

d. Finished goods inventory

Work in process inventory

19. Under an effective system of internal control, the authorization for issuing materials is made

a. Orally
b. On a prenumbered materials requisition slip

c. By the accounting department

d. By anyone

20. A company is more likely to use a job order cost system if

a. It manufactures a large volume of similar products

b. Its production is continuous

c. It manufactures products with unique characteristics

d. It uses a periodic inventory system

21. Process costing should be used in assigning cost to products in which of the following
situations?

a. If the product is composed of mass-produced homogeneous units.

b. If the product is manufactured individually based on an order received.

c. When the product is composed of heterogeneous units made in a job shop.

d. Whenever cost allocation is not used.

22. Milky Inc. produces and sells milk flavored bubble gum. Over the last five months, Milky had the
following

production costs and production volume.

Month Cost Volume (in cases)

March 6,000 12

April 6,659 14

May 8,370 18

June 8,800 19

July 8,050 17

Using the high-low method, what is the fixed cost per month for bubble gum production?

a. 400

b. 1,200
c. 4,800

d. 7,600

Justy Company produced 5,500 outdoor chairs for Job Order No. 610. Total material cost was P51,700.
Each chair

required 2.2 hours of direct labor at 8.90/hour. A total of P53,845 of factory overhead was traced to
Order 610.

23. What is the prime cost per unit of this order?

a. 18.69

b. 28.98

c. 29.37

d. 18.30

24. What is the conversion cost per unit of this order?

a. 18.69

b. 28.98

c. 29.37

d. 18.30

25. What is the unit cost of this order?

a. 37.88

b. 38.77

c. 28.09

d. 36.99

26. The following information was taken from Jerry Company’s accounting records for the year
ended December 31,

2021.

Increase in raw materials inventory 25,000

Decrease in finished goods inventory 45,000

 Raw materials used 450,000

Direct labor payroll 200,000

Factory overhead 300,000

There was no work-in-process inventory at the beginning or end of the year. Jerry’s 2021 cost of goods
sold is

a. 950,000

b. 905,000

c. 970,000

d. 995,000

The next two items are based on the following data of Matty Company for the month of March 2021:

March 1 March 31

Materials 40,000 50,000

Work in process 25,000 35,000

Finished goods 60,000 70,000

March 1 to 31, 2021

Direct labor cost 120,000

Factory overhead control 118,000

Factory overhead applied 108,000

Cost of goods sold 378,000

27. The total amount of direct materials purchased during March was:

a. 50,000

b. 170,000

c. 180,000

d. 220,000

28. The cost of goods manufactured during March 2021 was:

a. 378,000

b. 388,000
c. 398,000

d. 428,000

29. During the month of January, Nanny Company’s direct labor cost totaled P36,000, and direct
labor cost was 60%

of prime cost. It total manufacturing cost during January were P85,000, the factory overhead was:

a. 24,000

b. 25,000

c. 49,000

d. 60,000

30. Bechy Beach Industries has two production departments. ABC and XYZ, and uses a job order
cost system. To determine manufacturing costs, the company applies manufacturing overhead to
production orders based on direct labor cost using the departmental rates predetermined at the
beginning of the year based on the annual budget. The 2021 budget for the two departments was as
follows:

ABC XYZ

Direct materials 630,000 90,000

Direct labor 180,000 720,000

Factory overhead 540,000 360,000

Actual materials and labor costs of Job No. 676 during 2021 were as follows:

Direct materials 22,500

Direct labor - ABC 7,200

Direct labor - XYZ 10,800

What was the total manufacturing cost associated with Job No. 676 for 2021?

a. 45,000

b. 49,500

c. 58,500

d. 67,500

Work in process of Lesmar Corporation on July 1 (per general ledger) is P22,800.

Per cost sheets:

Job 101 Job 102

Direct materials 6,000 8,000

Direct labor 3,000 2,500

Amount charged to Work in Process for July of the current year

Job 101 Job 102 Job 103 Job 104

Direct materials 3,000 2,000 6,000 4,500

Direct labor 1,000 1,500 2,600 2,000

Factory overhead is applied to production based on direct labor cost. Jobs 101 and 103 are completed
during the

month.

31. Cost of goods put into process must be;

a. 42,100

b. 26,860

c. 45,400

d. 49,660

32. The cost of goods manufactured for the month of July is

a. 21,600

b. 15,400

c. 25,560

d. 31,800

33. Materials costing P56,000 were transferred from materials inventory to Job No. 333 which is
still incomplete at

this point. Which of the following is the proper journal entry for the transfer?

a. Materials inventory 56,000

Work in process 56,000

b. Work in process 56,000

Materials inventory 56,000

c. Finished goods 56,000

Work in process 56,000

d. Factory overhead control 56,000

Materials inventory 56,000

34. The accounting records for 2021 of Wallie Company showed the following:

Decrease in raw materials inventory 45,000

Decrease in finished goods inventory 150,000

Raw materials purchased 1,290,000

Direct labor payroll 600,000

Factory overhead 900,000

Freight-out 135,000

The cost of raw materials used for the period amounted to

a. 1,245,000

b. 1,290,000

c. 1,335,000

d. 1,380,000

35. Lollipop Company applied factory overhead as follows:

Actual machine hours are: 19,000 hours for fabricating; 27,500 hours for spreading and 5,500 hours for

gossiping. If the actual factory overhead cost for the period is P574,375, how much is over (under)
applied

factory overhead?

a. (11,875.00)

b. (23,562.50)

c. (187.50)

d. (76,125.00)
Department Factory overhead rate

Fabricating 7.75 per Machine hour

Spreading 15.10 per Machine hour

Gossiping 2.125 per Machine hour

MIDTERM

Midterm Examination - Cost Accounting

and Control
1. The underlying philosophy of “just-in-time” inventory system is *
0/1
That it is impractical to give equal attention to all stock items, hence the need to classify and rank
them according to their cost significance.
That the quantities of most stock are subject to definable limits.
It is a quest toward continuous improvement in the environmental conditions that necessitate
inventories.
That the status of quantities on hand must be periodically reviewed where high-value or critical
items are examined more frequently than low-cost or non-critical items.
Correct answer
That the quantities of most stock are subject to definable limits.

 
2. Companies that adopt just-in-time purchasing systems often experience *
0/1

A greater need for inspection of goods as the goods arrive.

An increase in carrying costs.
Less need for linkage with a vendor’s computerized order entry system.
A reduction in the number of suppliers.
 Correct answer
A greater need for inspection of goods as the goods arrive.

 
3.Buying of goods or materials for production in a way that they are delivered directly
on the manufacturing facility of company is called. *
1/1
Economic order quantity purchasing
Annual purchasing
Just in time purchasing
All of the above
 
4. The costing system appropriate to use with a JIT inventory system whose costs flow
directly to cost of goods sold is *
1/1
Backflush costing
Activity-based costing
Variable costing
Absorption costing

For 5-7.

 
5. The journal entry to record the manufacture of finished good units is *
1/1
Option 1

Option 2

Option 3
No entry

6. The January ending total for all inventory balances is *

0/1
12,250
16,250
10,000
11,250
Correct answer 11,250
 
7. The January cost of goods sold is *
0/1
1,286,000
1,283,750
1,296,000
1,284,750

Correct answer

1,284,750  

8. According to the net method, which of the following items should be included in the
cost of inventory? *
1/1
Freight cost – NO; Purchase discounts not taken – YES
Freight cost – YES; Purchase discounts not taken – NO
Freight cost – YES; Purchase discounts not taken – YES
Freight cost – NO; Purchase discounts not taken – NO

9. During June, Pepper Company experienced scrap, normal spoilage, and abnormal
spoilage in its manufacturing process. The cost of units produced includes *
0/1
Scrap, but not spoilage
Normal spoilage, but neither scrap nor abnormal spoilage
Scrap and normal spoilage, but not abnormal spoilage
None of the items mentioned

Correct answer
Normal spoilage, but neither scrap nor abnormal spoilage

10. Under the perpetual inventory system, the purchase of materials is recorded in the
account *
1/1
Work in process inventory
Materials inventory
Purchases
Finished goods inventory
11. *
1/1

1.04
2.08
1.94
2.00

 
12. *
1/1

1,600
800
3,200
2,400

13. *
1/1

300
400
200
450

For 14 and 15.

.
14. The cost per finished unit of Job Seed using Method A is: *
1/1
13.30
15.60
13.50
15.80
15. The cost per finished unit of Job Seed using Method B is: *
1/1
13.30
13.60
15.80
15.30

For 16-18

.16. Suppose that Orange orders 3,000 bats at a time. What is the total annual
inventory cost? *

0/1
2,700
1,200
750
581

Correct answer
750

 
17. What is the economic order quantity? *
1/1
1,324 units
1,643 units
3,000 units
2,324 units
18. How many times would Orange have to place an order in one year? *
1/1
67 times
30 times
39 times
55 times

 
19. Which of the following is not an ordering cost? *
1/1
Cost of record keeping
Cost of preparing the order
Cost of receiving inventory
Cost of handling the inventory
20. In a JIT system, the quality of each product begins with *
1/1
A good product warranty
Employees
Inspection of finished goods inventory
A company’s suppliers
21. Reducing inventory to the lowest possible levels is a major focus of *
1/1
Push inventory system
EOQ
ABC
JIT
22. Which of the following describes the effect on direct labor when management
adopts the JIT philosophy? *
1/1
Machine operators are expected to run several different types of machines, help set up for
production runs, and identify and repair machinery needing maintenance.
The environment becomes more labor-intensive.
Because each person runs a single machine in a JIT environment, there are more employees
classified as direct labor.
Each direct labor person performs a single task, thereby allowing that person to reach his or her
theoretical potential.
 

23. Which of the following is not true? *

1/1
JIT manufacturing strives for zero inventories
JIT manufacturing strives for zero defects
JIT manufacturing utilizes long lead time and few deliveries
JIT manufacturing uses manufacturing cells

 
24. The data used to calculate the order point include all of the following except: *
1/1
The rate at which the material will be used
The estimated minimum level of inventory needed to protect against stockouts.
The cost of placing an order
The estimated time interval between the placement and receipt of an order.

 
25. To effectively control materials, a business must maintain: *
1/1
Limited access
Combination of duties
Safety stock
None of these are correct

26. Moona is the purchasing agent at Starlit Manufacturing. Her duties include vendor
selection and ordering materials. Due to a recent economic downturn and resulting cut
backs, Moona has been assigned the additional duty of preparing a receiving reports
after the goods received to the purchase order. This is an example of *
1/1
Independence of assigned functions
A lack of segregation of duties
Unlimited access to materials
Misappropriations of assets

27. The form used to notify the purchasing agent that additional materials are needed
is known as a: *
1/1
Purchase order
Purchase requisition
Vendor’s invoice
Material requisition

28. Which of the following is not true about backflush costing? *

1/1
Different companies may choose different trigger points.
Direct labor is usually insignificant in a highly automated system, so is not cost effective to
account for it separately.
Production costs are attached to products as they move through work in process.
A single account is used for raw and in process materials because materials are issued to
production when received from the supplier.

 
29. *
1/1

DR. Spoiled Goods Inventory 6,000; CR. Work in process 6,000

DR. Spoiled Goods Inventory 11,200; CR. Factory overhead 11,200
DR. Factory overhead 11,200 ; CR. Work in process 11,200
DR. Spoiled Goods Inventory 6,000; DR. Factory overhead 5,200; CR. Work in process 11,200
 
For 30 and 31

 
30. Assuming that Lemon Company maintains perpetual inventory records, calculate
the cost of the ending inventory at August 31. *
1/1
4,770
2,310
2,291
3,956

 
31. The cost of the units issued of the problem above is *
1/1
2,310
1,620
4,770
3,956

 
32. All of the following methods may be used to account for the revenue from scrap
sales except: *
1/1
Credit Materials, if the scrap would have been able to be recycled.
Credit Factory Overhead, if the scrap cannot be identified with a specific job.
Credit Scrap revenue, which is included in the “Other Income” section of the income statement.
Credit Work in Process, if the scrap is identified with a specific job.
SEMI- FINALS

Cost Accounting and Control

SemiFinal Examination 2021-2022
Quince Manufacturing had worked on two jobs, Job 101 and Job 102 last
year. The estimated manufacturing overhead for last year was P 30,000
(fixed) and P5.00 per direct labor hour (variable) and estimated 2,000 direct
labor hours.
The factory overhead control account has a balance of P37,000. Actual hours
used for Job 101 was 1,200 and for Job102 was 1,000.
1. What is the total spending variance?
a. P4,000 unfavorable
b. P3,000 unfavorable
c. P4,000 favorable
d. P7,000 favorable
2. What is the total production variance?
a. P4,000 unfavorable
b. P3,000 unfavorable
c. P4,000 favorable
d. P7,000 favorable
The following information relates to Sapodilla Corporation for the past
accounting period.
Producing Departments Service Departments
C D A B
Direct costs 15,000 20,000 80,000 60,000
Proportion of service by A to:
B 10%
C 60%
 D 30%
Proportion of service by B to:
A 30%
C 20%
D 50%
3. Using the algebraic method, department A's cost allocated to department C
is:
a. P48,000
b. P58,800
c. P60,619
d. P98,000
4. Using the algebraic method, department B's cost allocated to department C
is:
a. P 7,794
b. P13,192
c. P14,021
d. P29,021
Tamarillo Inc. has 3 plants. Each plant produces identical magnets but uses
different manufacturing processes. Each
plant sells to different customers. Headquarters' costs total P350,000. Factors
that are considered for allocation
purposes are as follows:
Payroll Unit Volume Peso Volume Assets
Plant A 335,000 15,000 500,000 300,000
Plant B 450,000 19,000 900,000 600,000
Plant C 280,000 17,500 750,000 800,000
Totals 1,065,000 51,500 2,150,000 1,700,000
5. What is the amount of headquarters' costs allocated to Plant A if payroll is
used as the allocation base?
a. P 75,053
b. P 92,019
c. P 110,094
d. P 1,019,357
6. What is the amount of headquarters' costs allocated to Plant B if sales
volume, in pesos, is used as the allocated
base?
a. P 81,395
b. P 129,126
c. P 146,512
d. P 268,605
Muskmelon Company uses activity-based costing to determine the unit
product costs for external reports. The
company has two products: Candy A and Candy B. The annual production
sales of Candy A is 10,000 units and of Candy
B is 4,000 units. There are three overhead activity centers, with estimated
overhead costs and expected activity as
follows:
Activity Center Est. Overhead Expected Activity
Candy A Candy B
Activity 1 25,000 150 100
Activity 2 65,000 800 200
Activity 3 90,000 1,000 2,000
Total 180,000 1,950 2,300
7. The overhead cost per unit of Candy A under activity-based costing is
a. P6.00
b. P9.70
c. P4.85
d. P3.00

8. Which of the following describes a part of the step method of allocation?

a. All services between intermediate cost enters are simultaneously allocated
to final cost centers.
b. It ignores services between intermediate cost centers.
c. Linear algebra is required for the allocation
d. Once an allocation is made from one service department, no further
allocation is made to this department.
9. Which of the following is not true of the methods of allocating service
department costs to user departments?
a. A cause and effect basis is the preferred method of allocation
b. Each method allocates the same total cost when there are no interservice
department activities
c. If a cause and effect relationship cannot be established for service
department costs, then an allocation cannot be conducted
d. The level of detail associated with allocating service department costs
should be decided on a cost-benefit
basis.
10. In the determination of factory overhead application rates, the numerator
of the formula is the:
a. Actual factory overhead for the next period.
b. Estimated factory overhead for the next period.
c. Actual labor hours for the next period.
d. Estimated labor hours for the next period.
11. Which productive capacity level does not consider product demand, but at
the same time accounts for anticipated
and unavoidable interruptions in production?
a. Expected productive capacity
b. Normal productive capacity
c. Theoretical or maximum productive capacity
d. Practical productive capacity
12. Which productive capacity level is based on estimated production for the
next period?
a. Expected productive capacity
b. Normal productive capacity
c. Theoretical or maximum productive capacity
d. Practical productive capacity
13. To check the accuracy of hours worked, one would ordinarily compare
clock cards with:
a. Employee earnings
b. Personnel records
c. Job tickets
d. Labor variance reports
14. Voavanga Corporation uses a predetermined overhead rate based on
machine-hours to apply manufacturing
overhead jobs. The Corporation has provided the following estimated costs for
next year:
Direct materials 1,000
Direct labor 3,000
Sales commissions 4,000
Salary of production supervisor 2,000
Indirect materials 400
Advertising expense 800
Rent on factory equipment 1,000
Voavanga estimated that 500 direct-labor hours and 1,000 machine-hours will
be worked during the year. The
predetermined overhead rate per hour will be:
a. 6.80
b. 6.00
c. 3.00
d. 3.40
Sapadilla Manufacturing Corporation has a traditional costing system in which
it applies manufacturing overhead to
its products using a predetermined overhead rate based on direct labor-hours
(DLHS). The company has two products,
Rose and Apple, about which it has provided the following data:
Direct materials per unit 19.90 54.40
Direct labor per unit 12.00 31.50
Direct labor-hours per unit 0.80 2.10
Annual production (units) 30,000 10,000
The company's estimated total manufacturing overhead for the year is
2,063,250 and the company's estimated total
direct labor-hours for the year is 45,000.
The company is considering using a form of activity-based costing to
determine its unit product costs for external
reports. Data for this proposed activity-based costing system appear below:
Activities and Activity Measures Estimated Overhead Cost
Assembling products (DLHs) 720,000
Preparing batches (batches) 263,250
Product support (product variations) 1,080,000
Total 2,063,250
Expected Activity
Rose Apple Total
DLHs 24,000 21,000 45,000
Batches 1,080 675 1,755
Product variations 2,115 1,485 3,600
15. The manufacturing overhead that would be applied to a unit of product
Rose under the company’s traditional
costing is closest to:
a. 12.80
b. 39.35
c. 76.03
d. 36.68

16. The manufacturing that would be applied to a unit of product Apple under
the activity-based costing system is
closes to:
a. 88.28
b. 96.29
c. 187.57
d. 10.13
17. The document that is used to secure information as to the type of work
performed is the:
a. Labor voucher
b. Time ticket
c. Daily efficiency reports
d. Clock card
18. The company that is responsible for recording the direct labor cost on the
appropriate production reports and
indirect labor cost on the departmental cost analysis sheet is:
a. Timekeeping Department
b. Production Planning Department
c. Payroll Department
d. Cost Department
19. The employer’s portion of SSS premiums is:
a. An expense for the employee
b. An expense for the employer
c. A revenue for the employee
d. A revenue for the employer
20. Factory workers fringe benefits are usually charged to
a. Work in process account
b. Direct labor
c. Administrative expense
d. Factory overhead control
21. F & B Company pays time and a half for hours in excess of 40 hours per
week. An individual is paid P24.00 per
hour and worked 44 hours a week. The weekly earnings of the employee will
amount to
a. P 960
b. P1,032
c. P1,104
d. P1,036
22. Tangelo Manufacturing Co. has provided you with the following
information
Raw materials purchased 135,000
Beginning raw materials inventory 100,000
Ending raw materials inventory 175,000
Factory overhead (including P85,000 of indirect
labor and P20,000 of indirect materials) 227,500
Total manufacturing cost 960,000
Direct labor cost for the year amounted to
a. P677,500
b. P672,500
c. P642,500
d. P692,500
Zucchini Factory provides for an incentive scheme for its factory workers
which features a combined minimum
guaranteed wage of P875 per week and piece rate of P11.25. Production
report for the week show.
Employee Units produced
Huckleberries 67
Elderberries 78
Cranberries 80
Bilberries 82
Gooseberries 72
Raspberries 75
23. The portion of the weekly payroll that should be charged to factory
overhead is
a. 5,275.00
b. 5,215.50
c. 292.50
d. 217.50
24. The portion of the weekly payroll that should be charged to work in
process is
a. 5,250.00
b. 5,275.00
c. 5,117.50
d. 5,107.50
25. Ackee Co. pays their employees on a combined minimum rate and
piecework rate plan. The minimum guaranteed
daily wage is P420. Any employee who produces more than 10 shirts receives
a bonus. If Mr. Figs produced 14
shirts, what amount should be charged to factory overhead control?
a. 0 b. P 88 c. P 268 d. P 168
FINALS
Cost Accounting and Control
Final Examination 2021-2022
Instruction: All answers must be in the google form.
1. The process costing system is best suited for:
a. industries where different types of products are manufactured
b. industries where homogeneous products are manufactured on continuous
basis
c. service industries only
d. all of the above
2. Which of the following businesses is likely to adopt a process costing
system?
a. Plan manufacturers
b. Construction companies
c. Sugar refining units
d. Printing presses
3. In process costing system, the materials can be added in
a. first department only
b. last department only
c. first and last department only
d. any department
4. Which of the following is not correct about process costing and job order
costing?
a. Both the systems classify materials as direct materials and/or indirect
materials
b. Both the systems classify labor as direct labor and/or indirect labor
c. Direct materials under job order costing might be indirect under process
costing and vice versa
d. Both the systems assign costs by process
5. An equivalent unit of material or conversion cost is equal to:
a. The prime cost
b. The amount of material or conversion cost necessary to complete one unit
of production
c. a unit of work in process inventory
d. the amount of material or conversion cost necessary to start a unit of
production into work in process
6. An item that does not appear on a cost of production report is:
a. work in process-beginning inventory
b. cumulative costs through the end of departmental production
c. finished goods-ending inventory
d. materials used in the department
7. When added materials in subsequent departments result in an increase of
the units produced, the unit transferred-in costs will:
a. be reclassified as new materials
b. be increased to provide for the additional units
c. be decreased as they are spread over more units
d. remain unchanged
8. Assuming that there was no beginning work in process inventory, and the
ending work in process inventory is 50% complete with respect to conversion
costs, the number of equivalent units of production with respect to conversion
costs would be:
a. The same as the units completed
b. the same as the units started during the period
c. less than the units completed
d. less than the units started during the period
9. Process costing would be appropriate for each of the following except
a. custom furniture
b. oil refining
c. grain milling
d. newsprint production
10. On January 1, Department A had 3,000 units 50% complete with respect
to direct labor and factory overhead; materials are added at the beginning of
the process. During January, 15,000 units were started into process in
Department A. At the end of June, the ending goods in process of 4,000 units
were 80% complete with respect to direct labor and factory overhead. There
was no normal and/or abnormal loss of units in Department A during the
month of January. The number of units transferred to Department B were:
a. 16,700 units
b. 13,300 units
c. 14,000 units
d. 15,500 units
11. The following data belongs to Department A of Nakiri Company:
 WIP beginning inventory: 6,000 units – 40% complete as to labor and
overhead
 Completed and transferred to finished goods store room: 30,000 units
 WIP ending inventory: 1,000 units – 60% compete as to labor and overhead
The number of units started in Department A during the period were:
a. 24,000 units
b. 37,000 units
c. 25,000 units
d. 31,000 units
12. Alchemilla Manufacturing has three producing departments in its factory.
The ending inventory in the Milling Department consisted of 3,000 units.
These units were 60% complete with respect to labor and factory overhead.
Materials are applied at the end of the milling process. Unit costs for the
complete process in the Milling
Department are: materials, 50; labor, 100; and factory overhead, 300. The
appropriate unit cost for each unit in
the ending inventory is:
a. 240
b. 270
c. 400
d. 450
13. Gyro Products transferred 10,000 units to one department. An additional
3,000 units of materials were added in the department. At the end of the
month, 7,000 units were transferred to the next department. There was no
beginning inventory. The costs for units transferred in would be effectively
allocated over:
a. 3,000 units
b. 10,000 units
c. 7,000 units
d. 13,000 units
14. Production in July resulted in 100 lost units of which 40 was considered
normal and 60 abnormal. The 100 units were complete with respect to
materials but only 40 percent complete with respect to labor and overhead.
Unit cost for materials, labor and overhead were P10, P15 and P9
respectively. The unit costs have been determined after including normal and
abnormal lost units separately in the computation of total equivalent units.
a. P2,040
b. P1,176
c. P1,360
d. P 784
15. A characteristic of a process costing system is that:
a. costs are accumulated by order
b. standard costs are not applicable
c. it requires a lot more detailed accounting than does a job order system
d. work in process inventory is restated in terms of completed units
16. In a process costing system, how is the unit cost affected in a production
cost report when materials are added in a department subsequent to the first
department and the added materials result in additional units?
a. The first department's unit cost is increased, but it does not necessitate an
adjustment of the transferred-in unit cost.
b. The first department's unit cost is decreased, but it does not necessitate an
adjustment of the transferred-in unit cost.
c. The first department's unit cost is increased, which necessitates an
adjustment of the transferred-in unit cost.
d. The first department's unit cost is decreased, which necessitates an
adjustment of the transferred-in unit cost.
17. Alstroemeria Inc. instituted a new process in October. During October,
10,000 units were started in Department
A. Of the units started, 7,000 were transferred to Department B, and 3,000
remained in work in process at October
31. The work in process at October 31 was 100% complete as to material
costs and 50% complete as to conversion
costs. Materials costs of 27,000 and conversion costs of 39,950 were charged
to Department A in October. What
were the total costs transferred to Department B?
a. 46,900
b. 53,600
c. 51,800
d. 57,120
18. Crocus Company produces a small standard component in a process
operation. There is a quality control check at the end of the processing. Items
which fail this check are sold off as scrap for P1.80 per unit. The expected
rate of rejection is 10%. Normal loss is not given a cost except that whatever
scrap value it has is credited to the process account. The cost/value of the
abnormal loss or gain, net of scrap, is written off to the profit and loss account.
Data for July are as follows:
Materials input 1,000 units 5,100
Conversion cost 3,000
Output to Finished Goods 800 units
What was the full cost of the finished output that passed the quality control
check?
a. P7,040
b. P7,920
c. P7,200
d. P8,100
A company produces plastic kitchenware and uses process costing system.
Products go through three
departments – Mixing, Molding, and Packaging. During the month of August,
the following information is made
available for the Mixing Department
Units started 160,000
Units completed and transferred 140,000
Units in process, end (25% complete) 20,000
Materials are added at two points in the process. Material A is added at the
beginning of the process and Material
B when the units are 50% completed. Conversion costs are incurred uniformly
throughout the mixing process.
19. The equivalent production for Material A
a. 140,000
b. 145,000
c. 150,000
d. 160,000
20. The equivalent production for Material B
a. 140,000
b. 145,000
c. 150,000
d. 160,000
21. The equivalent production for conversion cost
a. 140,000
b. 145,000
c. 150,000
d. 160,000
22. Normal spoilage was computed to be 2,000 units. Spoilage is discovered
at the end of the process and is debited
to Finished Goods Inventory, it is not spread over good units produced. Costs
per equivalent unit were: Prior
department P3.00; Materials P2.00; Conversion costs P4.00.
The journal entry to remove all the costs of spoiling the 2,000 units from work
in process as follows:
DEBIT CREDIT
a. FG Inventory for P6,000 WP Inventory for P6,000
b. WP Inventory for P6,000 FG Inventory for P6,000
c. FG Inventory for P12,000 WP Inventory for P12,00
d. FG Inventory for P18,000 WP Inventory for P18,000
23. Snowdrop Company uses a process costing system. The company adds
all materials at the beginning of the
process in the Molding Department, which is the first of two stages of its
production process. Information
concerning the Molding Department during March is as follows:
Units started 112,000
Units completed and transferred 97,000
Units in process, end (50% complete) 15,000
Material cost 57,120
What was the material cost of the work in process inventory at March 31?
a. 11,220
b. 7,500
c. 5,100
d. 7,650
Chrysanthemum Company instituted a new process in October, 2022. During
October 10,000 units were started in Department A. Of the units, 1,000 were
lost by shrinkage in the process, 7,000 were transferred to
Department B, and 2,000 remained in work in process at October 31. The
work in process at October 31 was
100% complete as to materials and 50% complete as to conversion cost.
Materials cost of P27,000 and conversion costs of P40,000 were charged to
Department A in October.
24. What were the total costs transferred to Department B?
a. 53,900
b. 56,000
c. 61,600
d. 64,000
25. What were the costs of the units in process, October 31?
a. 10,400
b. 11,000
c. 15,000
d. 18,100