____________ 8.

Cost accounting serves as a bridge between financial and managerial

Accounting. TRUE
____________ 9. Opportunity costs are the potential benefit that is given up when one
alternative is selected over another. TRUE
Multiple Choice:

____ 1.. Direct materials, direct labor, and direct overhead are basic elements of
_____.
a. Managerial accounting
b. Cost accounting
c. Financial accounting
d. Depreciation

____ 2. Historical cost accounting is _____.

a. the process of valuing items at their original or historical cost for accounting
purposes
b. the process of valuing items based on their current market value
c. the process of valuing items at their estimated future value for accounting
purposes
d. the process of valuing items based on bidding and negotiations

____ 2. What are prime costs?

a. The amount of money it takes to produce one unit of a given product.
b. Direct labor costs combined with manufacturing overhead costs.
c. The total costs directly involved in manufacturing a product.
d. Expenses that fluctuate proportionally with the quantity of output.

____ 4. Raw materials would most likely be considered as what kind of cost?
a. Indirect costs
b. Direct Costs
c. Mixed Costs
d. Relevant costs

____ 5. A manufacturing company has _____ units in progress that are half complete.
The equivalent units for the work-in-progress (WIP) is 1,500.
 a. 3,000
b. 4,000
c. 3,500
d. 5,000

____ 6. Cost allocation base refers to which of the following?

a. Something that can change an activity's cost
b. Any item that a company wants to assign a cost to separately
c. A system by which a company allocates overhead costs
d. The process of gathering all of the costs for any given object

____ 7. The residual material that remains after a production process is called _____.
a. Scrap
b. Rework
c. Spoilage
d. Tulle

____ 7. All products that do not meet the requirements for sale to a customer are called
_____.
a. Spoilage
b. Tulle
c. Rework
d. Scrap

____ 8. The variable costs will change when the _____ changes.
a. number of units produced
b. amount of personnel hired
c. fixed cost
d. rent cost

____ 9. _____ are the estimated or expected value of the resources consumed in the
production of an item.
a. Standard costs
b. Variable Costs
c. Administrative Costs
 d. Fixed Costs

____ 10. The controller of a company or other organization is ______.

a. Staff Manager
b. Accountant
c. Natural Manager
d. Operating Manager

____ 11. Planning and control are ________.

a. Different names of the same thing
b. The basic functions of management
c. Described equally well by the terms ‘decision making’ and ‘performance
evaluation’.
d. Exemplified by, respectively, financial statements and budgeting.

____ 12. It is a cycle of processes in an organization.

a. Value Chain
b. Business Functions
c. Analysis
d. Business Cycle

____ 13. The one cost that would be classified as part of both prime cost and conversion
cost would be:
a. direct material
b. direct labor
c. indirect material
d. indirect labor

____ 14. Which financial executive is primarily responsible for both management and
financial accounting?
a. Treasurer
b. Controller
c. Chief Financial Officer
d. Auditor
____ 15. When activity changes this cost shifts upward or downward by a certain
interval?
a. Step Cost
b. Cost Interval
c. Shifting Cost
d. Incremental Cost

____ 16. The cost function derived by the simple least squares method.
a. Linear
b. Curvilinear
c. Parabolic
d. Derived from the maximum and minimum points

____ 17. When 20000 units are produced fixed costs are 16 per unit. Therefore, when
40,000 units are produced, fixed costs will
a. Increase to P32 per unit
b. Decrease to P8 per unit
c. Remain at P16 per unit
d. Total of P640,000

In the following questions, show a simple solution on how you derived your answer.

Vido Company manufactures Product Bondat. Unit Costs associated with Product
ICT 101 are as follows:

Direct Materials P60

Direct Manufacturing Labor 10
Variable Manufacturing Overhead 18
Fixed Manufacturing Overhead 32
Sales Commissions (2% of Sales) 4
Administrative Salaries 16___
Total P140

1. What are the variable costs per uni associated with Product Bondat?
 Direct Materials P60
Direct Manufacturing Labor 10
` Variable Manufacturing Overhead 18
Sales Commissions (2% of Sales) 4
= P 92

2. What are the fixed costs per unit associated with Product Bondat?

Fixed Manufacturing Overhead 32

Administrative Salaries 16
= P 48

3. What are the inventoriable costs per unit associated with Product Bondat?

Direct Materials P60

Direct Manufacturing Labor 10
Variable Manufacturing Overhead 18
Fixed Manufacturing Overhead 32
= P 120

4. What are the period costs per unit associated with Product Bondat?

Sales Commissions (2% of Sales) 4

Administrative Salaries 16
= P 20

Based on the following data of number of units produced and the corresponding total
cost, estimate the total cost of producing 4,000 units. Use the least-squares linear
regression method.

MONTH UNITS COST

1 1520 P 36, 375

2 1250 P 38, 000

3 1750 P 41, 750

4 1600 P 42, 360

5 2350 P 55, 080

6 2100 P 48, 100

7 3000 P 59, 000

8 2750 P 56, 800

https://xplaind.com/234559/least-squares-regression-method
1. What is the sum of XY?

2. What is the sum of X2?

3. What is the total variable cost?

4. What is the total fixed cost?

Using the high-low method, determine the fixed and variable components of the
maintenance costs.

1. What is the variable cost per unit?

2. What is the fixed cost per unit?

A. Gabriel Inc. is a merchandising company. Last month the company’s
merchandise purchases totaled $70,000. The company’s beginning merchandise
inventory was $15,000 and its ending merchandise inventory was $22,000. What
was the company’s cost of goods sold for the month?
A) $63,000.
B) $77,000.
C) $107,000.
D) $70,000.

B. Using the following data for April, calculate the cost of goods manufactured:
Direct materials …………………………………………….$23,00
Direct labor …………………………………………………$21,000
Manufacturing overhead…………………………………$37,000
Beginning work in process inventory…………………….$13,000
 Ending work in process inventory ………………………..$18,000
The cost of goods manufactured was:
A) $81,000.
B) $76,000.
C) $94,000.
D) $86,000.

C. The following data (in thousands of dollars) have been taken from the
accounting records of Larkin Corporation for the just completed year.
Sales……………………………………. $860
Purchases of raw materials …………….. $170
Direct labor…………………………….. $220
Manufacturing overhead………………. $210
Administrative expenses……………… $120
Selling expenses………………………… $170
Raw material inventory, beginning………$10
Raw material inventory, ending…………. $50
Work in process inventory, beginning…... $80
Work in process inventory, ending……… $60
Finished goods inventory, beginning…… $110
Finished goods inventory, ending………. $100
Required:
a. Prepare a Schedule of Cost of Goods Manufactured in good form.
b. Compute the Cost of Goods Sold.
c. Using data from your answers above as needed, prepare an Income
Statement in good form.
IA

Identify what is required.

Asset 1. It is something that has value and is in possession of an economic
entity such as a business.
PAS 1 2. A standard that focuses on the presentation of financial statements.
It provides guidelines, basis, and requirements for preparing the
financial statement.
CASH 3. Includes money and other financial instruments that are accepted
in the bank or other financial institutions
Face Value 4. A measurement meaning the value is as stated in the item.
Bank Overdraft 5. This occurs when the bank accounts a credit balance which results
from the issuance of cheeks in excess of the deposit.
Compensating Balance 6. It is the balance that should be maintained in a checking or
demand deposit account balance because of a borrowing
arrangement with a bank.
Undelivered Check 7. These are checks that are unreleased to the payee before the
end of the reporting date.
6 months 8. According to bank practices, a check is considered stale if it is not
encashed within _______ of issuance.
Non-Current Assets 9. These are long-term assets that have a useful life of more than a
year. Some examples are investments, real estate, or equipment.
Bank Reconciliation 10. What is the term for balancing a company's cash account to its
bank account?
Bank Statement 11. A _______ is a copy of the bank's customer's account in the books
of the bank.
Current Exchange Rate 12. Cash in foreign currency is valued at _________.
Bad Debts 13. The money owed to a business by its clients.
Distribution Costs 14. Are costs that are incurred to deliver your product from the
production unit to the end user
Income Statement 15. Which financial statement is changed by the percent of sales
method?
Shipping Point 16. The buyer is responsible for the costs of shipping when goods are sold
with the terms FOB __________.
Allowance Method 17. Which method of reporting losses on accounts receivable is to
be used for financial reporting?

Petty cash fund 18. Money set aside to pay small expenses.

A cash short or over account is:

a. A contra cash account
b. Not an accountable account title
c. Credited when the petty cash fund proves over
d. Credited when the petty cash fund proves short

For the purpose of bank reconciliation, debit memos are:

a. Added to the bank balance
b. Added to the book balance
c. Deducted from the bank balance
d. Deducted from the book balance

All of the following are considered cash equivalents except:

a. Treasury bills
b. Money market funds
c. Notes Receivables
d. Checks

What kind of account is Allowance for Doubtful Accounts?

a. Contra Revenue
b. Debit
c. Expense
d. Contra Asset

What is another name for Bad Debts?

a. Uncommon
b. Uncollectibles
c. Bad Debit
 d. Bad Credit

What are the bank reconciling items?

a. Credit memo
b. Debit memo
c. Bank error

What are the book reconciling items?

a. Deposit in transit
b. Outstanding Check
c. Book Error

Cash items included in cash:

a. Cash on hand
b. Cash in bank
c. Cash fund

Problem 1
In preparing the bank reconciliation for the month of August 31, 2014, Apex Company provided
the following information:

Balance per bank 1,805,000

Deposit in transit 325,000
Return of customer’s check for insufficient fund 60,000
Outstanding checks 275,000
Bank service charge for August 10,000

What is the adjusted cash in bank?

a. 1,855,000 c. 1,785,000 b. 1,795,000 d. 1,755,000
Problem 2
In preparing the bank reconciliation for the month of December 31, 2014, Case Company
provided the following data:
Balance per bank statement 3,800,000
Deposit in transit 520,000
Amount erroneously credited by bank to Case’s account 40,000
Bank service charge for December 5,000
NSF Check 50,000
Outstanding checks 675,000

What is the adjusted cash in bank?

a. 3,685,000 c. 3,600,000 b. 3,645,00 d. 3,605,000

Problem 3
Able Company received the bank statement for the month of March. However, the
closing balance of the account was unreadable. Attempts to contact the bank after
hours did not secure the desired information.
February 28 book balance 1,460,000
Note collected by bank 100,000
Interest earned on note 10,000
NSF check of customer 130,000
Bank service charge on NSF check 2,000
Other bank service charges 3,000
Outstanding checks 202,000
Deposit of February 28 placed in night depository 85,000
Check issued by Axle Company charged to Able’s account 20,000
What is the cash balance per bank statement?
a. 1,435,000 c. 1,338,000 b. 1,532,000 d. 1,557,000

Problem 4
SINO KA DIYAN COMPANY had the following account balances at December 31, 2020:
Cash on hand and in banks 975,000
Cash restricted for plant additions 900,000
(expected to be reimbursed in 2022)
Cash to deposit 250,000
(due January 16, 2021)
What total amount of cash and cash equivalents should be reported on December 31,
2020?
a. 975,000 b. 1,225,000 c. 1,575,000 d.1,825,000

Problem 5
At the beginning of current year, Odib company had a credit balance of
260,000 in the allowance for doubtful accounts. Based on past experience, 2% of
credit sales would be uncollectible. During the current year, the entity wrote off P
325,000 of uncollectible accounts. Credit sales for the year totaled P 9,000,000.
What amount should be reported as uncollectible accounts expense for the year?
a. P 325,000
b. P 180,000
c. P 440,000
d. P 65,000

Problem 7
At the beginning of the current year. Template Company showed the following
account balances:

Accounts Receivable 1,000,000

Allowance for doubtful accounts 40,000

The following summary transactions occurred during the current year:

1. Sales on account, 2/30, n/30 7,000,000
2. Collections from customers within the discount period 2,450,000
3. Collections from customers beyond the discount period 3,900,000
 4. Accounts receivable written off as worthless 30,000
5. Recovery of account previously written off not 10,000
included in the above collections
6. Credit memo for sales return 70,000

Required:
a. Prepare journal entries pertaining to acocutns receivable.
b. Prepare the adjustment for doubtful accounts at year-end if th entity uses the
percentage of accounts receivable method consistently.
c. What is the net realizable value of accounts receivable at year-end?
Problem 6
Affectionate Company sold merchandise on account for P500,000. The terms are 3/10,
n/30. The related freight charge amounted to P10,000. The account was collected
within the discount period.

Required:
Prepare journal entries to record the transactions under the following freight terms:
a. FOB destination and freight collect
b. FOB destination and freight prepaid

Problem 8
Credible company provided the following T-accounts summarizing the transaction
affecting the accounts receivable for the current year.