1. An equivalent unit of material or conversion cost is
can be used under any cost flow assumption
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
2. An item that does not appear on a cost of production
report is:
A. work in processCbeginning inventory
B. cumulative costs through the end of departmental
production
C. finished goodsCending inventory
D. materials used in the department
3. A characteristic of a process costing system is that:
A. costs are accumulated by order
B. it is used by a company manufacturing custom
machinery
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
4. In accounting for beginning inventory costs, the method
that allows the addition of beginning inventory costs with
costs incurred during the period is referred to as:
A. first-in, first-out C. last-in, first-out
B. addition D. average
5. In determining the cost of goods transferred in from a
previous department under the average cost method:
A. a simple average of unit costs is used
B. beginning inventory costs are separated from costs
transferred in during the period
C. a first-in, first-out approach is used
D. a weighted average of unit costs is used
6. The average and fifo process costing methods differ in
that the average method:
A.
B. is much more difficult to apply than the fifo method
C. requires that ending work in process inventory be
stated in terms of equivalent units of production
D. does not consider the degree of completion of
beginning work in process inventory when computing
equivalent units of production
7. Beginning work in process was 60% complete as to
conversion costs, and ending work in process was 45%
complete as to conversion costs. The dollar amount of the
conversion cost included in ending work in process (using
the average cost method) is determined by multiplying the
average unit conversion costs by what percentage of the
total units in ending work in process?
A. 60% B. 55% C. 45% D. 52%
8. In order to compute equivalent units of production
using the fifo method of process costing, work for the
period must be broken down to units:
A. started and completed during the period
B. completed during the period and units in ending
inventory
C. completed from beginning inventory, started and
completed during the month, and units in ending
inventory
D. started during the period and units transferred out
during the period
9. The first-in, first-out method of process costing will
produce the same cost of goods manufactured amount as
the average cost method when:
A. there is no beginning inventory
B. there is no ending inventory
C. beginning and ending inventories are each 50%
complete
D. beginning inventories are 100% complete as to
materials
10. The FIFO method of process costing differs from the
average cost method of process costing in that FIFO:
A. allocates costs based on whole units, but the average
cost method uses equivalent units
B. considers the stage of completion of beginning work in
process in computing equivalent units of production, but
the average cost method does not
C. does not consider the stage of completion of beginning
work in process in computing equivalent units of
production, but the average cost method does
D. is applicable only to those companies using the fifo
inventory pricing method, but the average cost method
may be used with any inventory pricing method
11. Spoilage occurs as a result of an internal failure in a
process cost system. Using average costing, the number
of equivalent units that production costs should be
charged to would be based upon:
A. spoiled units
B. units transferred out and spoiled units
C. units transferred out, spoiled units, and units in ending
inventory
D. units transferred out and units in ending inventory
12. Spoilage occurs as a result of normal production
shrinkage in a process cost system. Using average costing,
the number of equivalent units that production costs
should be charged to would be based upon:
A. spoiled units
B. units transferred out and spoiled units
C. units transferred out, spoiled units, and units in ending
inventory
D. units transferred out and units in ending inventory
13. If spoilage occurs as a result of normal production
shrinkage in a process cost system, using fifo costing, the
number of equivalent units that production costs should
be charged to would be based on:
A. spoiled units
B. units transferred out and spoiled units
C. units transferred out, beginning inventory, and units in
ending inventory
D. units transferred out, spoiled units, units in ending
inventory, and units in beginning inventory
14. The allocation of joint costs to individual products is
useful primarily for purposes of:
A. determining whether to produce one of the joint
products
B. inventory costing
C. determining the best market price
D. deciding whether to sell at the split-off point
15. In a joint production process, a by-product is also
described as:
A. a simultaneously produced product of relatively low
value
B. a form of main product with controllable production
proportions
C. waste
D. products of low value recovered at the end of a
production process
16. Costs to be incurred after the split-off point are most
useful for:
A. adjusting inequities in the joint cost allocation
procedure
B. determining the levels of joint production
C. assessing the desirability of further processing
D. setting the mix of output products
17. Standard costs are used for all of the following except:
A. income determination
B. controlling costs
C. measuring efficiencies
D. forming a basis for price setting
18. Of the following variances, the one that is most useful
in assessing the performance of the Purchasing
Department is the:
A. idle capacity variance
B. overhead price variance
C. materials purchase price variance
D. materials price usage variance
19. A purpose of standard costing is to:
A. allocate cost with more accuracy
B. eliminate the need for subjective decisions by worked
management

C. determine the "break-even" production level

1. The total FOH cost variance is
D. control costs
a. P25,000 unfavorable c. P21,680 unfavorable
20. Which one of the following is true concerning standard
b. P17,000 unfavorable d. P4,680 unfavorable
costs?
2. Using the two-variance method, the controllable
A. If properly used, standards can help motivate
variance is
employees.
a. P21,680 unfavorable c. P29,680 unfavorable
B. Unfavorable variances, material in amount, should be
investigated, but large favorable variances need not be b. P 4,680 unfavorable d. P15,600 unfavorable
investigated.
3. Using the three-variance method for analyzing FOH
C. Standard costs are difficult to use with a process costing variance, the budget or spending variance amounts to
system.
a. P 4, 680 unfavorable c. P25,000 unfavorable
D. Standard costs are estimates of costs attainable only
under the most ideal conditions, but rarely practicable. b. P14,080 unfavorable d. P13,680 unfavorable

II. Problem-solving Questions 4. Using the three-variance method for FOH

Direction: Analyze the problems and choose the best
answer for each item. Provide and show your
computations on a separate sheet of paper.
Siemey Corporation’s standard cost system contains the
following overhead costs, computed based on a monthly
normal volume of 25,000 units or 50,000 direct labor
hours:
analysis, the efficiency variance is
a. the variable efficiency variance of P15,600 unfavorable
b. the variable efficiency variance of P15,600 unfavorable
and volume variance of P8,000 favorable
c. equal to P8,000 favorable
d. never computed

Variable factory P12 per unit

overhead Aristeo Company produced 3,200 units of product. Each
Fixed factory 8 per unit unit requires 2 standard hours. The standard labor rate is
overhead P15 per hour. Actual direct labor for the period was
P79,200 (6,600 x P12).
Total P20 per unit

5. What is the direct labor efficiency variance?

The following information pertains to the month of April
2019: a. 19,800 favorable c. 2,400 u

Actual FOH costs b. 16,800 favorable d. 3,000

incurred:

Variable P316,680 6. What is the direct labor rate variance?

Fixed P225,000 a. 19,800 favorable c. 2,400 u
Actual production 26,000 units b. 16,800 favorable d. 3,000
Actual direct 54,600 hours
labor hours
During July, a company’s direct materials costs for the
production of Product X were as follows:
b. 17,000 units d. 13,000 units
Standard unit price P 12.50

Standard quantity allowed 6,300 units

11. What is the equivalent unit of production for
for actual production
the month of February under average costing?
Actual unit purchase price P 13.00
a. 13,000 units c. 14,000 units
Quantity purchased and 6,900 units
b. 12,500 units d. 17,000 units
used for actual production

Hope Manufacturing Company, using the FIFO process

7. What is the total direct materials variance? cost system, has the following data for the month of April:
a. 89,700 unfavorable c. 10,950 favorable
Percentage of Completion
b. 78,750 unfavorable d. 10,950 unfavorable
Actual Materials Conversion
Units Cost

8. The materials efficiency or usage variance is Beginning 15,000 100% 40%

Inventory
a. 10,950 unfavorable c. 3,450 unfavorable
Transferred In 150,000
b. 7,500 unfavorable d. 7,500 favorable
Transferred 120,000
out
9. The materials price variance is
Ending 45,000 100% 30%
a. 10,950 unfavorable Inventory
c. 3,450 unfavorable

b. 7,500 unfavorable d. 7,500 favorable 12. What are the equivalent units in production
for the month of April?

Materials Conversion
Department II of Love Manufacturing Company presents
Costs
the following production data for the month of February,
2020: a. 150,000 127,500

Opening inventory, 4,000 units b. 165,000 139,500

3/8 completed
c. 135,000 124,500
Started in process 13,000 units
d. 150,000 133,500
Transferred 9,000 units

Closing inventory, 4,000 units

Numbers 13-17 are based on the following information.
½ completed
Air Force Inc. manufactures their product in two
¾ 4,000 units
departments in a continuous process. Production data for
completed
the month of October 2019 are as follows:

Beginning work in 500 units

10. What is the equivalent unit of production for process, 40% completed
the month of February under FIFO costing?

a. 12,500 units c. 15,000 units

 Received from 2,000 units
preceding department
d. P1.90 P2.00
Normal spoilage 200 units

Abnormal spoilage 300 units

16. What is the conversion cost of normal
Units completed and 1,700 units spoilage?
transferred out
FIFO Method Average
Ending work in process, 300 units Method
1/3 completed
a. P438 P400
Conversion costs in P610
b. P380 P346
beginning inventory
c. P400 P380
Current period P3,990
conversion costs d. P380 P400

All spoilage occurs at the end of the process. 17. What is the conversion cost of abnormal
spoilage?

FIFO Method Average

13. The equivalent units of production using FIFO
Method
method

a. 2,500 a. P570 P519

b. 2,100 b. P657 P600

c. 2,300 c. P570 P600

d. 2,200 d. P600 P570

14. The equivalent units of production using Products D, E, and F are joint products of JMG Company.
average method Units of Product D are sold at split-off point while units of
Product E and Product F require further processing before
a. 2,500 they can be sold. Product E is further processed in
b. 2,100 Department 2 while Product F in Department 3. The
following data are the cost summary of JMG Company:
c. 2,300

d. 2,200
Department Department Department
1 2 3
15. What is the conversion cost per equivalent Cost of
unit? Article X
FIFO Method Average Direct P 144,000 - -
Method Materials
a. P1.90 P1.73 Direct 21,000 P 67,500 P 97,500
Labor
b. P2.19 P2.00
Factory 15,000 31,500 73,500
c. P2.00 P1.90
 Overhea c. 42,750
d
d. 90,000
Product D Product E Product F

Units 30,000 45,000 67,500

22. Which of the following shows the right
sold
allocation of joint costs?
Units on 15,000 - 22,500
a. D-54,000 ; E-36,000 ; F-90,000
hand,
July 31 b. D-67,500 ; E-27,000 ; F-85,500

Sales P 45,000 P 144,000 P 212,625 c. D-45,000 ; E-144,000 ; F-212,625

d. D-30,000 ; E-45,000 ; F-67,500

18. JMG uses the adjusted sales value method of

allocating joint costs. What is the sales value of Product D
AA Company manufactures products A, B, and C from a
at split-off point?
joint process. Joint product costs were P60,000. The
a. 45,000 company also provided the following data:

b. 30,000 Sales Value and Additional Costs

Units if Processed Further
c. 67,500 Products
Produced
Sales Values Additional Costs
d. 22,500
A 6,000 P49,000 P9,000

B 4,000 42,000 7,000

19. How much is the cost of goods sold for
Product E? C 2,000 30,000 5,000
a. 147,000

b. 99,000 23. How much is the allocated joint cost for

Product A using the physical measures method?
c. 144,000
a. P30,000
d. 135,000
b. P20,000

c. P10,000
20. How much is the ending inventory of Product
D? d. P60,000
a. 27,000

b. 18,000 24. How much is the allocated joint cost for

Product A using the adjusted sales value method?
c. 22,500
a. P24,000
d. 54,000
b. P15,000

c. P21,000
21. How much is the ending inventory of Product
F? d. P60,000
a. 33,500

b. 65,250
 25. How much is the allocated joint cost for 27. Assume that weighted average process
Product B using the adjusted sales value method? costing is used, what is the equivalent unit of production
for materials?
a. P24,000
a. 81,000
b. P15,000
b. 103,500
c. P21,000
c. 75,300
d. P60,000
d. 28,200

26. How much is the allocated joint cost for

Product C using the adjusted sales value method? 28. Assume that weighted average process
costing is used, what is the cost per equivalent unit for
a. P24,000
conversion costs?
b. P15,000
a. P5.04
c. P21,000
b. P5.40
d. P60,000
c. P3.87

d. P3.78
Pasa Co. has the following data for the month of May:

Beginning work in process

29. Assume that FIFO method is used, what is the
(75% complete as to 22,500 equivalent unit of production for conversion costs?
conversion, 0% complete
a. 75,300
as to materials)
b. 103,500
Started in Process 81,000
c. 62,655
Ending work in process 28,200
d. 79,530
(15% complete as to
conversion, 100% complete
as to materials)
30. Assume that FIFO method is used, what is the
cost per equivalent unit for conversion costs?

Beginning WIP costs a. P5.04

Materials P76,500 b. P5.40

Conversion costs 158,175 c. P3.87

d. P3.78

Current Period Costs

Materials P 102,900

Conversion Costs P 242,535