cost accounting

College of Business and AccountancyNotre Dame University

Cotabato City

Acctg 106-Cost AccountingFinal Examination

Name:_________________________________________GENERAL INSTRUCTIONS: You are given 3 hours to answer all the questions. Shade the box corresponding to the letter of your choice in the answer sheet. ABSOLUTELY NO ERASURES in the answer sheet, any erasure will be marked as wrong.

1.) I - A standard cost card is prepared after manufacturing standards have been developed for direct materials, direct labor, and factory overheadII - The total variance can provide useful information about the source of cost differences

a. I is true c. both are trueb. II is true d. both are false

2.) I - The formula for price/rate variance is (AP - SP) x AQII - The formula for price/rate variance is (AP - SP) x SQ


3.) I - The price variance reflects the difference between the price paid for inputs and the standard price for those inputsII - The usage variance reflects the difference between the price paid for inputs and the standard price for those inputs


4.) I - The formula for usage variance is (AQ - SQ) * SPII - The formula for usage variance is (AQ - SQ) * AP


5.) I - The difference between the actual wages paid to employees and the standard wages for all hours worked is the labor rate varianceII - The difference between the standard hours worked for a specific level of production and the actual hours worked is the labor efficiency variance


6.) I - The difference between actual variable overhead and budgeted variable overhead based upon actual hours is referred to as the variable overhead spending varianceII - The difference between budgeted variable overhead for actual hours and standard overhead is the variable overhead efficiency variance


7.) I - A fixed overhead volume variance is a controllable varianceII - A one-variance approach calculates only a total overhead variance


8.) I - The effect of substituting a non-standard mix of materials during the production process is referred to as a material yield varianceII - When multiple labor categories are used, the financial effect of using a different mix of workers in a production process is referred to as a labor yield variance


9.) I - When multiple labor categories are used, the monetary impact of using a higher or lower number of hours than a standard allows is referred to as a labor mix varianceII - When multiple labor categories are used, the monetary impact of using a higher or lower number of hours than a standard allows is referred to as a labor yield variance


10.) I - Business value-added activities add value to a productII - Business value-added activities increase the value of a product without increasing production time


11.) I - A company should strive to reduce all non-value added activities to a minimumII - When non-value added time is greater, manufacturing cycle efficiency is higher.


12.) I - Direct materials are normally considered as unit-level costs.II - Unit level costs occur once for each unit produced.

a. I is true c. both are true

b. II is true d. both are false

13.) I - Machine setup is normally considered a batch-level costII - Building depreciation is generally considered an organizational or facility cost.


14.) I - Building depreciation is generally considered an product or process level cost.II - Activity-based costing is appropriate for a company that manufactures a single product


15.) I - Activity-based costing is appropriate for a company that has low overhead costs that are proportional to the unit volumes of productsII - Activity-based costing conforms to GAAP with regard to which costs should be expensed


16.) I - Financial accounting is most concerned with meeting the needs of internal users.II - Managerial accounting is most concerned with addressing the needs of the firm as a whole


17.) I - The relevant range is valid for all levels of activityII - An indirect cost can be easily traced to a cost object


18.) The term "relevant range" as used in cost accounting means the range over whicha. costs may fluctuate.b. cost relationships are valid.c. production may vary.d. relevant costs are incurred.

19.) Predetermined overhead rates are computed based onestimated overhead costs estimated level of activity

a. yes yesb. yes noc. no yesd. no no

20.) One reason annual overhead application rates are used isa. because of seasonal variability of overhead costs.b. To help budget overhead costs.c. To minimize the overhead cost assigned to products.d. To maximize the overhead cost assigned to products.

21.) Which of the following could not be used in job order costing?a. Standardsb. An average cost per unit for all jobsc. normal costingd. overhead allocation based on the job's direct labor hours

22.) A job order costing system is likely to provide better(1) inventory valuations for financial statements.(2) control over inventory.(3) information about ability to accept additional production work.

(1) (2) (3)a. yes no nob. No yes yesc. No no nod. yes yes yes

23.) I - The FIFO method combines beginning inventory and current production to compute cost per unit of productionII - The weighted average method separates beginning inventory and current production to compute cost per unit of production


24.) In a FIFO process costing system, which of the following are assumed to be completed first in the current period?a. units started this periodb. units started last periodc. units transferred outd. units still in process

25.) I - Efficient inventory management relies largely on cost-minimization strategiesII - In a pull system of production control, inventory is produced in anticipation of customer or work center demand


26.) I - Economic order quantity (EOQ) is compatible with just-in-time systemsII - The EOQ formula can be modified to calculate the number of units that should be manufactured in a production run


27.) I - Joint costs occur after the split-off point in a production processII - Under the net realizable value approach, no value is recognized for by-products or scrap until they are actually sold


28.) I - Joint costs are allocated to by-products as well as primary productsII - The net realizable value approach is used to account for scrap and by-products when the net realizable value is insignificant


29.) I- The primary distinction between by-products and scrap is the difference in volume producedII -The point at which individual products are first identifiable in a joint process is referred to as the split-off point


30.) I - Joint costs include all materials, labor and overhead that are incurred before the split-off pointII - Two methods of allocating joint costs to products are physical measure allocation and monetary allocation.


31.) I - A decision that must be made at split-off is to sell a product or process it further.II - Allocating joint costs based upon a physical measure considers the revenue-generating ability of individual products


32.) I - Net realizable value equals product sales revenue at split-off minus any costs necessary to prepare and dispose of the productII - Monetary allocation measures recognize the revenue generating ability of each product in a joint process.


33.) I - The relative sales value method requires a common physical unit for measuring the output of each product.II - Joint costs are allocated to main products, but not to by-products


34.) I - If incremental revenues beyond split-off are less than incremental costs, a product should be sold at the split-off pointII - If incremental revenues beyond split-off exceed incremental costs, a product should be processed further


35.) I - The net realizable value approach requires that the net realizable value of by-products and scrap be treated as a reduction in joint costs allocated to primary productsII - Net realizable value is considered to be the best measure of the expected contribution of each product to the coverage of joint costs


36.) I - Specifications for materials are compiled on a purchase requisitionII - An operations flow document shows all processes necessary to manufacture one unit of a product


37.) Duck Company manufactures 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.

38.) The following information has been taken from the cost records of Witch Company for the past year:Raw material used in production P326Total 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 826Selling and Administrative expenses 25

Inventories Beginning EndingRaw Material P75 P 85Work in Process 80 30Finished Goods 90 110

The cost of raw material purchased during the year was:a. P316.b. P336.c. P360.d. P411.

39.) A firm has fixed costs of P200,000 and variable costs per unit of P6. It plans on selling 40,000 units in the coming year. To realize a profit of P20,000, the firm must have a sales price per unit of at least

a. P11.00.b. P11.50.c. P10.00.d. P10.50.

40.) Chippy Company. uses a job order costing system. During April 20X6, the following costs appeared in the Work in Process Inventory account:

Beginning balance P 24,000Direct material used 70,000Direct labor incurred 60,000Applied overhead 48,000Cost of goods manufactured 185,000

Chippy Company applies overhead on the basis of direct labor cost. There was only one job left in Work in Process at the end of April which contained P5,600 of overhead. What amount of direct material was included in this job?

a. P4,400b. P4,480c. P6,920d. P8,000

Turtle Company has a job order costing system and an overhead application rate of 120 percent of direct labor cost. Job #63 is charged with direct material of P12,000 and overhead of P7,200. Job #64 has direct material of P2,000 and direct labor of P9,000.

41.) Refer to Turtle Co. What amount of direct labor cost has been charged to Job #63?a. P 6,000b. P 7,200c. P 8,640d. P14,400

42.) Refer to Turtle Company. What is the total cost of Job #64?a. P10,800b. P11,000c. P21,800d. P30,200

43.) Green Company started 9,000 units in February. The company transferred out 7,000 finished units and ended the period with 3,500 units that were 40 percent complete as to both material and conversion costs. Beginning Work in Process Inventory units were

a. 500.b. 600.c. 1,500.d. 2,000.

The Houston Company makes wreaths in two departments: Forming and Decorating. Forming began the month with 500 wreaths in process that were 100 percent complete as to material and 40 percent complete as to conversion. During the month, 6,500 wreaths were started. At month end, Forming had 2,100 wreaths that were still in process that were 100 percent complete as to material and 50 percent complete as to conversion. Assume Forming uses the weighted average method of process costing. Costs in the Forming Department are as follows:

Beginning Work in Process Costs:Material P1,000Conversion 1,500

Current Costs:Material P3,200Conversion 5,045

The Decorating Department had 600 wreaths in process at the beginning of the month that were 80 percent complete as to material and 90 percent complete as to conversion. The department had 300 units in ending Work in Process that were 50 percent complete as to material and 75 percent complete as to conversion. Decorating uses the FIFO method of process costing, and costs associated with Decorating are:

Beginning WIP Inventory:Transferred In P1,170Material 4,320Conversion 6,210Current Period:Transferred In ?Material P67,745Conversion 95,820

44.) Refer to Houston Company. How many units were transferred to Decorating during the month?a. 600b. 4,900c. 5,950d. 7,000

45.) Refer to Houston Company. What was the cost transferred out of Forming during the month?a. P5,341b. P6,419c. P8,245d. P8,330

Zebra Corporation

Zebra Corporation's EOQ for Material A is 500 units. This EOQ is based on:Annual demand 5,000 unitsOrdering costs P12.50

46.) Refer to Zebra Corporation. What is the annual carrying cost per unit for Material A?a. P0.50b. P2.00c. P2.50d. P5.00

47.) Refer to Zebra Corporation. What are Zebra’s Corp.'s total annual ordering costs for Material A?a. P6,000b. P600c. P125d. P1,000

Snacks Company

Snacks Company produces two products (A and B). Direct material and labor costs for Product A total P35 (which reflects 4 direct labor hours); direct material and labor costs for Product B total P22 (which reflects 1.5 direct labor hours). Three overhead functions are needed for each product. Product A uses 2 hours of Function 1 at P10 per hour, 1 hour of Function 2 at P7 per hour, and 6 hours of Function 3 at P18 per hour. Product B uses 1, 8, and 1 hours of Functions 1, 2, and 3, respectively. Snacks produces 800 units of A and 8,000 units of B each period.

48.) Refer to Snacks Company If total overhead is assigned to A and B on the basis of units produced, Product A will have an overhead cost per unit of

a. P 88.64.b. P123.64.c. P135.00.d. None of the responses are correct.

49.) Refer to Snacks Company If total overhead is assigned to A and B on the basis of units produced, Product B will have an overhead cost per unit of

a. P84.00.b. P88.64.c. P110.64.d. None of the responses are correct.

50.) Refer to Snacks Company If total overhead is assigned to A and B on the basis of direct labor hours, Product A will have an overhead cost per unit of


51.) Refer to Snacks Company If total overhead is assigned to A and B on the basis of direct labor hours, Product B will have an overhead cost per unit of


52.) Refer to Snacks Company If total overhead is assigned to A and B on the basis of overhead activity hours used, the total product cost per unit assigned to Product A will be


53.) Refer to Snacks Company If total overhead is assigned to A and B on the basis of overhead activity hours used, the total product cost per unit assigned to Product B will be

a. P115.50.b. P73.32.c. P34.60.

d. None of the responses are correct.

Hazel Company

Hazel Company uses activity-based costing. The company produces two products: coats and hats. The annual production and sales volume of coats is 8,000 units and of hats is 6,000 units. There are three activity cost pools with the following expected activities and estimated total costs:

Activity Cost Pool

Estimated Cost

Expected ActivityCoats

Expected Activity

Hats TotalActivity 1 P20,000 100 400 500Activity 2 P37,000 800 200 1,000Activity 3 P91,200 800 3,000 3,800

54.) Refer to Hazel Company. Using ABC, the cost per unit of coats is approximately: a. P2.40 c. P 6.60b. P3.90 d. P10.59

55.) Refer to Hazel Company. Using ABC, the cost per unit of hats is approximately:

a. P2.40 c. P12.00b. P3.90 d. P15.90

Loft Savings and Loan

Loft Savings and Loan had the following activities, traceable costs, and physical flow of driver units:

Activities Traceable Costs Physical flow of Driver UnitsOpen new accounts P50,000 1,000 accountsProcess deposits 36,000 400,000 depositsProcess withdrawals 15,000 200,000 withdrawalsProcess loan applications 27,000 900 applications

The above activities are used by the Jennings branch and the Crowley branch:

Jennings Crowley New accounts 200 400 Deposits 40,000 20,000 Withdrawals 15,000 18,000 Loan applications 100 160

56.) Refer to Loft Savings and Loan. What is the cost per driver unit for new account activity?a. P0.09 c. P30.00b. P0.075 d. P50.00

57.) Refer to Loft Savings and Loan. What is the cost per driver unit for the deposit activity?a. P0.09 c. P30.00b. P0.075 d. P50.00

58.) Refer to Loft Savings and Loan. What is the cost per driver unit for the withdrawal activity?a. P0.09 c. P30.00b. P0.075 d. P50.00

59.) Refer to Loft Savings and Loan. What is the cost per driver unit for the loan application activity?a. P0.09 c. P30.00b. P0.075 d. P50.00

60.) Refer to Loft Savings and Loan. How much of the loan application cost will be assigned to the Jennings branch?a. P3,000 c. P 7,800b. P4,800 d. P27,000

61.) Refer to Loft Savings and Loan. How much of the deposit cost will be assigned to the Crowley branch?a. P1,800 c. P 5,400b. P3,600 d. P36,000

62.) Refer to Loft Savings and Loan. How much of the new account cost will be assigned to the Crowley branch?a. P10,000 c. P30,000b. P20,000 d. P50,000

Barley Company

The following July information is for Barley Company:

Standards:Material 3.0 feet per unit @ P4.20 per footLabor 2.5 hours per unit @ P7.50 per hour

Actual:Production 2,750 units produced during the monthMaterial 8,700 feet used; 9,000 feet purchased @ P4.50 per footLabor 7,000 direct labor hours @ P7.90 per hour

(Round all answers to the nearest peso.)

63.) Refer to Barley Company. What is the material price variance (calculated at point of purchase)?a. P2,700 Ub. P2,700 Fc. P2,610 Fd. P2,610 U

64.) Refer to Barley Company. What is the material quantity variance?a. P3,105 Fb. P1,050 Fc. P3,105 Ud. P1,890 U

65.) Refer to Barley Company. What is the labor rate variance?a. P3,480 Ub. P3,480 Fc. P2,800 Ud. P2,800 F

66.) Refer to Barley Company. What is the labor efficiency variance?a. P1,875 Ub. P938 Uc. P1,875 Ud. P1,125 U

Fischer Company

Fischer Company uses a standard cost system for its production process and applies overhead based on direct labor hours. The following information is available for August when Fischer made 4,500 units:

Standard:DLH per unit 2.50Variable overhead per DLH P1.75Fixed overhead per DLH P3.10Budgeted variable overhead P21,875Budgeted fixed overhead P38,750

Actual:Direct labor hours 10,000Variable overhead P26,250Fixed overhead P38,000

67.) Refer to Fischer Company. Using the one-variance approach, what is the total overhead variance?a. P6,062.50 Ub. P3,625.00 Uc. P9,687.50 Ud. P6,562.50 U

68.) Refer to Fischer Company. Using the two-variance approach, what is the controllable variance?a. P5,812.50 Ub. P5,812.50 Fc. P4,375.00 Ud. P4,375.00 F

69.) Refer to Fischer Company. Using the two-variance approach, what is the noncontrollable variance?a. P3,125.00 Fb. P3,875.00 Uc. P3,875.00 Fd. P6,062.50 U

70.) Refer to Fischer Company. Using the three-variance approach, what is the spending variance?a. P4,375 Ub. P3,625 Fc. P8,000 Ud. P15,750 U

71.) Refer to Fischer Company. Using the three-variance approach, what is the efficiency variance?a. P9,937.50 Fb. P2,187.50 Fc. P2,187.50 Ud. P2,937.50 F

Rodent Company

Rodent Company produces four solvents from the same process: C, D, E, and G. Joint product costs are $9,000. (Round all answers to the nearest dollar.)

Barrels

Sales priceper barrelat split-off

Disposalcost

per barrelat split-off

Furtherprocessing

costs

Finalsalesprice

per barrelC 750 $10.00 $6.50 $2.00 $13.50 D 1,000 8.00 4.00 2.50 10.00E 1,400 11.00 7.00 4.00 15.50G 2,000 15.00 9.50 4.50 19.50

If Rodent sells the products after further processing, the following disposal costs will be incurred: C, $2.50; D, $1.00; E, $3.50; G, $6.00.

72. Refer to Rodent Company. Using a physical measurement method, what amount of joint processing cost is allocated to Product D?

a. $1,748b. $2,447c. $1,311d. $3,495

73.Refer to Rodent Company. Using a physical measurement method, what amount of joint processing cost is allocated to Product E?

a. $3,495b. $2,447c. $1,748d. $1,311

74.Refer to Rodent Company. Using a physical measurement method, what amount of joint processing cost is allocated to Product C?

a. $3,495b. $2,447c. $1,748d. $1,311

75.Refer to Rodent Company. Using a physical measurement method, what amount of joint processing cost is allocated to Product G?

a. $3,495b. $2,447c. $1,748d. $1,311

76. Refer to Rodent Company. Using sales value at split-off, what amount of joint processing cost is allocated to Product D?

a. $4,433b. $2,276c. $1,108d. $1,182

77. Refer to Rodent Company. Using sales value at split-off, what amount of joint processing cost is allocated to Product C?

a. $4,433b. $2,276c. $1,108d. $1,182

78. Refer to Rodent Company. Using sales value at split-off, what amount of joint processing cost is allocated to Product G?

a. $4,433b. $1,182c. $1,108d. $2,276

79.Refer to Rodent Company. Using sales value at split-off, what amount of joint processing cost is allocated to Product E?

a. $4,433b. $1,182c. $1,108d. $2,276

80.Refer to Rodent Company. Using net realizable value at split-off, what amount of joint processing cost is allocated to Product C?

a. $1,550b. $1,017c. $4,263d. $2,170

cost accounting

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