NATIONAL COLLEGE OF BUSINESS AND ARTS

Cubao-Fairview-Taytay
FIRST SEMESTER SY 2015-2016
FINAL DEPARTMENTAL EXAMINATIONS 3 HRS
ACCOUNTING 7 – 07 COST ACCOUNTING & COST MANAGEMENT

INSTRUCTIONS: Select the correct answer for each of the following questions. Mark only one answer for each
item by shading the corresponding letter of your choice on the answer sheet provided. STRICTLY NO
ERASURES ALLOWED. Use Pencil No. 2 only.

1. Under just-in-time processing

A. raw materials are received just in time for use in production
B. subassembly parts are completed just in time for use in assembling finished goods
C. finished goods are completed just in time to be sold
D. all of the above

2. A successful JIT system is based upon which of the following concepts?

A. The company must rely upon a large number of suppliers to ensure frequent deliveries of small
lots.
B. The company should always choose those suppliers offering the lowest prices.
C. The company should avoid long-term contracts with suppliers so as to exert pressure on
suppliers to make prompt and frequent deliveries.
D. A small number of suppliers make frequent deliveries of specific quantities thus avoiding the
buildup of large inventories of materials on hand.

3. A company adopting the JIT approach would:

A. produce large batches of products so as to recoup the costs associated with setups.
B. attempt to reduce setup time so as to economically produce in smaller batches.
C. adapt a functional plant layout so as to enhance production flexibility.
D. require workers to become highly specialized in operating a single machine.

4. Conventional and just-in-time manufactures differ in that the conventional manufacturer is likely to
A. be a new entrant into its industry.
B. need less storage space than its JIT competitors.
C. give less credibility to management accounting reports.
D. have a longer production cycle than its JIT competitors.

5. In JIT manufacturing, each operation produces

A. only what is necessary for the succeeding operations
B. all that it can to offset fixed costs
C. a fixed percentage in excess of orders to ensure adequate quality stock
D. all that it can in order to build inventories

Use the following to answer questions 6 - 12:

Bistrol Corporation uses the weighted-average method in its process costing system. This month, the
beginning inventory in the first processing department consisted of 800 units. The costs and percentage
completion of these units in beginning inventory were:
Cost Percent Complete
Materials costs P15,700 75%
Conversion costs P7,700 20%
A total of 8,400 units were started and 7,500 units were transferred to the second processing
department during the month. The following costs were incurred in the first processing department
during the month:
Materials costs P 186,300
Conversion costs P 329,800
The ending inventory was 70% complete with respect to materials and 60% complete with respect to
conversion costs.
Note: Your answers may differ from those offered below due to rounding error. In all cases, select the
answer that is the closest to the answer you computed. To reduce rounding error, carry out all
computations to at least three decimal places.

6. How many units are in ending work in process inventory in the first processing department at the end of
the month?
A) 7,600 B) 900 C) 1,700 D) 900
ACCOUNTING 7 – 07 COST ACCOUNTING & COST MANAGEMENT

7. What are the equivalent units for conversion costs for the month in the first processing department?
A) 9,200 B) 8,520 C) 7,500 D) 1,020

8. The cost per equivalent unit for materials for the month in the first processing department is closest to:
A) P21.44 B) P21.96 C) P20.25 D) P23.25

9. The cost per equivalent unit for conversion costs for the first department for the month is closest to:
A) P41.59 B) P38.71 C) P39.61 D) P36.68

10. The cost per equivalent whole unit for the month in the first processing department is closest to:
A) P71.93 B) P62.86 C) P58.64 D) P66.63

11. The total cost transferred from the first processing department to the next processing department during
the month is closest to:
A) P516,100 B) P471,435 C) P539,500 D) P578,294

12. The cost of ending work in process inventory in the first processing department according to the
company's cost system is closest to:
A) P68,067 B) P64,115 C) P74,801 D) P106,859

Use the following to answer questions 13-16:

Harward Company's Staining department recorded the following activity in June:
Number of Units Labor and Overhead Percent Completed
Work in process inventory, June 18,000 35%
Started into production during June 50,000
Work in process inventory, June 30 12,000 55%
All materials are added at the beginning of the process in the Staining Department.

13. The equivalent units for labor and overhead for June, using the FIFO method, were:
A) 46,000 units B) 49,800 units C) 43,200 units D) 52,600 units

14. The equivalent units for labor and overhead for June, using the weighted-average method, were:
A) 52,600 units B) 62,000 units C) 50,000 units D) 46,000 units

15. The equivalent units for materials for June, using the FIFO method, were:
A) 46,000 units B) 42,000 units C) 58,000 units D) 50,000 units

16. The equivalent units for materials for June, using the weighted-average method, were:
A) 58,000 units B) 52,600 units C) 46,000 units D) 60,000 units

Use the following to answer questions 17-20:

The accounting records of Omar Company contained the following information for last year:
Beginning Ending
Direct materials inventory P 9,000 P 7,000
Work in process inventory P17,000 P31,000
Finished goods inventory P10,000 P15,000
Manufacturing costs incurred
Direct materials used P 72,000
Overhead applied P 24,000
Direct labor cost (10,000 hours) P 80,000
Depreciation P 10,000
Rent P 12,000
Taxes P 8,000
Cost of goods sold P157,000* *
Selling and administrative costs incurred
Advertising P35,000
Rent P20,000
Clerical P25,000
*Does not include over- or underapplied overhead.

17. The amount of direct material purchased during the year was:
A) P66,000 B) P70,000 C) P65,000 D) P74,000

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18. The total costs added to Work in Process during the year were:
A) P206,000 B) P162,000 C) P176,000 D) P182,000

19. If Omar Company applies overhead to jobs on the basis of direct labor hours and Job 3 took 120 hours,
how much overhead should be applied to that job?
A) P960 B) P360 C) P528 D) P288
20. The cost of goods manufactured for the year was:
A) P190,000 B) P162,000 C) P168,000 D) P135,000

Use the following to answer questions 21 -24:

At the beginning of the current year, Garber Corporation estimated that its manufacturing overhead
would be P70,000 and the activity level would be 10,000 machine-hours. The level of activity at
capacity is 14,000 machine-hours. The actual manufacturing overhead for the year was P63,300 and
the actual level of activity was 10,100 machine-hours.

21. If the company bases its predetermined overhead rate on estimated machine-hours, then its
predetermined overhead rate would have been:
A) P6.27 B) P7.00 C) P5.00 D) P6.33

22. If the company bases its predetermined overhead rate on estimated machine-hours, then its overhead
for the year would have been:
A) P12,800 overapplied C) P7,400 overapplied
B) P12,800 underapplied D) P7,400 underapplied

23. If the company bases its predetermined overhead rate on machine-hours at capacity, then its
predetermined overhead rate would have been:
A) P6.33 B) P6.27 C) P5.00 D) P7.00

24. If the company bases its predetermined overhead rate on machine-hours at capacity, then the cost of
unused capacity reported on the income statement would have been:
A) P700 B) P7,400 C) P6,700 D) P12,800

Use the following to answer questions 25-27:

Acton Corporation, which applies manufacturing overhead on the basis of machine-hours, has provided
the following data for its most recent year of operations.
Estimated manufacturing overhead P 139,080
Estimated machine-hours 3,800
Actual manufacturing overhead P 137,000
Actual machine-hours 3,780
The estimates of the manufacturing overhead and of machine-hours were made at the beginning of the
year for the purpose of computing the company's predetermined overhead rate for the year.

25. The predetermined overhead rate is closest to:

A) P36.60 B) P36.41 C) P36.24 D) P36.05

26. The applied manufacturing overhead for the year is closest to:
A) P136,269 B) P138,348 C) P136,987 D) P137,630

27. The overhead for the year was:

A) P732 underapplied C) P732 overapplied
B) P1,348 underapplied D) P1,348 overapplied

Use the following to answer questions 28-30:

Baker Corporation applies manufacturing overhead on the basis of direct labor-hours. At the beginning
of the most recent year, the company based its predetermined overhead rate on total estimated
overhead of P210,600 and 6,000 estimated direct labor-hours. Actual manufacturing overhead for the
year amounted to P209,000 and actual direct labor-hours were 5,980.

28. The predetermined overhead rate for the year was closest to:
A) P34.95 B) P34.83 C) P34.98 D) P35.10

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29. The applied manufacturing overhead for the year was closest to:
A) P208,283 B) P209,001 C) P209,898 D) P209,180

30. The overhead for the year was:

A) P702 underapplied C) P702 overapplied
B) P898 underapplied D) P898 overapplied

Use the following to answer questions 31-35:

The following partially completed T-accounts summarize transactions for Western Company during the
year:
Raw Material Finished Goods
Beg Bal 3,000 8,000 Beg Bal 9,000 20,000
5,000 25,000
7,000

Work in Process Wages & Salaries Payable

Beg Bal 6,000 25,000 10,000 2,000 Beg Bal
6,500 12,000
9,000
7,000
Manufacturing Overhead Cost of Goods Sold
1,500 7,000 20,000
2,000
750
3,000

31. The Cost of Goods Manufactured is:

A) P20,000 B) P34,000 C) P22,500 D) P25,000

32. The direct labor cost was:

A) P9,000 B) P12,000 C) P10,000 D) P14,000

33. The direct materials cost was:

A) P8,000 B) P6,500 C) P9,000 D) P6,000

34. The manufacturing overhead applied was:

A) P9,000 B) P3,000 C) P500 D) P7,000

35. The manufacturing overhead was:

A) P250 overapplied C) P250 underapplied
B) P750 underapplied D) P750 overapplied

Use the following to answer questions 36-37:

Kapanga Manufacturing Company uses a job-order costing system and started the month of October
with a zero balance in its work in process and finished goods inventory accounts. During October,
Kapanga worked on three jobs and incurred the following direct costs on those jobs:
Job B18 Job B19 Job C11
Direct materials P12,000 P25,000 P18,000
Direct labor P8,000 P10,000 P5,000
Kapanga applies manufacturing overhead at a rate of 150% of direct labor cost. During October,
Kapanga completed Jobs B18 and B19 and sold Job B19.

36. What is Kapanga's cost of goods manufactured for October?

A) P 50,000 B) P 55,000 C) P 78,000 D) P 82,000

37. What is Kapanga's work in process inventory balance at the end of October?
A) P23,000 B) P30,500 C) P32,000 D) P43,000

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Use the following to answer questions 38-41:

Acklin Company has two products: A and B. Annual production and sales are 600 units of Product A
and 900 units of Product B. The company has traditionally used direct labor-hours as the basis for
applying all manufacturing overhead to products. Product A requires 0.5 direct labor hours per unit and
Product B requires 0.3 direct labor hours per unit. The total estimated overhead for next period is P
63,322.
The company is considering switching to an activity-based costing system for the purpose of computing
unit product costs for external reports. The new activity-based costing system would have three
overhead activity cost pools—Activity 1, Activity 2, and General Factory— with estimated overhead
costs and expected activity as follows:

Activity Cost Estimated Expected Activity

Pool Overhead Cost Product A Product B Total
Activity 1 P 18,900 700 200 900
Activity 2 15,631 1,000 100 1,100
General Factory 28,791 300 270 570

The General Factory activity cost pool's costs are allocated on the basis of direct labor hours.
38. The predetermined overhead rate under the traditional costing system is closest to:
A. P 21.00 B. P14.21 C. P111.09 D. P50.51

39. The overhead cost per unit of Product A under the traditional costing system is closest to:
A. P10.50 B. P55.55 C. P25.26 D. P7.11

40. The predetermined overhead rate (i.e., activity rate) for Activity 1 under the activity based costing
system is closest to:
A. P27.00 B. P94.50 C. P21.00 D. P70.36

41. The overhead cost per unit of Product A under the activity-based costing system is closest to:
A. P25.26 B. P73.44 C. P42.21 D. P55.55

Use the following to answer questions 42-51:

HiTech Products manufactures three types of remote-control devices: Economy, Standard, and Deluxe.
The company, which uses activity-based costing, has identified five activities (and related cost drivers).
Each activity, its budgeted cost, and related cost driver is identified below.
Activity Cost Cost Driver
Material Handling P 225,000 Number of parts
Material Insertion 2,475,000 Number of parts
Automated 840,000 Machine Hours
Machinery
Finishing 170,000 Direct Labor Hours
Packaging 170,000 Orders Shipped
Total P 3,880,000

The following information pertains to the three product lines for next year:
Economy Standard Deluxe
Units produced 10,000 5,000 2,000
Orders Shipped 1,000 500 200
Number of parts per unit 10 15 25
Machine Hours per unit 1 3 5
Labor hours per unit 2 2 2

42. What is HiTech's pool rate for the material-handling activity?

A. P1.00/part B. P2.25/part C. P6.62/labor hour D. P13.23/part.

43. What is HiTech's pool rate for the automated machinery activity?
A. P24.00/machine hour C. P49.42/unit
B. P24.50/labor hour D. P50.00/machine hour.

44. What is HiTech's pool rate for the finishing activity?

A. P5.00 per labor hour C. P5.00 per unit
B. P5.00 per machine hour D. P7.50 per unit
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45. What is HiTech's pool rate for the packaging activity?

A. P4.86 per machine hour C. P10.00 per unit
B. P5.00 per labor hour D. P100.00 per order shipped

46. Under an activity-based costing system, what is the per-unit overhead cost of Economy?
A. P141 B. P164 C. P225 D. P228

47. Under an activity-based costing system, what is the per-unit overhead cost of Standard?
A. P164 B. P228 C. P272 D. P282.

48. Under an activity-based costing system, what is the per-unit overhead cost of Deluxe?
A. P272 B. P282 C. P320 D. P440

49. Assume that HiTech is using a volume-based costing system, and the preceding overhead costs are
applied to all products on the basis of direct labor hours. The overhead cost that would be assigned to
the Deluxe product line is closest to:
A. P 456,471 B. P 646,471 C. P 961,176 D. P 1,141,176

50. Assume that HiTech is using a volume-based costing system, and the preceding overhead costs are
applied to all products on the basis of direct labor hours. The overhead cost that would be assigned to
the Standard product line is closest to:
A. P 456,471 B. P 646,471 C. P 961,176 D. P 1,141,176

Use the following to answer questions 51-57:

Ratcliff Company produces two products from a joint process: X and Z. Joint processing costs for this
production cycle are P8,000.
Sales price Disposal cost Further processing Final sale price
Yards per yard at split-off per per yard Per yard
yard at split-off
X 1,500 P6.00 P3.50 P1.00 P 7.50
Z 2,200 9.00 5.00 3.00 11.25

If X and Z are processed further, no disposal costs will be incurred or such costs will be borne by the
buyer.

51. Refer to Ratcliff Company. Using a physical measure, what amount of joint processing cost is allocated
to X (round to the nearest dollar)?
A. P4,000
B. P4,757
C. P5,500
D. P3,243

52. Refer to Ratcliff Company. Using a physical measure, what amount of joint processing cost is allocated
to Z (round to the nearest dollar)?
A. P4,000
B. P3,243
C. P5,500
D. P4,757

53. Refer to Ratcliff Company. Using sales value at split-off, what amount of joint processing cost is
allocated to X (round to the nearest dollar)?
A. P5,500
B. P2,500
C. P4,000
D. P3,243

54. Refer to Ratcliff Company. Using sales value at split-off, what amount of joint processing cost is
allocated to Z (round to the nearest dollar)?
A. P5,500
B. P4,000
C. P2,500
D. P4,757

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55. Refer to Ratcliff Company. Using net realizable value at split-off, what amount of joint processing cost is
allocated to X (round to the nearest dollar)?
A. P4,000
B. P5,610
C. P2,390
D. P5,500

56. Refer to Ratcliff Company. Using net realizable value at split-off, what amount of joint processing cost is
allocated to Z (round to the nearest dollar)?
A. P5,500
B. P4,000
C. P2,390
D. P5,610

57. Refer to Ratcliff Company. Using approximated net realizable value at split-off, what amount of joint
processing cost is allocated to X (round to the nearest dollar)?
A. P3,090
B. P5,204
C. P4,000
D. P2,390

Use the following to answer questions 58-60:

The following July information is for Marley Company:
Standards:
Material 3.0 feet per unit @ P4.20 per foot
Labor 2.5 hours per unit @ P7.50 per hour

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

58. Refer to Marley Company. What is the material price variance (calculated at point of purchase)?
A. P2,700 U
B. P2,700 F
C. P2,610 F
D. P2,610 U

59. Refer to Marley Company. What is the material quantity variance?

A. P3,105 F
B. P1,050 F
C. P3,105 U
D. P1,890 U

60. Refer to Marley Company. What is the labor rate variance?

A. P3,480 U
B. P3,480 F
C. P2,800 U
D. P2,800 F

**** THE END ****

GOD BLESS!

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