PAMANTASAN NG LUNGSOD NG PASIG

College of Business and Accountancy

Strategic Cost Management – ACC108
MIDTERM EXAMINATION

PART I – MULTIPLE CHOICE (20 Points)

Write the letter of your choice on the space provided before every number. Write your
answers in CAPITAL LETTERS.

______ 1. Beginning work in process inventory was 4,800 units and were 55% complete as to
direct labor and manufacturing overhead. During the current period, 12,600 units were completed
and transferred to finished goods. Three hundred fifty units remain in work in process and are
70% complete. The number of units started during the current period were:
A. 12,600
B. 10,555
C. 17,050
D. 8,150
E. None of the above

_______ 2. The total cost to complete the beginning work in process of 6,000 units was P24,000.
Twenty thousand units were started and completed. There was no ending work in process
inventory. Costs added during the period for current units were: direct materials- P48,000, and
direct labor and manufacturing overhead – P16,000 each. What is the net change in the per unit
cost of the units started and completed during the period as compared to the beginning work in
process completed?
A. P1.20 decrease
B. P0.80 increase
C. P0.00 change
D. P0.80 decrease
E. None of the above

_______ 3. The following information belongs to PLP Corporation which uses process costing
system:
Over-applied balance of manufacturing overhead: P15,000
Work in process inventory, ending: P20,000
Finished goods inventory: P60,000
Cost of goods sold: P40,000

On the basis of ending balances, which of the following is the correct allocation of
over-applied manufacturing overhead among work in process, finished goods and
cost of goods sold?

A. P15,000, P0.00 and P0.00

B. P3,750, P11,250 and P0.00
C. P5,000, P5,000 and P5,000
D. P2,500, P7,500 and P5,000
E. None of the above

_______ 4. Which of the following is not a re-engineering challenge with modern cost systems?
A. Consistency
B. Timing
C. Reliability
D. Practicality
E. None of the above

______ 5. Estimated manufacturing overhead cost at beginning of period: P220,000

Estimated direct labor hours at the beginning of period: 10,000
Actual manufacturing overhead cost incurred during the period: P232,000
Actual direct labor hours worked during the period: 11,000

Based on the information above, the cost record of the company will show:
A. Under-applied manufacturing overhead cost of P10,000
B. Over-applied manufacturing overhead cost of P12,000
C. Under-applied manufacturing overhead cost of P12,000
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 D. Over-applied manufacturing overhead cost of P10,000
E. None of the above

______ 6. __________ is an approach to benchmarking which offers true long-term gains

because it provides a source of competitive advantage.
A. Generic
B. Competitive
C. Internal
D. Functional
E. All of the above

______ 7. Which of the following would be recorded as debit to manufacturing overhead account?
A. Indirect materials cost
B. Direct materials cost
C. Direct labor cost
D. All of the above
E. None of the above

_______ 8. Which of the following is most likely to use a process costing system?
A. Tables and chairs manufacturer
B. Sugar refiner
C. Print shop
D. Construction company
E. None of the above

______ 9. ________________ refers to the timetables and schedules for materials purchasing,
manufacturing, parts and tools, packing, transport and cash flow requirements.
A. People
B. Process
C. Product
D. Plant and Equipment
E. None of the above

______ 10. Which of the following costs is not taken into consideration in Life-Cycle Costing?
A. Maintenance cost
B. Operational cost
C. Acquisition cost
D. Opportunity cost
E. None of the above

______ 11. Companies that produce many different products or services often use
A. Job order costing
B. Process costing
C. Both A & B
D. None of the above

______ 12. Which of the following is not included in Michael Porter’s Five Competitive Forces
Model?
A. Buyer Power
B. Supplier Power
C. Threat of New Products
D. Threat of Substitutes
E. None of the above

______ 13. Which of the following is not a reason for adopting flexible manufacturing systems?
A. Reduced scrap, rework and floor space
B. Advanced technology to be used in the future
C. Ability to change product mix and volume rapidly
D. Maintain low consistency quality levels
E. None of the above

______ 14. The section of the process cost summary in which the details for the calculation of
the unit processing costs for direct materials, labor and overhead are shown is the:
A. Equivalent unit processing costs
B. Total costs to be accounted for
C. Costs charged to the department
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 D. Assignment of costs to the output of the department
E. None of the above

______ 15. On a process cost summary, the total costs to be accounted for and the total costs
accounted for are
A. Different in amount by the amount of under-applied manufacturing overhead
B. Different in amount by the amount of over-applied manufacturing overhead
C. Seldom the same because of spoiled or lost units
D. Should be the same
E. None of the above

_______16. Which of the following is not true regarding job order costing and process costing
systems?
A. Both classify materials as direct and indirect
B. Direct materials under one system might be indirect in the other
C. Both assign costs by process
D. Both classify labor cost as direct and indirect
E. None of the above

______ 17. Which of the following shows the materials issued to a department during a period
and substitutes for materials requisitions?
A. Materials consumption report
B. Process cost summary
C. Cost of production report
D. Equivalent units processing cost report
E. None of the above

______ 18. Beginning work in process inventory was 4,000 units and were 55% complete as to
direct labor and overhead. 23,000 units were added to production. 4,500 units remained in
process, each was 75% complete. The equivalent units for direct labor and overhead were:
A. 23,675
B. 47,350
C. 22,500
D. 23,765
E. None of the above

______ 19. Direct materials cost was P2.50 per unit, direct labor cost was P3 per unit and
manufacturing overhead was applied at 120% of direct labor cost. Beginning work in process
inventory of 4,500 units were 100% complete as to direct materials and 50% complete as to direct
labor and manufacturing overhead. The total production costs to process the beginning work in
process inventory is
A. 29,700
B. 26,100
C. 14,850
D. 40,950
E. None of the above

______ 20. Which of the following is not part of the benchmarking process?
A. Collect and analyze data
B. Develop an action plan
C. A senior manager decides what area of the company to benchmark
D. Specialists identify what company is the best in that area
E. None of the above

PART II – PROBLEM (70 Points)

CBA Manufacturing Co. produces Product X through three Departments – A, B and C.

Following are the data for the month of January 2020:

Dept. A Dept. B Dept. C

% of units put into process that was
completed and transferred to next 90% 90% 85%
department
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 Dept. A Dept. B Dept. C
Work in Process, Dec. 31, 2019:
Units 2,500 2,000 3,000
Raw materials Costs 36,000 8,000 6,800
Conversion Costs 48,000 21,000 14,000
Costs from preceding department:
Raw materials -- 5,000 2,800
Conversion costs -- 6,500 10,800
Units added to production 27,500
Costs incurred during the month:
Raw materials Costs 18,000 14,200 16,900
Factory payroll 32,000 18,000 15,000
Administrative expenses 56,000 17,650 19,750
Indirect expenses - factory 42,200 25,200 20,600
Selling expenses 38,000 9,500 12,550
Salary of factory supervisor 3,800 4,500 4,800
% of completion, WIP, Beg.
Direct Materials 95% 90% 90%
Conversion Costs 60% 70% 60%
% of completion, WIP, End.
Direct Materials 80% 80% 80%
Conversion Costs 70% 60% 70%

Compute/Prepare: 1.) Quantity schedule; 2.) Equivalent units of production; 3.) Cost per
equivalent unit; 4.) Cost of units transferred to the next department; and, 5.) Cost of WIP, Ending;
and supply the necessary journal entries - assuming CBA Manufacturing Co. uses a.) Weighted-
Average Method, and; b.) FIFO Method.

PART III – COMPARE AND/OR CONTRAST (10 Points)

Choose only five (5):

1. Life-Cycle Costing and Target Costing

2. Job Order Costing and Process Costing

3. Manufacturing and Merchandising

4. Quality and Reliability

5. Flow Production and Batch Production

6. Internal Benchmarking and Competitive Benchmarking

7. Period Cost and Product Cost

8. Prime Cost and Conversion Cost

9. Fixed Cost and Variable Cost

10. Flexible Manufacturing Systems and Total Quality Management

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GOOD LUCK!!

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