DMC COLLEGE FOUNDATION, INC.

Fr. Patangan Road, Sta. Filomena, Dipolog City

2nd SEMESTER, SY: 2022-2023

SCHOOL OF BUSINESS AND ACCOUNTANCY

1. Hoyden Co. developed the following equation to predict certain components of its budget for the coming period:

Costs = $50,000 + ($5 x direct labor hours)

The $5 would approximate:

A. total cost
B. direct labor rate per hour
C. fixed cost per direct labor hour
D. the coefficient of determination
E. variable costs per direct labor hour

2. When cost relationships are linear, total variable manufacturing costs will vary in proportion to changes in:
A. machine hours
B. direct labor hours
C. total material cost
D. total overhead cost
E. volume of production

3. The term "relevant range" as used in cost accounting means the range over which:
A. relevant costs are incurred
B. cost relationships are valid
C. costs may fluctuate
D. sales volume fluctuates
E. production may vary

4. Within a relevant range, the amount of fixed cost per unit:

A. differs at each production level on a per-unit basis
B. remains constant in total
C. decreases as production increases on a per-unit basis
D. increases as production decreases on a per-unit basis
E. all of the above

5. The following relationships pertain to a year's budgeted activity for Buckeye Company:

High Low
Direct labor hours ............................................................................. 400,000 300,000
Total costs ......................................................................................... $154,000 $129,000

What are the budgeted fixed costs for the year?

A. $100,000
B. $25,000
C. $54,000
D. $75,000
E. none of the above
 SUPPORTING CALCULATION:

6. Maintenance expenses of a company are to be analyzed for purposes of constructing a flexible

budget. Examination of past records disclosed the following costs and volume measures:

High Low
Cost per month .......................................................................... $39,200 $32,000
Machine hours ...............................................................................24,000 15,000

Using the high-low method of analysis, the estimated variable cost per machine hour is:
A. $12.50
B. $0.80
C. $0.08
D. $1.25
E. none of the above

SUPPORTING CALCULATION:

7. A company allocates its variable factory overhead based on direct labor hours. During the past three months,
the actual direct labor hours and the total factory overhead allocated were as follows:

October November December

Direct labor hours ................................................... 2,500 3,000 5,000
Total factory
overhead allocated ........................................ $80,000 75,000 ₱100,000

Based upon this information, the estimated variable cost per direct labor hour was:
A. ₱.125
B. ₱12.50
C. ₱.08
D. ₱8
E. none of the above
High and Low Points Method. A controller is interested in analyzing the fixed and variable costs of indirect
labor as related to direct labor hours. The following data have been accumulated:

Indirect Direct Labor

Month Labor Cost Hours
March ..... ₱2,880 425
April ....... 3,256 545
May ........ 2,820 440
June ........ 3,225 560
July ......... 3,200 540
August 3,200 495

Required: Determine the amount of the fixed portion of indirect labor expense and the variable rate for
indirect labor expense, using the high and low points method. (Round the variable rate to three decimal places and the fixed cost
to the nearest whole dollar.)
FINAL ANSWER: SOLUTION:
8. Variable Rate : ______________
9. Total Fixed Cost : ___________

10. Under job order cost accumulation, the factory overhead control account controls:
A. factory overhead analysis sheets
B. all general ledger subsidiary accounts
C. job order cost sheets
D. cost reports by processes
E. materials inventories

11. Supplies needed for use in the factory are issued on the basis of:
A. job cost sheets
B. materials requisitions
C. time tickets
D. factory overhead analysis sheets
E. clock cards

12.Finished Goods is debited and Work in Process is credited for a:

A. transfer of completed goods out of the factory
B. transfer of completed production to the finished goods storeroom
C. purchase of goods on account
D. transfer of materials to the factory
E. return of unused materials from the factory

13. In job order costing, when materials are returned to the storekeeper that were previously issued to the factory for
cleaning supplies, the journal entry should be made to:
A. Materials
Factory Overhead
B. Materials
Work in Process
C. Purchases Returns
Work in Process
D. Work in Process
Materials
E. Factory Overhead
Work in Process
14. Howell Corporation has a job order cost system. The following debits (credits) appeared in Work in Process for the
month of July:

July 1, balance ............................................................................................................. ₱ 12,000

July 31, direct materials ..................................................................................................40,000
July 31, direct labor ........................................................................................................30,000
July 31, factory overhead ................................................................................................27,000
July 31, to finished goods ........................................................................................... (100,000)

Howell applies overhead to production at a predetermined rate of 90% based on the direct labor
cost. Job 1040, the only job still in process at the end of July, has been charged with factory
overhead of ₱2,250. What was the amount of direct materials charged to Job 1040?
A. ₱6,750
B. ₱2,250
C. ₱2,500
D. ₱4,250
E. ₱9,000

SUPPORTING CALCULATION:

15.Valentino Corporation makes aluminum fasteners. Among Valentino's 19-- manufacturing costs were:

Wages and salaries:

Machine operators ..........................................................................................................₱80,000
Factory supervisors .......................................................................................................... 30,000
Machine mechanics .......................................................................................................... 20,000

Direct labor amounted to:

A. ₱50,000
B. ₱100,000
C. ₱110,000
D. ₱130,000
E. none of the above

16. Rudolpho Corporation makes aluminum fasteners. Among Rudolpho's 19-- manufacturing costs
were:

Materials and supplies:

Aluminum .............................................................................................................................. ₱400,000
Machine parts ............................................................................................................................. 18,000
Lubricants for machines ............................................................................................................ 5,000

Direct materials amounted to:

A. ₱23,000
B. ₱400,000
C. ₱405,000
D. ₱418,000
E. ₱423,000
17. Selected cost data (in thousands) concerning the past fiscal year's operations of the Moscow Manufacturing
Company are presented below.

Inventories
Beginning Ending
Materials ...................................................................................................................... ₱75 ₱ 85
Work in process ........................................................................................................... 80 30
Finished goods ............................................................................................................. 90 110

Materials used, ₱326

Total manufacturing costs charged to production during the year (including direct materials,
direct labor, and factory overhead applied at the rate of 60% of direct labor cost), ₱686
Cost of goods available for sale, ₱826
Selling and general expenses, ₱25
The cost of direct materials purchased during the year amounted to:
A. ₱360
B. ₱316
C. ₱336
D. ₱411
E. none of the above
SUPPORTING CALCULATION

18. Today, traditional accounting methods are

a. still appropriate for financial reporting.
b. still appropriate for providing useful cost information to internal managers.
c. still appropriate for both internal and external financial reporting.
d. outdated for all purposes.
19. Product costing systems in use over the last 40 years
a. concentrated on using multiple cost pools and cost drivers.
b. were often technologically incapable of handling activity-based costing information.
c. have generally been responsive to changes in the manufacturing environment.
d. have been appropriate for managerial decision purposes as long as they met the
requirements of generally accepted accounting principles.
20. Traditional overhead allocations result in which of the following situations?
a. Overhead costs are assigned as period costs to manufacturing operations.
b. High-volume products are assigned too much overhead, and low-volume products are assigned
too little overhead.
c. Low-volume products are assigned too much, and high-volume products are assigned too little
overhead.
d. The resulting allocations cannot be used for financial reports.
21. Traditionally, overhead has been assigned based on direct labor hours or machine hours. What effect does this
have on the cost of a high-volume item?
a. over-costs the product
b. under-costs the product
c. has no effect the product cost
d. cost per unit is unaffected by product volume
22. Relative to traditional product costing, activity-based costing differs in the way costs are
a. processed.
b. allocated.
c. benchmarked.
d. incurred.

23. Under activity-based costing, benchmarks for product cost should contain an allowance for
 a. idle time.
b. idle time and scrap materials.
c. spoilage.
d. None of the responses are correct.
24. The costs of non-quality work do not include
a. the cost of handling complaints.
b. the cost of scrap.
c. warranty costs.
d. original design costs.
25. In the "new era" of manufacturing, good performance indicators are
a. production-based.
b. sales-based.
c. cost-based.
d. consumer-based.
26. Traditional standard costs are inappropriate measures for performance evaluation in the "new era" of
manufacturing because they
a. build in allowances for non-value-adding activities.
b. are based on historical information.
c. don't reflect current costs.
d are ideal goals.
27. The amount of time between the development and the production of a product is
a. the product life cycle.
b. lead time.
c. production time.
d. value-added time.
28. For one product that a firm produces, the manufacturing cycle efficiency is 20 percent. If the total production
time is 12 hours, what is the total manufacturing time?
a. 15.0 hours
b. 60.0 hours
c. 12.0 hours
d. 2.4 hours
29. Activity analysis allows managers to
a. classify activities so that processes can be eliminated.
b. devise ways to minimize or eliminate non-value-added activities.
c. evaluate process performance to gain competitive advantages.
d. all of the above.

Smithson Company produces two products (A and B). Direct material and labor costs for Product A total $35 (which
reflects 4 direct labor hours); direct material and labor costs for Product B total $22 (which reflects 1.5 direct labor
hours). Three overhead functions are needed for each product. Product A uses 2 hours of Function 1 at $10 per hour,
1 hour of Function 2 at $7 per hour, and 6 hours of Function 3 at $18 per hour. Product B uses 1, 8, and 1 hours of
Functions 1, 2, and 3, respectively. Smithson produces 800 units of A and 8,000 units of B each period.

30. Refer to Smithson 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. $ 88.64.
b. $123.64.
c. $135.00.
d. None of the responses are correct.

31. Refer to Smithson 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. ₱84.00.
b. ₱88.64.
c. ₱110.64.
d. None of the responses are correct.
32. Refer to Smithson 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
a. ₱51.32.
b. ₱205.28.
c. ₱461.88.
d. None of the responses are correct.

Helps Company

Helps Company produces 50,000 units of Product Q and 6,000 units of Product Z during a period. In that period,
four set-ups were required for color changes. All units of Product Q are black, which is the color in the process at
the beginning of the period. A set-up was made for 1,000 blue units of Product Z; a set-up was made for 4,500
red units of Product Z; a set-up was made for 500 green units of Product Z. A set-up was then made to return the
process to its standard black coloration and the units of Product Q were run. Each set-up costs ₱500.

33. Refer to Phelps Company. If set-up cost is assigned on a volume basis for the department, what is the approximate
per-unit set-up cost for Product Z?
a. ₱.010.
b. ₱.036.
c. ₱.040.
d. None of the responses are correct.

34. Refer to Phelps Company. If set-up cost is assigned on a volume basis for the department, what is the approximate
per-unit set-up cost for the red units of Product Z?
a. ₱.036.
b. ₱.111.
c. ₱.250.
d. None of the responses are correct.
35. Refer to Phelps Company. Assume that Phelps Company has decided to allocate overhead costs using levels of
cost drivers. What would be the approximate per-unit set-up cost for the blue units of Product Z?
a. ₱.04.
b. ₱.25.
c. ₱.50.
d. None of the responses are correct.

SUPPORTING CALCULATION: