KABANKALAN CATHOLIC COLLEGE, INC.

(COST ACCOUNTING)
Midterm/Final Examination

Test I. MULTIPLE CHOICE THEORY. Choose the best answer from the given options. Write the letter of
your choice on your answer sheet.

1. Which of the following products would most likely to be accounted for with a process costing
system?
a. A public accounting firm
b. A retailer
c. Airplane manufacturer
d. Gasoline refinery

2. An equivalent unit of material or conversion cost is equal to

a. The amount of material or conversion cost necessary to complete one unit of production.
b. A unit of work in process inventory
c. The amount of material or conversion cost necessary to start a unit of production into work
in process
d. Fifty percent of the material or conversion cost of a unit of finished goods inventory.

3. In the computation of manufacturing cost per equivalent unit, the weighted average method of
process costing considers
a. Current costs only
b. Current costs plus cost of ending work in process inventory
c. Current costs plus cost of beginning work in process inventory
d. Current costs less cost of beginning work in process inventory.

4. Assuming that there was no beginning in process inventory and the ending work in process
inventory is 100% complete as to material costs, the number of equivalent units as to materials
costs would be
a. The same as the units place in process
b. The same as the units completed
c. Less than the units placed in process
d. Less than the units completed

5. Which of the following deductions are not levied on the employer?

a. Income taxes withheld
b. SSS premiums
c. Philhealth contributions
d. Pag-ibig contributions

6. The employer‘s portion of SSS premiums is:

a. An expense for the employee c. A revenue for the employee
b. An expense for the employer d. A revenue for the employer

7. Which of the following is usually prepared daily by employees for each job worked on?
a. Labor time ticket
b. Time card
c. Punch card
d. Cost control card

8. Fringe benefits of sales personnel is usually charged to

a. Work in process account
b. Administrative expense
c. Selling expenses
d. Factory overhead control

9. Idle time of factory workers is usually charged to

a. Work in process account
b. Administrative expense
c. Selling expenses
d. Factory overhead control
 10. In the determination of factory overhead application rates, the numerator of the formula is
a. Actual factory overhead for the next period
b. Estimated factory overhead for the next period
c. Actual labor hours for the next period
d. Estimated labor hours for the next period

11. The only method of allocating service department costs to producing departments that
considers reciprocal services is called the
a. Direct method
b. Step method
c. Out-of-step method
d. Algebraic method

12. Which of the following describes a part of the step method of allocation?
a. All services between intermediate cost centers are simultaneously allocated to final cost
centers.
b. It ignores services between intermediate cost centers
c. Linear algebra is required for the allocation
d. Once an allocation is made from one service department, no further allocation is made to
this department.

13. Depreciation based on the number of units produced would be classified as what type of cost?
a. Out0of-pocket
b. Marginal
c. Variable
d. Fixed

14. Which productive capacity level is based on estimated production for the next period.
a. Expected productive capacity c. Theoretical or maximum productive
b. Normal productive capacity capacity
d. Practical productive capacity

15. Manufacturing overhead applied was P120,000, while actual overhead incurred was P124,000.
Which of the following is always true of the above?
a. Direct labor activity was overestimated
b. Overhead was overapplied by P4,000
c. Overhead was underapplied by P4,000
d. This difference must be reported as a loss for the period.

Test II. Multiple Choice Problems. Choose the best answer from the given options. Write the letter of
your choice on your answer sheet.

Atlas Inc. uses a process costing system. The following data are available for one department for
October, 2017: Percent Complete
UNITS MATERIALS CONVERSION COST
Work in process, beginning 10,000 60% 30%
Work in process, ending 5,000 80% 70%

The department started 45,000 units into production during the month and completed and
transferred 50,000 units to the next department.
1. Assuming a weighted average method of accounting for units and costs, the equivalent
units for material for October, 2017 would be:
a. 54,000 units b. 50,000 units c. 48,000 units d. 44,000 units

2. Assuming a FIFO method of accounting for units and costs, the equivalent units for
conversion costs for October, 2017 would be:
a. 50,500 units b. 46,500 units c. 44,500 units d. 48,000 units

3. The following information pertains to the month of August for Sky Company:
Beginning work in process inventory – P17,500 (10,000 units-100% complete for materials
and 60% complete for labor and overhead)
Units completed- 60,000 units
Cost per equivalent unit: Materials-P2.50; Labor& overhead-P2.00
 Given the data above, he cost of units transferred out during the month is:
a. P260,000 b. P242,500 c. P254,500 d. P250,500

Data for numbers 4-7.

Department 1 is the first stage of Luna Company’s production cycle. The following
information is available for conversion costs for the month of May, 2017:
Work in process, beginning (25% complete) 8,000 units
Started in May 40,000 units
Completed in May and transferred to dept. B 38,000 units
Work in process, ending (60% complete) 10,000 units

4. Using the FIFO method, the equivalent units for conversion costs for the month is:
a. 42,000 units b. 38,000 units c. 44,000 units d. 36,000 units

5. Using the weighted average method, the equivalent units for conversion costs for the
month:
a. 42,000 units b. 38,000 units c. 44,000 units d. 36,000 units

6. Golden Company uses the weighted average method. It had 8,000 of conversion cost in the
beginning work in process inventory and added P64,000 of conversion cost during 2017.
The company completed 40,000 equivalent units for conversion costs during the year. The
company had 10,000 units in the ending work in process inventory that were 30% complete
as to conversion.
The amount of conversion cost assigned to the unit in process ending is:
a. P12,600 b. P5,400 c. P11,200 d. P4,800

Super Soap Company produces two types of sponges: Natural and Super Suds Both are
produced on the same assembly line but are considered separate divisions. The company
wants to know how to allocate manufacturing overhead to the products. The relevant data
for the possible allocation bases are given below.
Natural SuperSuds
Materials used P40,000 P25,000
Direct labor hours 20,000 35,000
Direct labor costs P100,000 P145,000
Machine hours 6,000 15,000
Output units 25,000 30,000
The company incurred manufacturing overhead of P48,000.

7. Using direct labor hours, how much overhead will be allocated to the SuperSuds?
a. P29,544 b. P30,545 c. P30,455 d. 34,054

8. Using machine hours, how much overhead will be allocated to the Natural?
a. P13,714 b. P28,500 c. P17,455 d. P34,286

9. Using Output(units), how much overhead will be allocated to the Natural?

b. P26,181 b. P21,818 c. P25,000 d. P30,000

10. Using direct labor costs , how much overhead will be allocated to the SuperSuds?
c. P19,592 b. P20,000 c. P28,408 d. P30,000

Data for Numbers 15-16.

Candid Corporation produces reusable Christmas cards in two departments: Printing and
Laminating. These departments are supported by two service departments: Personnel and
maintenance. Personnel uses the number of employees as an allocation base and
Maintenance uses machine hours. The expected level of activity for the quarter is shown
below: Number of employees Machine hours
Personnel 40 -
Maintenance 60
Printing 120 60,000
Laminating 180 40,000
Allocations are made in the order shown above. Budgeted costs for next quarter are
P93,000 for Personnel and P68,000 for Maintenance.
 11. What is the total amount of service cost that should be allocated to the Printing department
under the direct method?
a. P68,700 b. P77,070 c. P78,000 d. P78,070

12. What is the total amount of service cost that should be allocated to the Printing
department under the direct method?
b. P68,700 b. P77,070 c. P78,000 d. P78,070

Data for numbers 17-20.

A semi-monthly payroll summary made from time tickets shows the following data:
Number of Hours
Employee Classification Rate per hour Regular Overtime
Abas, A. Factory worker P36 80 8
Basa, B. Factory worker 36 80 6
Castor, C. Timekeeper 30 80 4
David, D. Bookkeeper 40 80

Overtime is payable at a rate of 150% of regular pay.

Deductions for SSS-3%; Philhealth- 1%; Pag-ibig-2%; Withholding tax-4%

13. The gross earnings of the employees including overtime pay amounted to:
a. P8,106 b. P8,277 c. 12,296 d. P11,423

14. The total deductions of the employees is equal to:

a. P1,147.70 b. P822.30 c. P1,229.60 d. P810.60

15. Net earnings of the employees amounted to:

a. P11,066.40 b. P7400.70 c. P10,368.00 d. P7295.40

Test III. Data from the books of Marine Manufacturing Co.

Sales 25,000 units P500,000

Variable Costs 300,000
Fixed costs 125,000

Required: 1. Breakeven sales in Peso

2. Breakeven volume (units)

Test IV. JOURNAL ENTRIES –JOB ORDER COST SYSTEM

The Celebes Company had the following inventories on Aug. 1 of the current year.
Finished goods P 25, 000
Work in process 18, 500
Materials 22, 000
The work in process account controls two jobs
Job. 501 Job. 502
Materials P 3, 000 P 5, 600
Labor 2, 500 3, 000
Factory overhead 2, 000 2, 400
P 7,500 P 11, 000

The following information pertains to August operations:

1. Materials purchased on account, P 30, 000.
2. Materials issued for production, P 25, 000. Of this amount, P 3, 000 was for indirect materials;
the difference was distributed: P 5, 500 to Job 501; P 7, 000 to Job 502; and P 9, 500 to Job 503.
3. Materials returned to the warehouse from the factory, P 800, of which P 300 was for indirect
materials, the balance from Job 503.
4. Materials returned to vendors, P 1, 000.
5. Payroll deductions: P 3, 025 for withholding taxes, P 1, 600 for SSS Premiums, P 375 for
Medicare, and P 1,200 for PAG – IBIG, Total payroll was P 40,000. The payroll due the employees
was paid during the month.
 6. The payroll was distributed as follows: P 10, 400 to Job 501; P 12, 500 to Job 502; P 10, 500 to
Job 503 and the balance represents indirect labor.
7. The share of the employer for payroll was recorded – P 2, 000 for SSS Premiums, P 375 for
Medicare Contributions, and P 1, 200 for PAG – IBIG Funds.
8. Factory overhead, other than any previously mentioned, amounted to P 15, 000. Included in this
figure were P 3, 000 for depreciation of factory building and equipment, and P 950 for expired
insurance on the factory. The remaining overhead was unpaid at the end of August.
9. Factory overhead was applied to production at the rate of 80%of direct labor cost.
10. Jobs 501 and 502 were completed and transferred to the finished goods warehouse.
11. Job 501 was shipped and billed at a gross profit of 40% of the cost.
12. Cash collections from accounts receivable during August were P 35, 000.

REQUIRED:Journal entries to record the above transactions.

TEST V. PREPARATION OF COST OF PRODUCTION REPORT: WEIGHTED AVERAGE METHOD.

UNITS:
Units in process, beginning 40% completed 10,000
Units started in process 50,000
Units in process, ending, 60% completed 15,000
Materials are added 100% at the start of the process.
COSTS:
In process, beginning:
Materials P6,000
Labor 4,000
Factory Overhead 2,000
Costs added this month:
Materials P54,000
Labor 28,400
Factory Overhead 14,200

Required: Prepare a cost of production report using the weighted average method.

END

***THE BEST PREPARATION FOR TOMORROW IS TO DO TODAY’S WORK SUPERBLY WELL.***