NEW
Font size
Worksheetsplez no steal huhu
Total questions: 73
Worksheet time: 37mins
Cost accounting involves the measuring, recording, and reporting of
product costs
manufacturing process
future costs
managerial accounting decisions
The cost management function is usually under
the chief information officer.
treasurer.
purchasing manager.
controller.
The cost management information system provides information
a, that the accountant needs to prepare the financial statements.
c. that the manager needs to effectively manage the firm.
b. that the manager needs to effectively manage not-for-profit organization.
b and c.
The main focus of cost management information must be
usefulness and accuracy.
timeliness and accuracy.
usefulness and timeliness.
relevance and good format.
With regard to the task of management’s decision making, cost management information is needed to
make sound strategic decisions regarding choice of products, methods, and techniques.
support recurring decisions regarding replacement of equipment, managing cash flow, etc.
provide a fair and effective basis for identifying inefficient operations.
provide accurate accounting for inventory, receivables, and other assets.
Product costing system design or selection:
requires an understanding of the nature of the business
should provide useful cost information for strategic and operational decision needs
should be cost effective in design and selection
all the above answers are correct
Which of the following is an example of a committed fixed costs?
direct materials
depreciation on a factory building
supervisor’s salary
insurance on a building
An example of a committed fixed cost is:
a training program for salespersons.
executive travel expenses.
property taxes on the factory building.
new product research and development.
Which of the following is an example of discretionary fixed cost?
direct labor
insurance on a building
property taxes on a factory building
depreciation on a factory building
Controllable costs are:
Costs that management decides to incur in the current period to enable the company to achieve operating objectives other than the filling of orders placed by customers.
Costs that are governed mainly by past decisions that established the present levels of operating and organizational capacity and that only change slowly in response to small changes in capacity.
Costs that will unaffected by current managerial decisions.
Costs that are likely to respond to the amount of attention devoted to them by a specified manager.
Controllable costs for responsibility accounting purposes are directly influenced only by
A given manager within a given period.
A change in activity.
Production volume.
Sales volume.
An imputed cost is
The difference in total costs which results from selecting one choice instead of another.
A cost that does not entail any cash outlay but which is relevant to the decision-making process.
A cost that may be shifted to the future with little or no effect on current operations.
A cost that continues to be incurred even though there is no activity.
Semi-variable costs
per unit remain the same regardless of total output
remain the same within the relevant range of output
increase in steps as the amount of the cost driver volume increases
have both fixed and variable components in them
A step cost is
the same as semi-fixed cost
the same as mixed cost
a cost that increases in steps as the amount of cost-driver volume increases
a and c only.
Which of the following would NOT be a period cost for a manufacturing firm?
Selling expenses
Salary paid to the CEO of the company
Repairs to the Receptionist's computer
Utilities in manufacturing plant
What kind of costs can be conveniently and economically traced to a cost object or pool?
Indirect Costs.
Relevant Costs.
Direct Costs.
Overhead Costs.
Direct product expenses
are incurred for the benefit of the business as a whole
cannot be identified readily with a given product
can be assigned to product only by a process of allocation
would not be incurred if the product did not exist
The distinction between direct and indirect costs depends on whether a cost
is controllable or non-controllable.
is variable or fixed.
can be conveniently and physically traced to a cost object under consideration.
will increase with changes in levels of activity.
Of most relevance in deciding how indirect costs should be assigned to products is the degree of
Linearity.
Causality.
Avoidability.
Controllability.
Almos, Inc. makes ski-boards in Davao. Identify the correct matching of terms.
Fiberglass is factory overhead
Plant real estate taxes are a period cost
Depreciation on delivery trucks is a product cost
Payroll taxes for workers in the Packaging Dept. are direct labor
An accounting system that focuses on transactions is
an activity-based accounting system.
a product life cycle costing system.
a traditional accounting system.
all of the above.
Traditionally, managers have focused cost reduction efforts on
activities.
processes.
departments.
costs.
Which of the following is a trait of a traditional cost management system?
unit-based drivers
detailed activity information
tracing is intensive
focus on managing activities
Which of the following is typically regarded as a cost driver in traditional accounting practices?
number of purchase orders processed
number of customers served
number of transactions processed
number of direct labor hours worked
Which of the following is not a trait of a traditional cost management system?
unit-based drivers
allocating intensive
focus on managing activities
narrow and rigid product costing
Which of the following is not typical of traditional costing systems?
Use of a single predetermined overhead rate.
Use of direct labor hours or direct labor cost to assign overhead.
Assumption of correlation between direct labor an incurrence of overhead cost.
Use of multiple cost drivers to allocate overhead.
Conventional product costing uses which of the following procedures?
Overhead costs are traced to departments, then costs are traced to products.
Overhead costs are traced to activities, then costs are traced to products.
Overhead costs are traced directly to product.
All overhead costs are expensed as incurred.
The overhead rates of the traditional approach to product costing use
nonunit-based cost drivers
process costing
unit-based cost drivers
job-order costing
The use of unit-based activity drivers to assign costs tends to
overcost low-volume products.
overcost high-volume products.
overcost all products.
undercost all products.
Traditional overhead allocations result in which of the following situations?
Overhead costs are assigned as period costs to manufacturing operations.
High-volume products are assigned too much overhead, and low-volume products are assigned too little overhead.
Low-volume products are assigned too much, and high-volume products are assigned too little overhead.
The resulting allocations cannot be used for financial reports.
Product costs can be distorted if a unit-based cost driver is used and
a. nonunit-based overhead costs are a significant proportion of total overhead
b. the consumption ratios differ between unit-based and nonunit-based input categories
both a and b
neither a or b
Which of the following items is not a characteristic of a process cost system?
Once production begins, it continues until the finished product emerges
The products produced are heterogeneous in nature
The focus is on continually producing homogeneous products
When the finished product emerges, all units have precisely the same amount of materials, labor, and overhead
The formula for computing the predetermined manufacturing overhead rate is estimated annual overhead costs divided by an expected annual operating activity, expressed as
direct labor cost
machine hours
direct labor hours
any of these
The two main advantages of using predetermined factory overhead rates are to provide more accurate unit cost information and to:
simplify the accounting process
provide cost information on a timely basis
insure transmission of correct data
adjust for variances in data sources
The effect of uniform production levels on production cost per unit can be achieved
by using a factory overhead rate based on different production levels for each year
by using a factory overhead rate based on selling price
by closing the factory overhead at the end of the accounting period
by using a factory overhead rate based on long-run normal production activity level
No matter which method is used, underapplied or overapplied overhead usually is adjusted only:
at the end of a year.
monthly during the year
if the difference exceeds P1,000 or one percent of total overhead.
Disadvantages of actual costing include
actual cost systems cannot provide accurate unit cost information on a timely basis
actual cost systems produce unit costs that fluctuate from period to period
estimates must be used when calculating the actual overhead rate
a and b
The principal difficulty with normal costing is that
the unit cost information is not received on a timely basis
it can result in fluctuating per-unit overhead costs
estimated overhead and estimated activity are likely to differ from actual overhead and actual costs, resulting in underapplied or overapplied overhead
there is no difficulty associated with using normal costing
Normal costing and standard costing differ in that
the two systems can show different overhead budget variances
only normal costing can be used with absorption costing
the two systems show different volume variances if standard hours do not equal actual hours
normal costing is less appropriate for multiproduct firms
The product cost which is determined in a conventional standard cost accounting system is a(an)
Joint cost
Fixed cost
Expected cost
Direct cost
Volume-based plant-wide rates produce inaccurate product cost when:
a. a large share of factory overhead cost is not volume-based
b. firms produce a diverse mix of product
c. large volumes of production occur
Both a and b are correct
An activity that has a direct cause-effect relationship with the resources consumed is a(an)
cost driver
overhead rate
cost pool
product activity
The term cost driver refer to:
any activity that can be used to predict cost changes
the attempt to control expenditures at a reasonable level
the person who gathers and transfers cost data to the management accountant
any activity that causes costs to be incurred
Each group of overhead costs should be applied based on
direct labor hours or cost
units produced
whatever activity drives those specific overhead costs
machine time
Which of the following statements is true?
The traditional approach to costing uses many different cost drivers.
Costs that are indirect to products are by definition traceable to directly to products.
Costs that are indirect to products are traceable to some activity.
All of the above statements are true.
Why is it better to use separate overhead rates?
Some departments are labor-intensive, some are machine-intensive.
Labor rates vary considerably among departments.
The resulting overhead rates are all about the same.
All jobs require about the same percentage of time in all departments.
If company A has a higher degree of operating leverage than company B, then:
the company A has higher variable expenses.
the company A's profits are more sensitive to percentage changes in sales.
the company A is more profitable.
the company A is less risky.
Direct materials and direct labor costs total P120,000, conversion costs total P100,000, and factory overhead costs total P400 per machine hour. If 150 machine hours were used for Job #201, what is the total manufacturing cost for Job #201?
P120,000
P160,000
P180,000
P280,000
Machine hours used to set the predetermined overhead rate were 25,000, actual hours were 24,000, and overhead applied was P60,000. Budgeted overhead for the year was
P57,600
P59,000
P60,000
P62,500
ABC Company had a total overhead of P360,000 and selling and administrative expense of P140,000 for the year. 1,000 units of A and 3,000 units of B were produced. A requires 3 machine hours and B requires one machine hour per unit. What is overhead chargeable per unit of A
P60
P90
P120
P180
ABC Company had a total overhead of P360,000 and selling and administration expense of P140,000 for the year. 1,000 units of A and 3,000 units of B were produced. A requires 3 and B requires one machine hours per unit. A requires 6 direct labor hours and B requires 4 direct labor hours per unit. 40% of overhead is related to labor and the balance to machines. Labor-related overhead per hour amounts to
P8
P12
P18
P24
ABC Company had a total overhead of P360,000 and selling and administration expense of P140,000 for the year. 1,000 units of A and 3,000 units of B were produced. A requires 3 and B requires one machine hours per unit. A requires 6 direct labor hours and B requires 4 direct labor hours per unit. 40% of overhead is related to labor and the balance to machines. The overhead per unit of B amounts to
P60
P68
P156
P180
ABC Company had a total overhead of P360,000 and selling and administration expense of P140,000 for the year. 1,000 units of A and 3,000 units of B were produced. Assuming that 20% of all overhead are batch-related for 1,000 batches, 40% of which was for producing product A, batch-related overhead for product A per unit amounts to
P20
P40
P60
P80
ABC Company had a total overhead of P360,000 and selling and administration expense of P140,000 for the year. 1,000 units of A and 3,000 units of B were produced. Assuming that 30% of overhead is product related overhead - 20% of which is related to product A, product-related overhead per unit of A amounts to
P30
P40
P50
P60
Cooke Company uses the equation P450,000 + P1.50 per direct labor hour to budget manufacturing overhead. Cooke has budgeted 150,000 direct labor hours for the year. Actual results were 156,000 direct labor hours and P697,500 total manufacturing overhead. The total overhead variance for the year is
P4,500 favorable
P18,000 favorable
P4,500 unfavorable
P18,000 unfavorable
If estimated annual factory overhead is P800,000, estimated annual direct labor hours are 400,000, actual June factory overhead is P82,000, and actual June direct labor hours are 38,000, then overhead is:
P6,000 overapplied
P1,800 overapplied
P1,800 underapplied
P6,000 underapplied
BKY company predicted that company overhead for 2006and 2007 would be P60,000 for each year. The predicted and actual activity for 2006 and 2007 were 30,000 and 20,000 direct labor hours, respectively.
Sales in units: 2006 — 25,000; 2007 — 25,000.
Selling price per unit: 2006 — P10; 2007 — P10.
Direct materials and direct labor per unit: 2006 — P5; 2007 — P5.
The company assumes that the long-run production level is 20,000 direct labor hours per year. The actual factory overhead cost for the end of 2006 and 2007 was P60,000. Assume that it takes one direct labor hour to make one finished unit. When the annual estimated factory overhead rate is used, the gross profits for 2006 and 2007, respectively, are
P 75,000 and P 75,000
P 75,000 and P 55,000
P 125,000 and P 125,000
P 75,000 and P 50,000
Britney Company has unit costs of P10 for materials and P30 for conversion costs. If there are 2,500 units in ending work in process, 40% complete as to conversion costs, and fully complete as to materials cost, the total cost assignable to the ending work in process inventory is
P 45,000
P 55,000
P 75,000
P 100,000
In the Star Company, the predetermined overhead rate is 80% of direct labor cost. During the month, P210,000 of factory labor costs are incurred, of which P180,000 is direct labor and P30,000 is indirect labor. Actual overhead incurred was P200,000. The amount of overhead debited to Work in Process Inventory should be
P 120,000
P 144,000
P 168,000
P 160,000
The Assembling Department’s output during the period consists of 20,000 units completed and transferred out, and 5,000 units in ending work in process 60% complete as to materials and conversion costs. Beginning inventory is 1,000 units, 40% complete as to materials and conversion costs. The equivalent units of production are
22,600
23,000
24,000
25,000
The Amor Company has 2,000 units in beginning WIP, 20% complete as to conversion costs, 23,000 units transferred out to finished goods, and 3,000 units in ending work in process one-third complete as to conversion costs. The beginning and ending inventory is fully complete as to materials costs. Equivalent units for materials and conversion costs are
22,000 and 24,000
26,000 and 24,000
24,000 and 26,000
26,000 and 26,000
Dodge Company has a mixing department and a refining department. Its process-costing system in the mixing department has two direct materials cost categories (material J and material P) and one conversion costs pool. The company uses First-in, First out cost flow method. The following data pertain to the mixing department for November 2006.
Units:
Work in process, November 1: 50 percent completed — 15,000;
Work in process, November 30, 70 percent completed;
Units started — 60,000;
Completed and transferred — 50,000.
Costs:
Work-in-process, November 1 — P218,000;
Material J — P720,000;
Material P — P750,000;
Conversion costs — P300,000.
Material J is introduced at the start of operations in the Mixing department, and Material P is added when the product is three-fourths completed in the mixing department. Conversion costs are added uniformly during the process. The respective equivalent units for Material J and Material P in the mixing department for November 2006, are
Both 50,000 units
60,000 units and 50,000 units
75,000 units and 60,000 units
60,000 units and 75,000 units
Had the company used the weighted-average method of accounting for its production, the equivalent units should be
74,200
57,200
81,000
53,800
In the Newman Company, there are zero units in beginning work in process, 7,000 units started into production, and 500 units in ending work in process 20% completed. The physical units to be accounted for are
7,000
7,360
7,600
7,340
For the month of May, the Production Control Department of La Mesa, Inc. reported the following production data for Finishing Department (second department): Transferred-in from Assembly Department 75,000 units; transferred-out to Packaging Department 59,250 units; in-process end of May 15,750 units (with one-third labor and factory overhead). All materials were put into process in Assembly Department. The Cost Accounting Department collected these figures for Finishing Department: unit cost for unit transferred-in from Assembly Department P2.70; labor cost in Finishing Department P41,280.00; factory overhead cost applied at 112.5% of labor. How much was the cost of finished goods transferred out to the Packaging Department?
P240,555
P80,580
P260,580
P159,975
Mergy Company uses process costing for its production department, which uses two raw materials. Material Alpha is placed at the beginning of the process. Inspection is at the 85% completion stage. Material Bravo is then added to the good units. Normal spoilage units amount to 5% of good output. Records for April show: started during the period 20,000 units; Material Alpha cost P26,800; Material Beta cost P22,500; direct labor cost P75,160; factory overhead P93,950; transferred to finished goods 14,000 units; work in process on April 30 (95% complete) 4,000 units. How much were material cost per equivalent unit for Alpha and Beta, respectively?
P1.40; P1.36
P1.40; P1.06
P1.34; P1.06
P1.34; P1.25
Mergy Company uses process costing for its production department, which uses two raw materials. Material Alpha is placed at the beginning of the process. Inspection is at the 85% completion stage. Material Bravo is then added to the good units. Normal spoilage units amount to 5% of good output. Records for April show: started during the period 20,000 units; transferred to finished goods 14,000 units; work in process on April 30 (95% complete) 4,000 units. The equivalent units of production for Material Alpha and Material Beta are
Alpha 18,000; Beta 14,000
Alpha 18,000; Beta 18,000
Alpha 20,000; Beta 18,000
Alpha 20,000; Beta 14,000
Mergy Company uses process costing for its production department, which uses two raw materials. Material Alpha is placed at the beginning of the process. Inspection is at the 85% completion stage. Material Bravo is then added to the good units. Normal spoilage units amount to 5% of good output. For April, started during the period 20,000 units; transferred to finished goods 14,000 units; work in process on April 30 (95% complete) 4,000 units. The number of normal and abnormal lost units are, respectively
Normal 700; Abnormal 1,400
Normal 1,400; Abnormal 700
Normal 900; Abnormal 1,100
Normal 1,100; Abnormal 900
In April for Mergy Company, 9,000 units are transferred out and 3,000 units in ending work in process are one-third finished as to conversion costs and fully complete as to materials cost. If total materials cost is P60,000, the unit materials cost is
P5.00
P6.00
P5.45
P5.35
Lapid Company uses process costing. All materials are added at the beginning of the process. The product is inspected when it is 90 percent converted, and spoilage is identified only at that point. Normal spoilage is expected to be 5% of good output. The following production data for May 2003 are provided: units put into process 21,000; units transferred to finished goods 14,000; ending in-process inventory on May 31 is 6,000 units that are 75% complete. How many units are considered abnormal loss?
Zero
300
15
850
Statement of Cost of Goods Manufactured & Sold. Use the following information that pertains to Beta Manufacturing Company to answer: beginning direct materials inventory P 20,000; beginning work in process inventory P 20,000; beginning finished goods inventory P 40,000; ending direct materials inventory P 10,000; ending work in process inventory P 100,000; ending finished goods inventory P 50,000; purchases P 140,000; direct labor P 160,000; factory overhead P 200,000. What is the amount of direct materials used during the period?
P140,000
P130,000
P60,000
P150,000
Statement of Cost of Goods Manufactured & Sold. Use the following information that pertains to Beta Manufacturing Company to answer: beginning direct materials inventory P 20,000; beginning work in process inventory P 20,000; beginning finished goods inventory P 40,000; ending direct materials inventory P 10,000; ending work in process inventory P 100,000; ending finished goods inventory P 50,000; purchases P 140,000; direct labor P 160,000; factory overhead P 200,000. What is the amount of cost of goods manufactured during the period?
P430,000
P420,000
P470,000
P510,000
Statement of Cost of Goods Manufactured & Sold. Use the following information that pertains to Beta Manufacturing Company to answer: beginning direct materials inventory P 20,000; beginning work in process inventory P 20,000; beginning finished goods inventory P 40,000; ending direct materials inventory P 10,000; ending work in process inventory P 100,000; ending finished goods inventory P 50,000; purchases P 140,000; direct labor P 160,000; factory overhead P 200,000. What is the amount of cost of goods sold during the period?
P430,000
P420,000
P470,000
P510,000
