College of Business and Accountancy Notre Dame University Cotabato City Acctg 106-Cost Accounting Final Examination Name:_________________________________________

GENERAL INSTRUCTIONS: You are given 3 hours to answer all the questions. Shade the box corresponding to the letter of your choice in the answer sheet. ABSOLUTELY NO ERASURES in the answer sheet, any erasure will be marked as wrong. 1.) I - A standard cost card is prepared after manufacturing standards have been developed for direct materials, direct labor, and factory overhead II - The total variance can provide useful information about the source of cost differences a. I is true c. both are true b. II is true d. both are false I - The formula for price/rate variance is (AP - SP) x AQ II - The formula for price/rate variance is (AP - SP) x SQ a. I is true c. both are true b. II is true d. both are false I - The price variance reflects the difference between the price paid for inputs and the standard price for those inputs II - The usage variance reflects the difference between the price paid for inputs and the standard price for those inputs a. I is true c. both are true b. II is true d. both are false I - The formula for usage variance is (AQ - SQ) * SP II - The formula for usage variance is (AQ - SQ) * AP a. I is true c. both are true b. II is true d. both are false I - The difference between the actual wages paid to employees and the standard wages for all hours worked is the labor rate variance II - The difference between the standard hours worked for a specific level of production and the actual hours worked is the labor efficiency variance a. I is true c. both are true b. II is true d. both are false I - The difference between actual variable overhead and budgeted variable overhead based upon actual hours is referred to as the variable overhead spending variance II - The difference between budgeted variable overhead for actual hours and standard overhead is the variable overhead efficiency variance a. I is true c. both are true b. II is true d. both are false I - A fixed overhead volume variance is a controllable variance II - A one-variance approach calculates only a total overhead variance a. I is true c. both are true b. II is true d. both are false I - The effect of substituting a non-standard mix of materials during the production process is referred to as a material yield variance II - When multiple labor categories are used, the financial effect of using a different mix of workers in a production process is referred to as a labor yield variance a. I is true c. both are true b. II is true d. both are false I - When multiple labor categories are used, the monetary impact of using a higher or lower number of hours than a standard allows is referred to as a labor mix variance II - When multiple labor categories are used, the monetary impact of using a higher or lower number of hours than a standard allows is referred to as a labor yield variance a. I is true c. both are true b. II is true d. both are false I - Business value-added activities add value to a product II - Business value-added activities increase the value of a product without increasing production time a. I is true c. both are true b. II is true d. both are false I - A company should strive to reduce all non-value added activities to a minimum II - When non-value added time is greater, manufacturing cycle efficiency is higher.

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a. b. 12.)

I is true II is true

c. both are true d. both are false

I - Direct materials are normally considered as unit-level costs. II - Unit level costs occur once for each unit produced. a. I is true c. both are true b. II is true d. both are false I - Machine setup is normally considered a batch-level cost II - Building depreciation is generally considered an organizational or facility cost. a. I is true c. both are true b. II is true d. both are false I - Building depreciation is generally considered an product or process level cost. II - Activity-based costing is appropriate for a company that manufactures a single product a. I is true c. both are true b. II is true d. both are false I - Activity-based costing is appropriate for a company that has low overhead costs that are proportional to the unit volumes of products II - Activity-based costing conforms to GAAP with regard to which costs should be expensed a. I is true c. both are true b. II is true d. both are false I - Financial accounting is most concerned with meeting the needs of internal users. II - Managerial accounting is most concerned with addressing the needs of the firm as a whole a. I is true c. both are true b. II is true d. both are false I - The relevant range is valid for all levels of activity II - An indirect cost can be easily traced to a cost object a. I is true c. both are true b. II is true d. both are false The term "relevant range" as used in cost accounting means the range over which a. costs may fluctuate. b. cost relationships are valid. c. production may vary. d. relevant costs are incurred. Predetermined overhead rates are computed based on estimated overhead costs estimated level of activity a. yes yes b. yes no c. no yes d. no no One reason annual overhead application rates are used is a. because of seasonal variability of overhead costs. b. To help budget overhead costs. c. To minimize the overhead cost assigned to products. d. To maximize the overhead cost assigned to products. Which of the following could not be used in job order costing? a. Standards b. An average cost per unit for all jobs c. normal costing d. overhead allocation based on the job's direct labor hours A job order costing system is likely to provide better (1) inventory valuations for financial statements. (2) control over inventory. (3) information about ability to accept additional production work. a. b. c. d. (1) yes No No yes (2) no yes no yes (3) no yes no yes

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I - The FIFO method combines beginning inventory and current production to compute cost per unit of production II - The weighted average method separates beginning inventory and current production to compute cost per unit of production a. I is true c. both are true b. II is true d. both are false In a FIFO process costing system, which of the following are assumed to be completed first in the current period?

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a. b. c. d.

units started this period units started last period units transferred out units still in process

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I - Efficient inventory management relies largely on cost-minimization strategies II - In a pull system of production control, inventory is produced in anticipation of customer or work center demand
a. b. I is true II is true c. both are true d. both are false

26.)

I - Economic order quantity (EOQ) is compatible with just-in-time systems II - The EOQ formula can be modified to calculate the number of units that should be manufactured in a production run
a. b. I is true II is true c. both are true d. both are false

27.)

I - Joint costs occur after the split-off point in a production process II - Under the net realizable value approach, no value is recognized for by-products or scrap until they are actually sold a. I is true c. both are true b. II is true d. both are false I - Joint costs are allocated to by-products as well as primary products II - The net realizable value approach is used to account for scrap and by-products when the net realizable value is insignificant a. I is true c. both are true b. II is true d. both are false I- The primary distinction between by-products and scrap is the difference in volume produced II -The point at which individual products are first identifiable in a joint process is referred to as the split-off point a. I is true c. both are true b. II is true d. both are false I - Joint costs include all materials, labor and overhead that are incurred before the split-off point II - Two methods of allocating joint costs to products are physical measure allocation and monetary allocation. a. I is true c. both are true b. II is true d. both are false I - A decision that must be made at split-off is to sell a product or process it further. II - Allocating joint costs based upon a physical measure considers the revenue-generating ability of individual products a. I is true c. both are true b. II is true d. both are false I - Net realizable value equals product sales revenue at split-off minus any costs necessary to prepare and dispose of the product II - Monetary allocation measures recognize the revenue generating ability of each product in a joint process. a. I is true c. both are true b. II is true d. both are false I - The relative sales value method requires a common physical unit for measuring the output of each product. II - Joint costs are allocated to main products, but not to by-products a. I is true c. both are true b. II is true d. both are false I - If incremental revenues beyond split-off are less than incremental costs, a product should be sold at the splitoff point II - If incremental revenues beyond split-off exceed incremental costs, a product should be processed further a. I is true c. both are true b. II is true d. both are false I - The net realizable value approach requires that the net realizable value of by-products and scrap be treated as a reduction in joint costs allocated to primary products II - Net realizable value is considered to be the best measure of the expected contribution of each product to the coverage of joint costs a. I is true c. both are true b. II is true d. both are false I - Specifications for materials are compiled on a purchase requisition II - An operations flow document shows all processes necessary to manufacture one unit of a product a. I is true c. both are true b. II is true d. both are false Duck Company manufactures desks. The beginning balance of Raw Material Inventory was P4,500; raw material purchases of P29,600 were made during the month. At month end, P7,700 of raw material was on hand. Raw material used during the month was

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a. b. c. d. 38.)

P26,400. P34,100. P37,300. P29,600.

The following information has been taken from the cost records of Witch Company for the past year: Raw material used in production P326 Total manufacturing costs charged to production during the year (includes direct material, 686 direct labor, and overhead equal to 60% of direct labor cost) Cost of goods available for sale 826 Selling and Administrative expenses 25 Inventories Raw Material Work in Process Finished Goods Beginning P75 80 90 Ending P 85 30 110

The cost of raw material purchased during the year was: a. P316. b. P336. c. P360. d. P411. 39.) A firm has fixed costs of P200,000 and variable costs per unit of P6. It plans on selling 40,000 units in the coming year. To realize a profit of P20,000, the firm must have a sales price per unit of at least a. P11.00. b. P11.50. c. P10.00. d. P10.50. Chippy Company. uses a job order costing system. During April 20X6, the following costs appeared in the Work in Process Inventory account: Beginning balance Direct material used Direct labor incurred Applied overhead Cost of goods manufactured P 24,000 70,000 60,000 48,000 185,000

40.)

Chippy Company applies overhead on the basis of direct labor cost. There was only one job left in Work in Process at the end of April which contained P5,600 of overhead. What amount of direct material was included in this job? a. P4,400 b. P4,480 c. P6,920 d. P8,000 Turtle Company has a job order costing system and an overhead application rate of 120 percent of direct labor cost. Job #63 is charged with direct material of P12,000 and overhead of P7,200. Job #64 has direct material of P2,000 and direct labor of P9,000. 41.) Refer to Turtle Co. What amount of direct labor cost has been charged to Job #63? a. P 6,000 b. P 7,200 c. P 8,640 d. P14,400 Refer to Turtle Company. What is the total cost of Job #64? a. P10,800 b. P11,000 c. P21,800 d. P30,200 Green Company started 9,000 units in February. The company transferred out 7,000 finished units and ended the period with 3,500 units that were 40 percent complete as to both material and conversion costs. Beginning Work in Process Inventory units were a. 500. b. 600. c. 1,500. d. 2,000.

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The Houston Company makes wreaths in two departments: Forming and Decorating. Forming began the month with 500 wreaths in process that were 100 percent complete as to material and 40 percent complete as to conversion. During the month, 6,500 wreaths were started. At month end, Forming had 2,100 wreaths that were still in process that were 100 percent complete as to material and 50 percent complete as to conversion. Assume Forming uses the weighted average method of process costing. Costs in the Forming Department are as follows: Beginning Work in Process Costs: Material Conversion Current Costs: Material Conversion P1,000 1,500 P3,200 5,045

The Decorating Department had 600 wreaths in process at the beginning of the month that were 80 percent complete as to material and 90 percent complete as to conversion. The department had 300 units in ending Work in Process that were 50 percent complete as to material and 75 percent complete as to conversion. Decorating uses the FIFO method of process costing, and costs associated with Decorating are: Beginning WIP Inventory: Transferred In Material Conversion Current Period: Transferred In Material Conversion 44.) P1,170 4,320 6,210 ? P67,745 95,820

Refer to Houston Company. How many units were transferred to Decorating during the month? a. 600 b. 4,900 c. 5,950 d. 7,000 Refer to Houston Company. What was the cost transferred out of Forming during the month? a. P5,341 b. P6,419 c. P8,245 d. P8,330

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Zebra Corporation Zebra Corporation's EOQ for Material A is 500 units. This EOQ is based on: Annual demand 5,000 units Ordering costs P12.50 46.) Refer to Zebra Corporation. What is the annual carrying cost per unit for Material A? a. P0.50 b. P2.00 c. P2.50 d. P5.00 Refer to Zebra Corporation. What are Zebras Corp.'s total annual ordering costs for Material A? a. P6,000 b. P600 c. P125 d. P1,000

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Snacks Company Snacks Company produces two products (A and B). Direct material and labor costs for Product A total P35 (which reflects 4 direct labor hours); direct material and labor costs for Product B total P22 (which reflects 1.5 direct labor hours). Three overhead functions are needed for each product. Product A uses 2 hours of Function 1 at P10 per hour, 1 hour of Function 2 at P7 per hour, and 6 hours of Function 3 at P18 per hour. Product B uses 1, 8, and 1 hours of Functions 1, 2, and 3, respectively. Snacks produces 800 units of A and 8,000 units of B each period. 48.) Refer to Snacks 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. P 88.64. b. P123.64. c. P135.00. d. None of the responses are correct.

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Refer to Snacks 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. P84.00. b. P88.64. c. P110.64. d. None of the responses are correct. Refer to Snacks 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. P51.32. b. P205.28. c. P461.88. d. None of the responses are correct. Refer to Snacks Company If total overhead is assigned to A and B on the basis of direct labor hours, Product B will have an overhead cost per unit of a. P51.32. b. P76.98. c. P510.32. d. None of the responses are correct. Refer to Snacks Company If total overhead is assigned to A and B on the basis of overhead activity hours used, the total product cost per unit assigned to Product A will be a. P86.32. b. P95.00. c. P115.50. d. None of the responses are correct. Refer to Snacks Company If total overhead is assigned to A and B on the basis of overhead activity hours used, the total product cost per unit assigned to Product B will be a. P115.50. b. P73.32. c. P34.60. d. None of the responses are correct.

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Hazel Company Hazel Company uses activity-based costing. The company produces two products: coats and hats. The annual production and sales volume of coats is 8,000 units and of hats is 6,000 units. There are three activity cost pools with the following expected activities and estimated total costs: Activity Cost Pool Activity 1 Activity 2 Activity 3 54.) Estimated Cost P20,000 P37,000 P91,200 Expected Activity Coats 100 800 800 Expected Activity Hats 400 200 3,000

Total 500 1,000 3,800

Refer to Hazel Company. Using ABC, the cost per unit of coats is approximately: a. P2.40 c. P 6.60 b. P3.90 d. P10.59 Refer to Hazel Company. Using ABC, the cost per unit of hats is approximately: a. b. P2.40 P3.90 c. d. P12.00 P15.90

55.)

Loft Savings and Loan Loft Savings and Loan had the following activities, traceable costs, and physical flow of driver units: Activities Open new accounts Process deposits Process withdrawals Process loan applications Traceable Costs P50,000 36,000 15,000 27,000 Physical flow of Driver Units 1,000 accounts 400,000 deposits 200,000 withdrawals 900 applications

The above activities are used by the Jennings branch and the Crowley branch: New accounts Deposits Jennings 200 40,000 Crowley 400 20,000

Withdrawals Loan applications 56.)

15,000 100

18,000 160

Refer to Loft Savings and Loan. What is the cost per driver unit for new account activity? a. P0.09 c. P30.00 b. P0.075 d. P50.00 Refer to Loft Savings and Loan. What is the cost per driver unit for the deposit activity? a. P0.09 c. P30.00 b. P0.075 d. P50.00 Refer to Loft Savings and Loan. What is the cost per driver unit for the withdrawal activity? a. P0.09 c. P30.00 b. P0.075 d. P50.00 Refer to Loft Savings and Loan. What is the cost per driver unit for the loan application activity? a. P0.09 c. P30.00 b. P0.075 d. P50.00 Refer to Loft Savings and Loan. How much of the loan application cost will be assigned to the Jennings branch? a. P3,000 c. P 7,800 b. P4,800 d. P27,000 Refer to Loft Savings and Loan. How much of the deposit cost will be assigned to the Crowley branch? a. P1,800 c. P 5,400 b. P3,600 d. P36,000 Refer to Loft Savings and Loan. How much of the new account cost will be assigned to the Crowley branch? a. P10,000 c. P30,000 b. P20,000 d. P50,000

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Barley Company The following July information is for Barley Company: Standards: Material Labor Actual: Production Material Labor 3.0 feet per unit @ P4.20 per foot 2.5 hours per unit @ P7.50 per hour 2,750 units produced during the month 8,700 feet used; 9,000 feet purchased @ P4.50 per foot 7,000 direct labor hours @ P7.90 per hour

(Round all answers to the nearest peso.) 63.) Refer to Barley 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 Refer to Barley Company. What is the material quantity variance? a. P3,105 F b. P1,050 F c. P3,105 U d. P1,890 U Refer to Barley Company. What is the labor rate variance? a. P3,480 U b. P3,480 F c. P2,800 U d. P2,800 F Refer to Barley Company. What is the labor efficiency variance? a. P1,875 U b. P938 U c. P1,875 U d. P1,125 U

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Fischer Company Fischer Company uses a standard cost system for its production process and applies overhead based on direct labor hours. The following information is available for August when Fischer made 4,500 units: Standard:

DLH per unit Variable overhead per DLH Fixed overhead per DLH Budgeted variable overhead Budgeted fixed overhead Actual: Direct labor hours Variable overhead Fixed overhead 67.)

2.50 P1.75 P3.10 P21,875 P38,750 10,000 P26,250 P38,000

Refer to Fischer Company. Using the one-variance approach, what is the total overhead variance? a. P6,062.50 U b. P3,625.00 U c. P9,687.50 U d. P6,562.50 U Refer to Fischer Company. Using the two-variance approach, what is the controllable variance? a. P5,812.50 U b. P5,812.50 F c. P4,375.00 U d. P4,375.00 F Refer to Fischer Company. Using the two-variance approach, what is the noncontrollable variance? a. P3,125.00 F b. P3,875.00 U c. P3,875.00 F d. P6,062.50 U Refer to Fischer Company. Using the three-variance approach, what is the spending variance? a. P4,375 U b. P3,625 F c. P8,000 U d. P15,750 U Refer to Fischer Company. Using the three-variance approach, what is the efficiency variance? a. P9,937.50 F b. P2,187.50 F c. P2,187.50 U d. P2,937.50 F

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Rodent Company Rodent Company produces four solvents from the same process: C, D, E, and G. Joint product costs are $9,000. (Round all answers to the nearest dollar.) Sales price per barrel at split-off $10.00 8.00 11.00 15.00 Disposal cost per barrel at split-off $6.50 4.00 7.00 9.50 Further processing costs $2.00 2.50 4.00 4.50 Final sales price per barrel $13.50 10.00 15.50 19.50

C D E G

Barrels 750 1,000 1,400 2,000

If Rodent sells the products after further processing, the following disposal costs will be incurred: C, $2.50; D, $1.00; E, $3.50; G, $6.00. 72. Refer to Rodent Company. Using a physical measurement method, what amount of joint processing cost is allocated to Product D? a. $1,748 b. $2,447 c. $1,311 d. $3,495 73.Refer to Rodent Company. Using a physical measurement method, what amount of joint processing cost is allocated to Product E? a. $3,495 b. $2,447 c. $1,748 d. $1,311

74.Refer to Rodent Company. Using a physical measurement method, what amount of joint processing cost is allocated to Product C? a. $3,495 b. $2,447 c. $1,748 d. $1,311 75.Refer to Rodent Company. Using a physical measurement method, what amount of joint processing cost is allocated to Product G? a. $3,495 b. $2,447 c. $1,748 d. $1,311 76. Refer to Rodent Company. Using sales value at split-off, what amount of joint processing cost is allocated to Product D? a. $4,433 b. $2,276 c. $1,108 d. $1,182 77. Refer to Rodent Company. Using sales value at split-off, what amount of joint processing cost is allocated to Product C? a. $4,433 b. $2,276 c. $1,108 d. $1,182 78. Refer to Rodent Company. Using sales value at split-off, what amount of joint processing cost is allocated to Product G? a. $4,433 b. $1,182 c. $1,108 d. $2,276 79.Refer to Rodent Company. Using sales value at split-off, what amount of joint processing cost is allocated to Product E? a. $4,433 b. $1,182 c. $1,108 d. $2,276 80.Refer to Rodent Company. Using net realizable value at split-off, what amount of joint processing cost is allocated to Product C? a. $1,550 b. $1,017 c. $4,263 d. $2,170