COST ACCOUNTING CONCEPTS, JOB ORDER COSTING, STANDARD COSTING,

ACTIVITY BASED COSTING & ACCOUNTING FOR JOINT PRODUCTS & BY-
PRODUCTS

INSTRUCTIONS: Select the best answer for each of the following

questions. ALL questions are compulsory and MUST be attempted.
Mark only one answer for each item on the answer sheet provided.
Strictly NO ERASURES ALLOWED. Erasures will render your
examination answer sheet INVALID. Use PENCIL No. 2 only.
GOODLUCK!

1. Which of the following functions is most directly related to

management by objective?

a. Reporting
b. Decision making
c. Control
d. Planning

2. Which of the following is FALSE?

a. Managerial accounting need not mostly conform to PFRS.

b. Financial accounting reports focus on subunits of the
organization.
c. Managerial accounting is not required.
d. Managerial accounting focuses on the needs of internal
users.

3. For internal users, managers are more concerned with receiving

information that is:

a. completely objective and verifiable.

b. completely accurate and precise.
c. relevant, flexible, and immediately available.
d. relevant, completely accurate, and precise.

4. Managers who properly apply the concept called management by

exception will

a. investigate only unfavorable variances.

b. investigate only favorable variances.
c. always investigate unfavourable and favorable variances
regardless of size.
d. investigate only variances of a certain size or scope.

5. The absolute minimum cost possible under the best conceivable

operating conditions is a description of which type of standard?

a. Currently attainable
b. Normal
c. Theoretical
d. Practical

6. Which department is customarily held responsible for an

unfavourable materials usage variance?

a. Quality control
b. Engineering
c. Purchasing
d. Production
7.By-products

a. Are regarded as the main products of joint process

b. Have relatively less sales value than joint products
c. Have relatively less sales value than scrap
d. Occur before the split-off point

8. Joint costs are used for

a. Controlling costs
b. Setting the selling price of the product
c. Determining whether to continue producing an item
d. Determining inventory costs for accounting purposes

9. Joint product costs are generally allocated using

a. Relative sales value

b. Additional costs after split-off
c. Relative profitability
d. Direct labor hours

10. In an ABC system, what should be used to assign a

departments manufacturing overhead costs to products produced in
varying lot sizes?

a. A single cause-and-effect relationship

b. Multiple cause-and-effect relationship
c. Relative net sales values of the products
d. A products ability to bear cost allocations

11. A nonmanufacturing organization may use

a. Job order costing but not process costing

b. Process costing but not job order costing
c. Either process costing or job order costing
d. Neither process costing nor job order costing

12. All costs are irrelevant, except:

a. Historical costs
b. Joint costs
c. Sunk costs
d. Avoidable costs

13. Indirect materials are

I. Prime cost

II. Conversion Cost

III. Manufacturing cost

a. I, II and III
b. I and II only
c. I and III only
d. II and III only

14. Volume variance comprises

a. Actual factory overhead and Budgeted allowance based on

actual hours
b. Actual factory overhead and Budgeted allowance based on
standard hours
 c. Budgeted allowance based on actual hours and Standard
hours times standard rate
d. Budgeted allowance based on standard hours and Standard
hours times standard rate

15. Examples of activities at the facility level of costs

include:

a. heating, lightning and security

b. scheduling, setting up, and moving
c. cutting, painting and packaging
` d. designing, changing and advertising

16. 1st statement: JOB ORDER COSTING is the best accumulation

procedure to use when there is a continuous mass production
of like units.

2nd statement: PROCESS COSTING is the best cost accumulation

procedure to use when many batches, each differing as to
product specification, are produced.

3rd statement: JOB ORDER COSTING uses a job order cost

sheet; PROCESS COSTING uses a cost production report.

a. True, true, true c. False, true, true

b. True, false, true d. False, false, true

17. Over-applied factory overhead results when

a. A plant is operated at less than its normal capacity

b. Factory overhead costs incurred are greater than costs
charged to production
c. Factory overhead costs are less than the cost charged to
production
d. Factory overhead costs incurred are unreasonably low
relative to the units produced

18. The appropriate method for the disposition of under-applied

or over-applied factory overhead

a. Is to cost of goods sold only

b. Is to finished goods inventory only
c. Is apportioned to cost of goods sold and finished goods
inventory
d. Depends on the significance of the amount

19. Normal spoilage is properly classified as

a. Extraordinary item
b. Period cost
c. Product cost
d. Deferred charge

20. The following are methods for allocating joint costs, except:

a. Physical measures method

b. Relative sales value method
c. Adjusted sales value method
d. Split-off point method

21. MILDRED Company had the following inventories at the

beginning and of March 2016.
 March 1, 2016 March 31, 2016
Direct Materials P36,000 P30,000
Work-in-Process 18,000 12,000
Finished Goods 54,000 72,000

The following additional manufacturing cost data were available

for the month of March 2016:

March 1, 2016
Direct Materials purchased P36,000
Direct labor payroll 18,000
Direct labor rate per hour 7.50
Factory overhead rate per direct
labor hour 10.00

The cost of goods manufactured for March 2016 was:

a. P212,000 c. P230,000
b. P218,000 d. P236,000

22. JOY Company operates its factory on a two-shift basis and

pays a late-shift differential of 15%. Joy also pays a premium of
50% overtime wqork. Since Joy manufactures only for stock, the
cost system provides for uniform direct-labor hourly charges for
production done without regard to shift worked or work done on an
overtime basis. Overtime and late-shift differentials are
included in Joys factory overhead application rate. The May 2016
payroll for production workers is as follows:

Wages at base direct-labor rate P325,000

Shift differentials 25,000
Overtime premiums 10,000

For the Month of May 2016, what amount if direct labor should Joy
charge to work-in-process?

a. P325,000 c. P350,000
b. P335,000 d. P360,000

23. GO MELJUN uses a job order cost system and applies factory
overhead to production orders on the basis of direct-labor cost.
The overhead rates for 2016 are 200% for department A and 50% for
department B. Job 123, started and completed during 2016 as
charged with the following costs:

DEPARTMENT
A B
Direct materials P 25,000 P 5,000
Direct labor ? 30,000
Factory overhead 40,000 ?

The total manufacturing costs associated with Job 123 should be

a. P135,000 c. P195,000
b. P180,000 d. P240,000

24. CYLA Company produces a single product. The standard cost

card for the product follows:
 Direct materials (4 yards @ 5 per yard) P 20
Direct labor (1.5 hours @ 10 per hour) P 15
Variable manufacturing overhead (1.5 hours P6
@ P4 per hour)

During a recent period, the company produced 1,200 units of

product. Various costs associated with the production of these
units are given bellow:
Direct materials purchased (6,000 yards) P28,500
Direct materials used in production 5,000 yards
Direct labor cost incurred (2,100 hours) P17,850
Variable manufacturing overhead cost incurred P10,080

These company records all variances at the earliest possible

point in time. Variable manufacturing overhead costs applied to
products on the basis of direct labor hours.

25. The materials price variance for the period is

a. P1,250 favorable c. P1,250 unfavorable

b. P1,500 favorable d. P1,500 unfavorable

26. The materials quantity variance for the period is

a. P950 unfavorable c. P5,000 favorable

b. P1,000 unfavorable d. P5,000 unfavorable

27. The labor rate variance for the period is

a. P3,150 unfavorable c. P2,700 unfavorable

b. P3,150 favorable d. P2,700 favorable

28. The labor efficiency variance for the period is

a. P3,000 unfavorable c. P2,550 unfavorable

b. P3,000 favorable d. P2,550 favorable

29. The variable overhead spending variance for the period is

a. P1,440 favorable c. P1,680 favorable

b. P1,440 unfavorable d. P1,680 unfavorable

30. The variable overhead efficiency variance for the period is

a. P1,200 unfavorable c. P1,440 favorable

b. P1,200 favorable d. P1,440 favorable

The following information relates to a given department of Li

Company for the first quarter 2016.
Actual total overhead (fixed plus variable) P178,500
Budget formula P110,000 plus 0.50 per hour
Total overhead application rate P1.50 per hour
Spending variance (from three-way analysis) P8,000 (U)
Volume variance (from two-way analysis) P5,000 (F)
Over-all factory overhead variance P6,000 (U)

31. What were the actual hours worked in this department during
this quarter?

a. 110,000 c. 137,000
b. 121,000 d. 153,000
32. What were the standard hours allowed for good output in this
department?

a. 105,000 c. 110,000
b. 106,667 d. 115,000

33. Information on STRESS GRELYNE Companys direct material costs

is as follows:

Actual units of direct 20,000

materials used
Actual direct-material costs 40,000
Standard price unit of direct P 2.10
materials
Direct-material efficiency P 3,000
variance favorable

What were STRESS Grelynes direct-materials price variance?

a. P1,000 favorable c. P2,000 favorable

b. 1,000 unfavorable d. 2,000 unfavorable

34. JASON Company has identified an activity cost pool to which

it has allocated estimated overhead of P1,920,000 and determined
the expected use of cost drivers per that activity to by 160,000
inspections. Widgets require 40,000 inspections, Gadgets 30,000
inspections, and Targets, 90,000 inspections.

The overhead assigned to each product is

a. Widgets P40,000, Gadgets P30,000, Targets P90,000

b. Widgets P1,080,000, Gadgets P360,000, Targets P480,000
c. Widgets P480,000, Gadgets P360,000, Targets P1,080,000
d. Widgets P360,000, Gadgets P360,000, Targets P1,080,000

MICHELLE Company manufactures two products, JOAB and ANTHONY,

Michelles overhead costs consist of setting up machines,
P400,000; machining, P900,000; and inspecting, P300,000.

Information of the two products is:

JOAB ANTHONY
Direct labor hours 15,000 25,000
Machine setups 600 400
Machine hours 24,000 26,000
Inspections 800 700

35. Overhead applied to JOAB using traditional costing is

a. P600,000
b. P768,000
c. P832,000
d. P960,000

36. Overhead applied to ANTHONY using activity-based costing is

a. P640,000
b. P768,000
c. P832,000
d. P1,000,000
37. B. Mijo Co. which began operations in 2016, produces gasoline
and a gasoline by-prooduct. The following information is
available pertaining to 216 sales and production:

Total production costs .P120,000

Gasoline sales 270,000
By-product sales 30,000
Gasoline Inventory, 12/31/2016 15,000
Additional by-product costs:
Marketing 15,000
Production 15,000

MiJo accounts for the by-product at the time of production. What

are MiJos 2016 cost of sales for gasoline and by-product?

Gasoline By-Product
a. P105,000 P25,000
b. P105,000 P30,000
c. P108,000 P37,000
d. P100,000 P0

38. Audre Company manufactures products S and T from a joint

process. The sales value at split-off was P50,000 for 6,000 units
of Product S and P25,000 for 2,000 units of Product T. Assuming
the portion of the total joint costs properly allocated to
Product S using the relative-sales value at split-off approach
was P30,000, what were the total joint costs?

a. P40,000 c. P45,000
b. P42,000 d. P60,000

39. Bes Corporation manufactures product JJ, JM and HO from a

joint process.

Product Units Sales Value Additional Further

Produced at Cost Sales Value
Split-off If Process
Further
JJ 6,000 P40,000 P9,000 P55,000
JM 4,000 35,000 7,000 45,000
HO 2,000 25,000 5,000 30,000

Assuming the total joint cost of P60,000 were allocated using the
physical measures (units produced), what were the total costs
allocated to its product JJ?

a. P27,000 c. P33,000
b. P29,000 d. P39,000

40. Assuming the same information in No. 39 and assuming that

joint product costs of P60,000 were allocated using the relative
sales value at split-off approach, what were the total costs
allocated to its product JM?

a. P27,000 c. P28,350
b. P28,000 d. P32,200
41. Vane Corporation, which manufactures two products out of a
joint process Compad and Ultrasene. The joint (common) costs
incurred are P250,000 for a standard production run that
generates 120,000 gallons of Compad and 80,000 gallons of
Ultrasene. Compad sells for P2.00 per gallon while Ultrasene
sells for P3.25 per gallon.

If there are no additional processing costs incurred after the

split-off point, the amount of joint cost of each production run
is allocated to Compad on a physical-quantity basis is

a. P100,000 c. P130,000
b. P120,000 d. P150,000

42. Using the same information in No. 41 and if there are no

additional processing costs incurred after the split-off point,
the amount of joint cost of each production run allocated to
Ultrasene on a realizable value (gross market value) basis is

a. P100,000 c. P130,000
b. P120,000 d. P150,000

43. Using the same information in No. 41 and if additional

processing costs beyond the split-off point are P.10 per gallon
for Compad and P1.10 per gallon for Ultrasene, the amount of
joint cost of each production run allocated to Ultrasene on a
physical quantity basis is

a. P100,000 c. P142,500
b. P148,000 d. P150,000

44. Using the same information in No. 41, and if additional

processing costs beyond the split-off point are P.10 per gallon
for Compad and P1.10 per gallon for Ultrasene, the amount of
joint cost of each production run allocated to Compad on a net
realizable value (net market value) basis is

a. P100,000 c. P142,500
b. P107,500 d. P150,000

Paalam Company keeps careful track of the time related to orders

and their production. During the most recent quarter, the
following average times were recorded for each unit or order:

Inspection time 2 days

Processing time 3 days
Move time 4 days
Queue time 5 days
Wait time 6 days

45. How long in days is the manufacturing cycle time or

throughput time?

a. 20 days c. 15 days
b. 14 days d. 17 days

46. What is the manufacturing cycle efficiency ratio?

a. 15 % c. .214285%
b. 21.43% d. .15%
47. What is the total delivery cycle time?

a. 20 days c. 15 days
b. 14 days d. 17 days

48. GOLDILOCKS produces three products. Production and cost

information is as follows:

Cake Y Cake O Cake U

Units produced 2,000 6,000 12,000
Direct labor hours 4,000 2,000 4,000
Number of orders 100 150 250

The consumption ratio for the number of orders would be?

a. Cake Y 40 % ; Cake O 20 % ; Cake U 40%

b. Cake Y 10 % ; Cake O 30 % ; Cake U 60%
c. Cake Y 20 % ; Cake O 30 % ; Cake U 50%
d. None of the choices

49. BILL GATES & GREMLIN INC. year-end manufacturing costs were
as follows:

Direct materials and direct labor P 500,000

Depreciation of manufacturing equipment 70,000
Depreciation of factory building 40,000
Janitors wages for cleaning office premises 15,000

How much of these costs should be inventoried for external

reporting purposes?

a. P625,000 c. P585,000
b. 610,000 d. 500,000

The accounting records for 2016 of Eva Co. showed the following:

Decrease in raw materials inventory P 45,000

Decrease in finished goods inventory 150,000
Raw materials purchased 1,290,000
Freight-out 135,000

50. The cost of raw materials used for the period amounted to

a. P1,245,000 c. P1,335,000
b. P1,290,000 d. P1,380,000

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