C. NAVOR
3. In a broad sense, cost accounting can best be defined within the accounting system as
A) Internal and external reporting that may be used in making nonroutine decisions
and in developing plans and policies
B) External reporting to government, various outside parties and shareholders
C) Internal reporting for use in management planning and control, and external
reporting to the extent its product costing function satisfies external reporting
requirement
D) Internal reporting for use in planning and controlling routine operations.
4. Which one of the following categories of cost most likely not considered a component of
fixed factory overhead?
A) Rent
B) Property taxes
C) Depreciation
D) Power
8. Indirect labor is a
A) Prime Cost
B) Product Cost
C) Period Cost
D) Non manufacturing cost
9. As current technology changes manufacturing processes, it is likely that direct
A) Labor will increase
B) Labor will decrease
C) Materials will increase
D) Materials will decrease
10. For inventoriable costs to become expenses under the matching principle
A) The product must be finished and in stock
B) The product must be expensed based on its percentage of completion
C) The product to which they attached must be sold
D) Alla ccounts payable must be settled
11. Immaterial amount of over/underapplied Factory Overhead is closed in the following account
A) Raw Materials
B) Work in Process
C) Finished Goods
D) Cost of Goods Sold
12. The following are factors in the computation of high-low method, except:
A) Highest Cost
B) Highest Activity Level
C) Average Activity Level
D) Lowest Activity Level
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PROBLEM SOLVING: Supply the Answer. Round off your final answer to the nearest centavo,
(2.5 points each)
A. The following information was taken from Kay Companys accounting records for the year
ended December 31, 2015.
There was no work in process inventory at the beginning or end of the year.
Solution:
Cost of Goods
915,000
Manufactured
Decrease in Finished goods 35,000
Cost of goods sold 950,000
B. A company allocates overhead to jobs in process using direct labor costs, raw material costs
and machine hours. The overhead application rates for the current year are
4) How much is the total cost charged to the production run? 34,780
5) How much is the applied factory overhead? 24,780
C. Northcast Manufacturing Company, a small manufacturer of parts used in appliances, has just
completed its first year of operations. The companys controller, Vic Trainor has been revieweing
the actual result for the year and is concerned about the application of factory overhead.
Trainor is using the followung information to assess operations
Total factory overhead is applied at direct labor cost using predetermined plant
wide rate
The budgeted activity for the year included 20 employees each working 1,800
productive hours per year to produce 540,000 units of product. The machines are
highly automated and each employee can operate two to four machines
simultaneously. Machine operators are paid Php 15 per hour
Budgeted factory overhead costs for the past year for various level of activity are
shown in the table below
6) What is the predetermined overhead application rate for the year? 1.78
7) How much is the factory overhead over/underapplied? 195,500 under
8) What amount of underapplied overhead allocated to cost of goods sold (if
material)? 156,400
9) If machine hours were used as the application base, what would be the
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predetermined overhead rate? 8.90
D. Pane Company uses a job costing system and applies overhead to products on the basis of
direct labor cost. Job no. 75, the only job in process on January 1 had the following costs
assigned as of that date: direct materials, Php 40,000; direct labor, Php 80,000; and factory
overhead, Php 120,000. The following selected costs were incurred during the year:
Traceable to jobs:
Direct Materials Php 178,000
Direct labor 345,000
Panes profit plan for the year included budgeted direct labor cost of Php 320,000 and factory
overhead of Php 448,000. Assuming no work in process on December 31.
10) How much is the ending balance of factory overhead control account? (Indicate
whether debit/credit and over/under applied). 24,000 credit. Overapplied
11) How much is the total manufacturing cost charged to work in process? 1,006,000
12) How much is the cost of gooods manufactured? 1,246,000
Factory Overhead applied 483,000
Factory overhead actual 459,000
Overapplied (credit) 24,000
13) What was the actual number of direct labor hours worked last year at Yellow
Corporation? 480,000
14) What is the adjusted balance of the Cost of Goods Sold? (if disposition of
over/under applied overhead involves an immaterial amount) 488,840
I. Snoopy Company had the following inventories at the beginning and end of the month of
January.
January 1 January 31
Finished goods Php 125,000 Php 117,000
Work in process 235,000 251,000
Direct materials 134,000 124,000
The following additional manufacturing data were available for the month of January:
Snoopy Company applies factory overhead at a rate of 60% of direct labor cost, and any
overapplied or underapplied factory overhead is deferred until the end of the year, December
31.
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26) Snoopy Companys prime cost for January was? 501,000
27) Snoopy Companys total manufacturing cost for January was? 681,000
28) Snoopy Companys cost of goods manufactured for January was? 665,000
29) Snoopy Companys cost of goods sold for January was? 673,000
30) Snoopy Companys balance in factory overhead control for January was? (Specify
debit/credit and over/underapplied). 5,000 credit- overapplied
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