ACC 122 | Cost Accounting and Control

First Periodic Quiz 1

Name: Date:
Block & Year: ID number:

General Direction: Choose the best answer. Shade your final answer on the separate answer sheet provided.
Erasures on the answer sheet are strictly prohibited.

Coverage: Cost Accounting System

Job order Costing

Part I: Multiple Choice Questions

1. Management accounting information focuses on a. focuses on the future and includes activities
external reporting. such as preparing next year's operating
a. True budget.
b. False b. must comply with GAAP (generally accepted
*Management accounting information focuses on accounting principles).
internal reporting. c. reports include detailed information on the
various operating segments of the business
2. A good cost accounting system is narrowly focused
such as product lines or departments.
on a continuous reduction of costs.
d. is prepared for the use of department
a. True
heads and other employees.
b. False
8. The person MOST likely to use ONLY financial
* A good cost accounting system is broadly focused accounting information is a
to provide information that helps managers at all a. factory shift supervisor.
levels implement, monitor, and evaluate company b. vice president of operations.
strategies. c. current shareholder.
3. The same cost may be direct for one cost object and d. department manager.
indirect for another cost object. 9. Which of the following statements refers to
a. True management accounting information?
b. False a. There are no regulations governing the
4. Cost management provides information that helps reports.
increase value for customers. b. The reports are generally delayed and
a. True historical.
b. False c. The audience tends to be stockholders,
5. An effective way to cut costs is to eliminate activities creditors, and tax authorities.
that do not improve the product attributes that d. It primarily measures and records business
customers value. transactions
a. True 10. Which of the following groups would be LEAST likely
b. False to receive detailed management accounting reports?
a. Stockholders
6. Management accounting
b. Sales representatives
a. focuses on estimating future revenues,
c. Production supervisors
costs, and other measures to forecast
d. Managers
activities and their results.
11. Management accounting information includes
b. provides information about the company as
a. tabulated results of customer satisfaction
a whole.
surveys.
c. reports information that has occurred in the
b. the cost of producing a product.
past that is verifiable and reliable.
c. the percentage of units produced that are
d. provides information that is generally
defective.
available only on a quarterly or annual
d. all of the above.
basis.
7. Financial accounting

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First Periodic Quiz 1

12. Place the four business functions in the order they b. can be easily identified with the cost
appear along the value chain: object.
A = Customer service B = Design c. generally include the cost of material and
C = Distribution D = Production the cost of labor.
a. A B D C b. A C D B d. may include both variable and fixed costs.
c. B D C A d. B A D C 20. Which statement is TRUE?
13. The person(s) directly responsible for the attainment a. All variable costs are direct costs.
of organizational objectives is/are b. Because of a cost-benefit tradeoff, some
a. the treasurer. direct costs may be treated as indirect
b. line management. costs.
c. the controller. c. All fixed costs are indirect costs.
d. the chief financial officer. d. All direct costs are variable costs.
14. Responsibilities of a CFO include all EXCEPT 21. Cost behavior refers to
a. providing financial reports to shareholders. a. how costs react to a change in the level of
b. managing short-term and long-term activity.
financing. b. whether a cost is incurred in a
c. investing in new equipment. manufacturing, merchandising, or service
d. preparing federal, state, and international company.
tax returns c. classifying costs as either inventoriable or
15. The Standards of Ethical Conduct for management period costs. classifying costs as either
accountants include concepts related to inventoriable or period costs.
a. competence, performance, integrity, and d. whether a particular expense has been
reporting. ethically incurred.
b. competence, confidentiality, integrity, and 22. Variable costs
objectivity. a. are always indirect costs.
c. experience, integrity, reporting, and b. increase in total when the actual level of
objectivity. activity increases.
d. none of the above as ethical issues do not c. include most personnel costs and
affect management accountants. depreciation on machinery.
16. Cost objects include d. can always be traced directly to the cost
a. products. object.
b. customers. 23. Fixed costs
c. departments. a. may include either direct or indirect costs.
d. all of the above. b. vary with production or sales volumes.
17. Actual costs are c. include parts and materials used to
a. the costs incurred. manufacture a product.
b. budgeted costs. d. can be adjusted in the short run to meet
c. estimated costs. actual demands.
d. forecasted costs. 24. Which one of the following is a variable cost in an
18. Which one of the following items is a direct cost? insurance company?
a. Customer-service costs of a multiproduct a. Rent
firm; Product A is the cost object. b. President's salary
b. Printing costs incurred for payroll check c. Sales commissions
processing; payroll check processing is the d. Property taxes
cost object. 25. Period costs
c. The salary of a maintenance supervisor in a a. include only fixed costs.
multiproduct manufacturing plant; Product b. seldom influence financial success or
B is the cost object. failure.
d. Utility costs of the administrative offices; c. include the cost of selling, delivering, and
the accounting department is the cost after-sales support for customers.
19. Indirect manufacturing cost d. should be treated as an indirect cost rather
a. can be traced to the product that created than as a direct manufacturing cost.
the costs. 26. Period costs

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a. are treated as expenses in the period they Cost of goods sold 270,000
are incurred. Sales revenue 500,00
b. are directly traceable to products. Operating expenses 145,000
c. include direct labor.
d. are also referred to as manufacturing 32. What is cost of goods manufactured for 20x3?
overhead costs a. P230,000
27. Costs expensed on the income statement in the b. P257,000
accounting period incurred are referred to as c. P283,000
a. direct costs. b. indirect costs. d. P355,000
c. period costs. d. inventoriable costs * P270,000 + P67,000 - P80,000 = P257,000
28. Prime costs include 33. What is gross margin for 20x3?
a. direct materials and direct manufacturing a. P283,000
labor costs. b. P355,000
b. direct manufacturing labor and c. P230,000
manufacturing overhead costs. d. P257,000
c. direct materials and manufacturing * P500,000 - P270,000 = P230,000
overhead costs. 34. What is operating income for 20x3?
d. only direct materials a. P85,000
29. Total manufacturing costs equal b. P112,000
a. direct materials + prime costs. c. P62,000
b. direct materials + conversion costs. d. P230,000
c. direct manufacturing labor costs + prime * P500,000 - P270,000 - 145,000 = P85,000
costs.
d. direct manufacturing labor costs + THE FOLLOWING INFORMATION APPLIES TO QUESTIONS 35
conversion costs. THROUGH 38
30. Bravo is paid P10 an hour for straight-time and P15 The Singer Company manufactures several different products.
an hour for overtime. One week she worked 42 Unit costs associated with Product ICT101 are as follows:
hours, which included 2 hours of overtime. Direct materials P60
Compensation would be reported as Direct manufacturing labor 10
a. P400 of direct labor and P30 of Variable manufacturing overhead 18
manufacturing overhead. Fixed manufacturing overhead 32
b. P400 of direct labor and Pzero of Sales commissions (2% of sales) 4
manufacturing overhead. Administrative salaries 16
c. P420 of direct labor and P10 of Total P140
manufacturing overhead.
d. P430 of direct labor and Pzero of 35. What are the variable costs per unit associated with
manufacturing overhead Product ICT101?
* Direct labor (42 hours x P10) + Overtime premium a. P18
(2 hrs x P5) = $430 b. P22
31. When 10,000 units are produced, fixed costs are P14 c. P88
per unit. Therefore, when 20,000 units are produced d. P92
fixed costs , the total Fixed cost is: * P60 + P10 + P18 + P4 = P92
a. increase to P28 per unit 36. What are the fixed costs per unit associated with
b. remain at P14 per unit Product ICT101?
c. decrease to P7 per unit a. P102
d. total P280,000 b. P48
* Total fixed costs = P14 x 10,000 units = P140,000 c. P52
P140,000/20,000 units = P7 d. P32
* P32 + 16 = P48
THE FOLLOWING INFORMATION APPLIES TO QUESTIONS 32 37. What are the inventoriable costs per unit associated
THROUGH 34 with Product ICT101?
The following information pertains to Harding Company: a. P120
Beginning finished goods, 1/1/20x3 P 80,000 b. P140
Ending finished goods, 12/31/20x3 67,000 c. P50

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d. P88 Explanation: B) Underallocated: Allocated only

* P60 + P10 + P18 + P32 = P120 P52,500 (3,500 × P15 per DLH) of the P55,000 actual OH
38. What are the period costs per unit associated with THE FOLLOWING INFORMATION APPLIES TO QUESTIONS 42
Product ICT101? THROUGH 44
a. P4 Bauer Manufacturing uses departmental cost driver
b. P16 rates to allocate manufacturing overhead costs to
c. P20 products. Manufacturing overhead costs are
d. P52 allocated on the basis of machine-hours in the
*P4 + 16 = P20 Machining Department and on the basis of direct
39. Joni's Kitty Supplies applies manufacturing overhead labor-hours in the Assembly Department. At the
costs to products at a budgeted indirect-cost rate of beginning of 20X3, the following estimates were
P60 per direct manufacturing labor-hour. A retail provided for the coming year:
outlet has requested a bid on a special order of the Machining Assembly
Toy Mouse product. Estimates for this order include: Direct labor-hours 30,000 60,000
Direct materials P40,000; 500 direct manufacturing Machine-hours 80,000 20,000
labor-hours at P20 per hour; and a 20% markup rate Direct labor cost P500,000 P900,000
on total manufacturing costs. Manufacturing overhead costs P420,000 P240,000
Estimated total product costs for this special order
equal: The accounting records of the company show the following
a. P96,000 data for Job #316:
b. P50,000
c. P80,000 Machining Assembly
d. None of these answers is correct. Direct labor-hours 120 70
Explanation: C) DM P40,000 + DML (500 × $20) + Machine-hours 60 5
MOH P30,000 = P80,000 Direct labor cost P300 P200
THE FOLLOWING INFORMATION APPLIES TO QUESTIONS 40 Manufacturing overhead costs P100 P400
THROUGH 41
42. For Bauer Manufacturing, what is the annual
Philadelphia Company manufactures pipes and manufacturing overhead cost-allocation rate for the
applies manufacturing overhead costs to production Machining Department?
at a budgeted indirect-cost rate of P15 per direct a. P4.00
labor-hour. The following data are obtained from the b. P4.20
accounting records for June 2020: c. P4.67
Direct materials P140,000 d. P5.25
Direct labor (3,500 hours @ $11/hour) 38,500 Explanation: D) P420,000/80,000 MH = P5.25 per
Indirect labor 10,000 MH
Plant facility rent 30,000 43. What amount of manufacturing overhead costs will
Depreciation on plant machinery be allocated to Job #316?
and equipment 15,000 a. P439
Sales commissions 20,000 b. P502
Administrative expenses 25,000 c. P595
d. P532
40. The amount of manufacturing overhead allocated to Explanation: C) (P420,000 / 80,000 MH × 60
all jobs during June 2020 totals: MH) + [(P240,000/60,000) × 70 DLH] = P595
a. P38,500 44. What are the total manufacturing costs of Job #316?
b. P52,500 a. P715
c. P55,000 b. P880
d. P100,000 c. P1,595
Explanation: B) 3,500 × P15 per DLH = P52,500 d. P1,000
41. For June 2020, manufacturing overhead was: Explanation: C) DM P500 + DML P500 + MOH P595 =
a. overallocated P1,595
b. underallocated THE FOLLOWING INFORMATION APPLIES TO QUESTIONS 45
c. neither overallocated nor underallocated THROUGH 48
d. indeterminable

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Wayland Manufacturing uses a normal cost system and had The actual material and labor costs charged to Job #432 were
the following data available for 2020: as follows:
Direct materials purchased on account P 148,000 Total
Direct materials requisitioned 82,000 Direct materials: P25,000
Direct labor cost incurred 130,000 Direct labor:
Department A P 8,000
Factory overhead incurred 146,000 Department B P12,000
Cost of goods completed 292,000 P20,000
Cost of goods sold 256,000 Apple Valley applies manufacturing overhead costs to jobs on
the basis of direct manufacturing labor cost using
Beginning direct materials inventory 26,000 departmental rates determined at the beginning of the year.
Beginning WIP inventory 64,000
Beginning finished goods inventory 58,000 Manufacturing costs estimated for Job #432 total:
Overhead application rate, as a percent a. P 55,000
of direct-labor costs 125 percent b. P 65,000
c. P 70,000
45. The journal entry to record the materials placed into d. P 75,000
production would include a: Explanation: D) DM P25,000 + DML P20,000 + MOH
a. credit to Direct Materials Inventory for P30,000 [(P8,000 × P600,000 / P200,000)] + [P12,000
P82,000 × P400,000/P800,000] = P75,000
b. debit to Direct Materials Inventory for 50. Work-in-Process Control will be decreased (credited)
P148,000 for the amount of direct-labor costs incurred.
c. credit to WIP Inventory for P82,000 a. True
d. debit to WIP Inventory for P148,000 b. False
46. The ending balance of direct materials inventory is: Explanation: Work-in-Process Control will be
a. P92,000 increased (debited) for the amount of direct-labor
b. P174,000 costs incurred.
c. P82,000 51. The Work-in-Process Control account tracks job
d. P108,000 costs from the time jobs are started until they are
Explanation: A) P26,000 + P148,000 - P82,000 = completed.
P92,000 a. True
47. The ending balance of work-in-process inventory is: b. False
a. P 438,500 52. Purchases of materials are credited to materials
b. P 146,500 control.
c. P 130,000 a. True
d. P 422,000 b. False
Explanation: B) P64,000 + P82,000 + P130,000 + Explanation: Purchases of materials are debited to
1.25 (P130,000) - 292,000 = P146,500 materials control.
48. The ending balance of finished goods inventory is: 53. The Salaries Payable Control account has underlying
a. P 58,000 subsidiary ledgers.
b. P 36,000 a. True
c. P 94,000 b. False
d. P 292,000 54. Indirect materials that are requisitioned increase the
Explanation: C) P58,000 + P292,000 - P256,000 = Materials Control account.
P94,000 a. True
49. Apple Valley Corporation uses a job cost system and b. False
has two production departments, A and B. Explanation: Indirect materials that are
Budgeted manufacturing costs for the year are: requisitioned increase the Manufacturing Overhead
Dept. A Dept. B Control account.
Direct materials P700,000 P100,000 55. In a job-cost system, each indirect-cost pool has its
Direct manufacturing labor P200,000 P800,000 own account in the general ledger.
Manufacturing overhead P600,000 P400,000 a. True
b. False

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56. Indirect manufacturing costs are debited to 64. All of the following are general ledger accounts
Manufacturing Overhead Control. EXCEPT:
a. True a. the Salaries Payable Control account
b. False b. the Prepaid Insurance Control account
57. The Finished Goods Control account consists of c. the Accounts Receivable subsidiary account
actual manufacturing overhead costs rather than for Ruben Electric
allocated manufacturing overhead costs. d. the Advertising Costs account
a. True 65. All of the following increase (are debited to) the
b. False Work-in-Process Control account EXCEPT:
Explanation: The Finished Goods Control account a. actual plant insurance costs
consists of allocated manufacturing overhead costs b. direct materials
rather than actual manufacturing overhead costs c. allocated manufacturing overhead costs
58. The ending balance in Work-in-Process Control d. direct manufacturing labor
represents the total costs of all jobs that have NOT 66. When direct materials are requisitioned the
yet been completed. ________ account is increased.
a. True a. Manufacturing Overhead Control
b. False b. Work-in-Process Control
59. The product cost reported as inventoriable costs to c. Materials Control
shareholders may differ from product costs reported d. Accounts Payable Control
for government contracting. 67. Payment of the factory rent increases the:
a. True a. Work-in-Process Control account
b. False b. Manufacturing Overhead Control account
60. For external reporting purposes, it is acceptable to c. Both A and B are correct.
allocate marketing costs to individual jobs. d. None of these answers are correct.
a. True 68. All of the following are true of plant utility costs
b. False EXCEPT:
Explanation: Management may choose to allocate a. the source document is the utility bill
marketing costs to individual jobs for internal b. the cost increases the Manufacturing
pricing, product-mix, and cost-management Overhead Control account
decisions. c. the cost increases the Work-in-Process
61. In a normal costing system, the Manufacturing Control account
Overhead Control account: d. it is an indirect cost
a. is increased by allocated manufacturing 69. Actual (rather than allocated) manufacturing
overhead overhead costs are included in the:
b. is credited with amounts transferred to a. Work-in-Process Control account
Work-in-Process b. Finished Goods Control account
c. is decreased by allocated manufacturing c. Manufacturing Overhead Control account
overhead d. Both A and B are correct.
d. is debited with actual overhead costs 70. The ending balance in the Work-in-Process Control
62. The Materials Control account is increased when: account represents the costs of all jobs that:
a. direct materials are purchased a. have not been completed
b. indirect materials are purchased b. have been completed but not sold
c. materials are requisitioned for production c. have been completed and sold to
d. Both A and B are correct. customers
63. All of the following are true of the Work-in-Process d. are reported on the income statement
Control account EXCEPT that: 71. For externally reported inventory costs, the Work-in-
a. it tracks all direct material purchases Process Control account is increased (debited) by:
b. the balance equals the sum of amounts a. marketing costs
from all in-process individual job-cost b. allocated plant utility costs
records c. the purchase costs of direct and indirect
c. it is an asset account materials
d. it tracks job costs from beginning through d. customer-service costs
completion

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72. What is the appropriate journal entry if P100,000 of Which is the correct journal entry assuming utilities and
materials were purchased on account for the month repairs were on account?
of August? a. Manufacturing Overhead Control 75,000
a. Materials Control 100,000 Accounts Payable Control 50,000
Accounts Payable Control 100,000 Accumulated Depreciation Control 25,000
b. Work-in-Process Control 100,000 b. Manufacturing Overhead Control 75,000
Accounts Payable Control 100,000 Accounts Payable Control 75,000
c. Manufacturing Overhead Control 100,000 c. Manufacturing Overhead Control 75,000
Accounts Receivable Control 100,000 Accumulated Depreciation Control 75,000
d. Manufacturing Allocated 100,000 d. Accumulated Depreciation Control 25,000
Accounts Receivable Control 100,000 Accounts Payable Control 50,000
73. What is the appropriate journal entry if direct Manufacturing Overhead Control 75,000
materials of P20,000 and indirect materials of P3,000 77. Which of the following statements regarding
are sent to the manufacturing plant floor? manufacturing overhead allocation is FALSE?
a. Work-in-Process Control 20,000 a. It includes all manufacturing costs that
Materials Control 20,000 cannot be directly traced to a product or
b. Work-in-Process Control 23,000 service.
Materials Control 23,000 b. The costs can be grouped in either a single
c. Manufacturing Overhead Control 3,000 indirect-cost pool or in multiple indirect-
Materials Control 20,000 cost pools.
Work-in-Process Control 23,000 c. Total costs are unknown at the end of the
d. Work-in-Process Control 20,000 accounting period.
Manufacturing Overhead Control 3,000 d. Allocated amounts are debited to Work-in-
Materials Control 23,000 Process.
74. All of the following items are debited to Work-in- 78. When a job is complete:
Process EXCEPT: a. Work-in-Process Control is debited
a. allocated manufacturing overhead b. Finished Goods Control is credited
b. completed goods being transferred out of c. the cost of the job is transferred to
the plant Manufacturing Overhead Control
c. direct labor consumed d. actual direct materials, actual direct
d. direct materials consumed manufacturing labor, and allocated
75. What would be the appropriate journal entry if the manufacturing overhead will comprise the
following labor wages were incurred in a furniture total cost of the job
manufacturing company? 79. During an accounting period, job costs are computed
Assembly workers P20,000 on an ongoing basis by the use of:
Janitors P10,000 a. actual allocation rates
a. Work-in-Process Control 30,000 b. budgeted indirect-cost rates
Wages Payable Control 30,000 c. overallocated indirect-cost rates
b. Work-in-Process Control 20,000 d. underallocated indirect-cost rates
Manufacturing Overhead Control 10,000 80. The advantage of using normal costing instead of
Wages Payable Control 30,000 actual costing is:
c. Manufacturing Overhead Control 30,000 a. indirect costs are assigned at the end of the
Wages Payable Control 30,000 year when they are known
d. Wages Payable Control 30,000 b. the job cost is more accurate under normal
Work-in-Process Control 30,000 costing
76. Manufacturing overhead costs incurred for the c. indirect costs are assigned to a job on a
month are: timely basis
Utilities P30,000 d. normal costing provides a higher gross
Depreciation on equipment P25,000 profit margin
Repairs P20,000

-END-
“Self-belief and hard work will always earn you success.”
– Virat Kohli

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