COST ACCOUNTING REVIEWER, Exercises of Cost Accounting

Download COST ACCOUNTING REVIEWER and more Exercises Cost Accounting in PDF only on Docsity! Np DAW oN 10. 11. 12. 13. 14. 15. 16. 17. 18. 19. 20. 21. 22. 23. 24. 25. 26. 27. 28. 29. 30. Junior Philippine Institute of Accountants ACCTG 1203 ”Cost Accounting and Control” 2019 — 2020 (Finals Reviewer) TRUE OR FALSE Direct material cost combined with manufacturing overhead cost is known as conversion cost. Although depreciation is always a period cost in a merchandising firm, it can be a product cost ina manufacturing firm. In a manufacturing firm, all costs are product costs. Advertising is a product cost as long as it promotes specific products. In a process costing system, overhead is allocated to departments before being applied to units of product. The “costs accounted for” portion of the cost reconciliation report includes the cost of ending work in process inventory and the costs of units transferred out. In order to use process costing, the output of a processing department should be homogenous. The “costs to be accounted for” portion of the cost reconciliation report includes the cost of beginning work in process inventory and the cost of ending work in process inventory. The production manager is usually held responsible for the labor efficiency variance. From a standpoint of cost control, the most effective time to recognize materials price variances is when the materials are placed into production. The materials quantity variance is computed based on the amount of materials purchased during the period. Purchase of poor quality materials will generally result in a favorable materials price variance and an unfavorable labor rate variance. Net realizable value at split-off is used to allocate separable cost In a sell-or-process further decision, joint costs are irrelevant. The split-off in a joint situation refers to the stage of processing where two or more products are separated. The price variance reflects the difference between the price paid for inputs and the standard price for those inputs. The usage variance reflects the difference between the price paid for inputs and the standard price for those inputs. The formula for usage variance is (AQ - SQ) The difference between the actual wages paid to employees and the standard wages for all hours worked is the labor efficiency variance. The difference between the standard hours worked for a specific level of production and the actual hours worked is the labor efficiency variance. Astandard cost system is applicable only to process costing where the operation is repetitive. A fixed overhead volume variance is a noncontrollable variance. A budget variance is a controllable variance. Unfavorable variances are represented by debit balances in the overhead account. Favorable variances are represented by credit balances in the overhead account. If the net realizable value of by-product will be treated as additional revenue of the main product, it has the same effect if by-product will be treated as a deduction from production cost assuming that there is ending inventory of main product. If the net realizable value of by-product will be treated as other income, it has the same effect if by-product will be treated as a deduction from production cost assuming that there is no ending inventory. Under the FIFO method, units transferred out are treated in separate blocks — one block consisting of the units in the beginning inventory, and the other block consisting of the units started and complete during the period. The controller is responsible for reporting and interpreting results of operations and system installation. The treasurer is responsible for the protection of asset. MULTIPLE CHOICE —- THEORY Cost classifications are based on the relationship of costs to all of the following except: a. Ledger accounts b. Accounting periods c. Products d. Volume of production Depreciation on factory buildings and equipment is classified as: a. Selling expense b. Administrative expense c. Indirect Materials d. Factory Overhead An expense that is likely to contain both fixed and variable components is: a. Security guard wages b. Supplies c. Heat, light and power d. Small tools An equivalent unit of material or conversion cost is equal to: a. The prime cost b. The amount of material or conversion cost necessary to complete one unit of production c. Aunit of work in process inventory d. The amount of material or conversion cost necessary to start a unit of production into work in process The product flow format where certain portions of the work are done simultaneously and then brought together for completion is called: a. Applied b. Parallel c. Standard d. Selective An item that does not appear on a cost of production report is: a. Work in process, beginning inventory b. Cumulative costs through the end of departmental production c. Finished goods ending inventory d. Materials used in the department Acharacteristic of a process costing system is that: a. Costs are accumulated by order b. It is used by company manufacturing custom machinery c. Standard costs are not applicable d. Work in process inventory is restated in terms of completed units The general model for calculating a quantity variance is: a. Actual quantity of inputs used x (actual price — standard price) b. Standard price x (actual quantity of inputs used — standard quality allowed for output) costs. Materials Cost P127,400 Conversion Cost P201,400 The ending inventory was 85% complete with respect to materials and 70% complete with respect to conversion How many units are in ending work in process inventory in the first processing department at the end of the month? a. 5,100 b. 800 c. 1,400 d. 900 What are the equivalent units for conversion costs for the month in the first processing department? a. 4,900 b. 5,880 c. 6,300 d. 980 The cost per equivalent unit for materials for the month in the first processing department is closest to: a. P20.92 b. P21.95 c. P20.22 d. P22.71 Gaboy Company computed the flow of physical units completed for Department M for the month of March as follows: Units completed: From work in Process on March 1 15,000 From March Production 45,000 Total ---------n2-- 2a nena nna nnn cee ceecnenecnenecnenenene 60,000 Materials are added at the beginning of the process. The 12,000 units of work in Process at March 31 were 80% complete as to conversion costs. The work in process at March 1 was 60% complete as to conversion costs. Using the fifo method, the equivalent units for March conversion costs were: a. 60,600 b. 55,200 c. 57,000 d. 54,600 Suficiencia Company computed the physical flow of units for Department for the month of April as follows: Units completed: From work in process on April 1 10,000 From April production 30,000 Total ----------2--2n 22 nan anne 40,000 Materials are added at the beginning of the process. Units of work in process at April 30 were 8,000. The work in process at April 1 was 80% complete as to conversion costs, and the work in process at April 30 was 60% complete as to conversion costs. What are the equivalent units of production for the month of April using the fifo method? Materials Conversion Costs a. 48,000 48,000 b. 40,000 47,600 c 36,800 38,000 d. 38,000 36,800 6. Department A is the first stage of Bascoguin Company’s production cycle. The following information is available for conversion costs for the month of April: UNITS Beginning work in process (60% complete) 20,000 Started in April 340,000 Completed in April and transferred to Dept B 320,000 Ending work in Process (40% complete) 40,000 Using the fifo method, the equivalent units for the conversion cost calculation are: a. 336,000 b. 360,000 c. 328,000 d. 324,000 7. \nformation on Galve Company's direct labor costs is as follows: Standard direct labor rate P3.75 Actual direct labor rate P3.50 Standard direct labor hours 10,000 Direct labor usage (efficiency) variance unfavorable P4,200 What were the actual hours worked, rounded to the nearest hour? a 11,914 b. 10,714 c. 11,120 d. 11,200 8. Each unit of Product Gascon requires two direct labor hours. Employee benefit costs are treated as direct labor costs. Data on direct labor are as follows: Number of direct labor employees 25 Weekly productive hours per employee 30 Estimated weekly wages per employee P240 Employee benefits (related to weekly wages) 25% The standard direct labor cost per unit of Product Gascon is: a. P8.00 b. P10.00 c. P12.00 d. P20.00 Items 9 — 10 are based on the following information: Pudadera and Fernandez Company employs a standard absorption system for product costing. The standard cost of its product is as follows: Direct materials P14.50 Direct labor (2 direct labor hours x P8) P16.00 Manufacturing overhead (2 direct labor hours x P11) P22.00 Total Standard Cost P52.50 The manufacturing overhead rate is based upon a normal activity level of 600,000 direct labor hours. Pudadera planned to produce 25,000 units each month during the year. The budgeted annual manufacturing overhead is: Variable P3,600,000 Fixed P3,000,000 During November, Pudadera produced 26,000 units. Pudadera used 53,500 direct labor hours in November at a cost of P433,350. Actual manufacturing overhead for the month was P250,000 fixed and P325,000 variable. 9. The manufacturing overhead controllable variance for November is a. P9,000 U b. P13,000 U c. P9,000 F d. P4,000 F 10. The manufacturing overhead volume variance for November is: a. P12,000U b. P10,000 F c. P3,000 U d. P9,000 U Items 11 - 13 are based on the following information: Guinabo, Gabanto, and Resol Company has established standards as follows: Direct Material 3 Pounds @ P4/pound = P12 per unit Direct labor 2 hours @ P8/ hour = P16 per unit Variable Overhead 2 hours @ P5/hour = P10 per unit Actual production figures for the past year were as follows: Units Produced 500 Direct Materials Used 1,600 pounds Direct Material Purchases (3,000 pounds) P12,300 Direct labor cost (950 hours) P7,790 Variable overhead cost incurred P4,655 11. The materials price variance is a. P160U b. 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