La Consolacion University Philippines
Costs of direct materials used un
College of Business, Entrepreneurship and
Accountancy
Preliminary Examinations
Cost Accounting and Cost Management
Name:
______________________________________
Section:
_____________________________________
Date: ________________
Score: ____/50 Percentage: ______
Instructor: Mr. Leomar B. Seminiano, MICB, CPA
Instructions: Multiple Choice. Choose the best
answer in answering the questions. Provide a
1/2 sheet of yellow paper and put only the
letter answer for each number. If the answer is
not given, put letter E on your answer sheet.
Strictly no erasure. Please use CAPITAL
LETTERS. Use ball pen in answering the
questions. One (1) point each
PART 1 - THEORIES
1. Financial Statements for external users
can be described as?
A. User specific
B. General purpose
C. Special purpose
D. Management reports
2. Planning is a function that involves?
A. Hiring the right people for a
particular job
B. Coordinating the accounting
information system
C. Setting goals and objectives for an
entity
D. Analyzing financial statement
3. Which of the following costs shall be
considered as both prime costs and
conversion costs?
A. Supervisory salaries for
manufacturing plant
B. Property taxes on manufacturing
plant
C.
production
D. Employee benefits earned by
machine operators in producing the
firm’s product
4. In a job-costing system, what account is
debited when issuing indirect materials
tp production?
A. Manufacturing overhead control
B. Materials control
C. Manufacturing overhead applied
D. Work in process control
5. Costs that are subject to short-run
fluctuations for given jobs are:
A. normal costs
B. budgeted direct costs
C. actual costs
D. budgeted indirect costs
6. When the allocated amount of indirect
costs are less than the actual amount,
indirect costs have been:
A. overabsorbed
B. Both underapplied and
underallocated are correct.
C. underallocated
D. underapplied
7. An updated costing system should:
A. be installed even if the costs
outweigh the additional benefits
B. be tailored to fit the underlying
operations rather than the current
cost system
C. provide all information for
management decision needs
D. focus specifically on the costing
needs of the CFO
8. Internal reports are generally:
A. Aggregated
B. Detailed
C. Regulated
D. Unreliable
9. All of the following are true of the
Work-in-Process Control account except
that:
 A. it is an asset accssount
B. the balance equals the sum of
amounts from all in-process
individual job-cost records
C. it tracks job costs from beginning
through completion
D. it tracks all direct material
purchases
10. A job-cost record uses information
from:
A. All of these answers are correct.
B. a labor-time card to record an
employees wage rate and hours
spent on a particular job
C. a receiving report that indicates the
type and quantity of each item
received in an order from a supplier
D. a materials requisition record to
record raw material purchases from
suppliers
11. A service organization would be most
likely to use a predetermined overhead
rate based on
A. standard material cost
B. direct labor
C. machine hours
D. number of complaints
12. The person who is responsible for the
protection of the materials in the
storeroom, and for identification of the
materials is the:
A. Receiving clerk
B. Purchasing agent
C. Storeroom supervisor
D. Storeroom clerk
13. No materials may be issued without a
written document called the:
A. Materials requisition
B. Material issued
C. Materials ledger card
D. Receiving report
14. Entries made in Materials account in
the general ledger are the following,
except:
A. Materials purchased
B. Materials issued
C. Materials returned
D. Materials reserved and on order
15. In a well controlled materials system,
the Purchasing Agent performs the
following activities except the:
A. Placing of purchase orders with
suppliers
B. Receiving purchase requisitions
C. Approving and checking of invoices
D. Preparation of purchase orders
16. Costs that are used in generating
revenues during the current period are
often referred to as:
A. conversion costs
B. period costs
C. product costs
D. factory overhead costs
17. Actual costing is a costing method that
allocates______________ indirect
costs.
A. predetermined
B. estimated
C. budgeted
D. actual
18. A direct labor overtime premium should
be charged to a specific job when the
overtime is caused by the
A. Management's requirement that
the job be completed before the
annual factory vacation closure
B. Increased overall level of activity
C. Customer's requirement for early
completion of job
D. Management's failure to include
the job in the production schedule
19. The costing method that is no longer
permitted by PAS No. 2 is:
A. FIFO
B. LIFO
C. Moving average
D. Specific identification
 20. What is the initial measurement and subsequent measurement of inventories as per PAS No. 2?
A. Cost and lower of cost or NRV, respectively.
B. Lower of cost or NRV and cost, respectively
C. Cost and fair market value, respectively.
D. Cost and revaluation measurement, respectively

PART 2 – PROBLEMS • Actual factory overhead costs

amounted to ₱250,000.
For number 21-23. The following costs relate to • Applied conversion costs
ABC Industries for the last quarter: totaled ₱340,000. This included
₱78,000 of direct labor.
Conversion cost – P435,000
• All units were completed.
Direct materials – 215,000
24. How much is the balance of
Manufacturing overhead – 190,000
Finished Goods account in August 31?
Selling and administrative expenses – 185,000
a. P412,000 debit b. P424,000
21. What is ABC’s prime cost for last
debit c. P412,000 credit
quarter?
d. P424,000 credit
A. 460,000
B. 410,000 For numbers 25-30. Some selected sales
C. 405,000 and cost data for Alcid Manufacturing
D. 375,000 Company are given below:
22. ABC’s total manufacturing cost is? Direct Materials used - P100,000
A. 460,000 Direct labor – 150,000
B. 645,000 Factory overhead (40% variable) -
C. 650,000 75,000
D. 840,000 Selling and administrative expenses
23. ABC’s total period cost is? (50% Direct, 60% variable) – 120,000
A. 185,000
25. Prime cost was:
B. 275,000
A. 175,000
C. 400,000
B. 250,000
D. 620,000 C. 130,000
Vex, general manager of AB D. 225,000
Corporation, provided the following 26. Conversion cost was:
information for transactions that A. 150,000
occurred during August. The B. 225,000
corporation uses JIT costing system: C. 270,000
• Raw materials purchased and D. 270,000
requisitioned for product were ₱84,000. 27. Direct cost was:
• Direct labor costs of ₱78,000 A. 225,000
were incurred. B. 250,000
C. 310,000
D. 325,000
 28. Indirect cost was: B. 8.2 (Rounded up to 9 deliveries in
A. 75,000 March 2014)
B. 135,000 C. 6.5 (Rounded up to 7 deliveries in
C. 195,000 March 2014)
D. 325,000 D. 5.8 (Rounded up to 6 deliveries in
29. Product cost was: March 2014)
A. 135,000 33. The materials ledger card shows the
B. 250,000 following units for Materials 00-923B:
C. 325,000 Beginning balance – 14,343.31
D. 370,000 Purchases – 75,372.75
30. Variable cost was: Issued - 54.282.09
A. 250,000
B. 280,000 Assuming the unit price of Materials 00-
C. 352,000 923B is P171.21, what is the cost of the
D. 370,000 ending inventory of Materials 00-923B?
31. DEF Company has a plant that A. 5,283,329.3321
manufactures transistor radios. One B. 6,575,329.2112
Component is an XT transistor. C. 6,066,650.0037
Expected demand is for 5,200 of these D. 6,323,309.3281
transistors in March 2014. DEF
estimates the ordering cost per 34. On January 11, 2015, HIJ
purchase order to be 250. The carrying Manufacturing Company returned
cost for one unit of XT in stock is 5. materials costing 17,500 to its suppliers,
What is the EOQ for the XT transistor? XYZ Supplies, Inc. What is the journal
A. 721 entry to record the materials returned?
B. 521 A. Vouchers payable 17,500
C. 520 Materials 17,500
D. 720 B. Work in process 17,500
32. Using the information in number 31, Materials 17,500
what is the number of deliveries of XT in C. Vouchers payable 17,500
April 2014? Work in process 17,500
A. 7.2 (Rounded up to 8 deliveries in
March 2014) D. Work in process 17,500
Materials 17,500

35. Roiann and Dennett Law Office employs 12 full-time attorneys and 10 paraprofessionals. Direct and
indirect costs are applied on a professional labor-hour basis that includes both attorney and
paraprofessional hours. Following is information for 20X3:
Budget Actual
Indirect costs P270,000 P300,000
Annual salary of each attorney 100,000 P110,000
Annual salary of each paraprofessional 29,000 P30,000
Total professional labor-hours 50,000 dlh 60,000 dlh

How much should the client be billed in an actual costing system if 200 professional labor-hours are
used?
A. 6,960
B. 5,000
C.7,480
D. 6,400

36. Based on the information given on Number Requisition 52 – 310

35, what are the budgeted direct-cost rate and Returned Material Report 24 (From requisition
the budgeted indirect-cost rate, respectively, 50) – 20
per professional labor-hour?
A. P27.00; P4.17 What is the cost of ending inventory using the
B. P29.80; P5.40 FIFO costing method?
C. P27.00; P5.00 A. 2,519
D. P32.40; P5.00 B. 2,421
C. 2,500
D. 2,400
37. The data given below rate to Material XYZ
used by Pedro Shoes Factory, Inc.: 38. Based on the information given No. 38,
Beginning balance – 480 at P4.80 each what is the cost of ending inventory using the
Purchase order 32 – 600 at P4.90 each moving average inventory costing method?
Requisition 54 - 175 A. 2,499.50
Requisition 55 – 225 B. 2,450.59
Requisition 56 – 280 C. 2,459.60
Purchase order 67 – 400 at P4.95 each D. 2,949.60

39. The following data relates to the materials inventory of the Automatic Automobiles Factory:

Group I Units Unit costs NRV per unit

Material WW 460 140 130
Materials BB 830 85 90
Group II
Materials XX 1,290 120 145
Materials ZZ 580 65 55

What is the value of the inventory if the LCNRV method is applied to the individual items?
A. 317,050
B. 237,500
C. 327,050
D. 371,050
41. Based on the data given in No. 39, what is
40. Based on the data given in No. 39, what is the value of the inventory if the LCNRV rule is
the value of the inventory if the LCNRV rule is applied to the groups?
applied to the inventory as a whole? A. 327,000
A. 317,450 B. 372,000
B. 353,450 C. 218,950
C. 307,450 D. 317,000
D. 327,450
42. Jonis Kitty Supplies applies manufacturing
overhead costs to products at a budgeted
indirect-cost rate of P60 per direct
 manufacturing labor-hour. A retail outlet has
requested a bid on a special order of the Toy
Mouse product. Estimates for this order
include: Direct materials P40,000; 500 direct
manufacturing labor-hours at P20 per hour; and
a 20% markup rate on total manufacturing
costs. Manufacturing overhead cost estimates
for this special order total:
A. 10,000
B. None of these answers is correct.
C. 36,000
D. 30,000
43. During the current accounting period, a
manufacturing company purchased P70,000 of
raw materials, of which P50,000 of direct
materials and P5,000 of indirect materials were
used in production. The company also incurred
P45,000 of total labor cost and P20,000 of other
factory overhead costs. An analysis of the work-
in-process control account revealed P40,000 of
direct labor costs based upon the above
information, what is the total amount
accumulated in the factory overhead control
account?
A. 50,000
B. 25,000
C. 45,000
D.30,000

44. Sunny Company manufactures pipes and applies manufacturing overhead costs to production at a
budgeted indirect-cost rate of P15 per direct labor-hour. The following data are obtained from the
accounting records for June 2020:
Direct materials 280,000
Direct labor (7,000 hours at P11/hour) 77,000
Indirect labor 20,000
Plant facility rent 60,000
Depreciation on plant machinery and equipment 30,000
Sales commissions 40,000
Administrative expenses 50,000

For June 2020, manufacturing overhead was:

A. overallocated
B. neither overallocated nor underallocated
C. underallocated
D. indeterminable

45. During the month of January, Metro C. 3,300,000

Company which used a perpetual inventory D. 2,640,000
system recorded the following information
pertaining to inventory: 46. Based on the information given in Number
Beginning balance – 10,000 units at P100 45, what amount should be the balance of
Purchased on Jan. 7 – 6,000 units at P300 inventories on January 31 under moving
Sold on Jan. 20 – 9,000 units average method?
Purchased on Jan. 25 – 4,000 units at P500 A. 3,900,000
B. 3,225,000
Under the FIFO method, what amount should C. 3,300,000
be the balance of inventories on January 31? D. 2,640,000
A. 3,900,000
B. 3,225,000
 47. Magnus, a production employee is paid
P180 per hour for a regular work of 40 hours.
During the week ended March 23, Magnus
worked 50 hours and earned time and a half for
OT hours. What is the amount that should be
charged to WIP account if the OT premium is
charged to production worked on during the OT
hours?
A. 9,000
B. 9,900
C. 8,900
D. 9,500
48. Using the data in Number 47, what is the
amount that should be charged to WIP account,
if the OT premium is charged to FOH?
A. 0
B. 9,000
C. 9,900
D. 10,000
49. XYZ Company pays time and a half hour for
hours in excess of 40 hours per week. An
individual is paid 24.00 per hour and worked 44
hours a week. The weekly earnings of the
employee will amount to?
A. 960
B. 1,032
C. 1,104
D.1,036
50. UY Manufacturing Co. has provided you the
following information:
Raw materials purchased – 135,000
Beginning raw materials inventory – 100,000
Ending raw materials inventory – 175,000
55-56 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. (1) (No); (2) (No); (3) (No)
B. (1) (No); (2) (Yes); (3) (Yes)
C.(1) (Yes); (2) (No); (3) (No)
D. (1) (Yes); (2) (Yes); (3) (Yes)
FOH including 85,000 of indirect labor and
20,000 of indirect materials – 227,500
Total manufacturing cost – 960,000
What is the amount of direct labor cost for the
year?
A. 677,500
B. 642,500
C. 382,500
D. 692,500
Bonus questions: The following questions
below are not included in the number of items
for preliminary examinations but if you answer
the questions correctly, the number of the
correct items will be added to your total score.
If your score is 41 or above, the excess points
will be added to your score on Midterm
examinations. Two (2) points each.
51-52. In allocating factory service department
costs to producing department, which one of
the following items would most likely be used
as an activity base?
A. Units of product sold
B. Direct materials usage
C. Salary of service department employees
D. Units of electric power consumed
53-54. If actual indirect-cost rates were
calculated monthly rather than annually, then
for the month of February with only 28 days:
A. fixed indirect-cost rates would be lower
B. total indirect-cost rates would be higher
C. monthly output would be higher
D. variable indirect-cost rates would be lower
 57-58. JDV Company has two service departments (A and B) and two producing departments (X and Y).
Data provided are as follows:
Departments
Service Operating
A B X Y
Direct costs 150 300 5,000 6,000
Services performed by Dept. A 40% 40% 20%
Services performed by Dept. B 20% 70% 10%
JDV Company uses the direct method to allocate service department costs. The service department cost
allocated to Department Y is:
A. 60.00
B. 50.00
C. 150.00
D. 87.50

59-60. The simplest approach to dealing with underallocated or overallocated overhead is the
__________ approach.
A. write-off to cost of goods sold
B. adjusted allocation-rate
C. proration
D. Both a and b are correct.