BSA 2103- COST ACCOUNTING AND CONTROL

MIDTERM DEPARTMENTAL EXAM REVIEWER

MULTIPLE CHOICE

1.Under job order cost accumulation, the factory overhead control account controls:
A. factory overhead analysis sheets
B. all general ledger subsidiary accounts
C. job order cost sheets
D. cost reports by processes
E. materials inventories

2.Supplies needed for use in the factory are issued on the basis of:
A. job cost sheets
B. materials requisitions
C. time tickets
D. factory overhead analysis sheets
E. clock cards

3.Finished Goods is debited and Work in Process is credited for a:

A. transfer of completed goods out of the factory
B. transfer of completed production to the finished goods storeroom
C. purchase of goods on account
D. transfer of materials to the factory
E. return of unused materials from the factory

4.In job order costing, when materials are returned to the storekeeper that were previously
issued to the factory for cleaning supplies, the journal entry should be made to:
A. Materials
Factory Overhead
B. Materials
Work in Process
C. Purchases Returns
Work in Process
D. Work in Process
Materials
E. Factory Overhead
Work in Process
5.Under a job order cost system, the dollar amount of the entry to transfer the inventory from
Work in Process to Finished Goods is the sum of the costs charged to all jobs:
A. completed during the period
B. started in process during the period
C. in process during the period
D. completed and sold during the period
E. none of the above

6.When a manufacturing company has a highly automated plant producing many different
products, probably the most appropriate basis of applying factory overhead costs to
Work in Process is:
A. units processed
B. machine hours
C. direct labor hours
D. direct labor dollars
E. none of the above

7.Blair Company applies factory overhead on the basis of direct labor hours. Budget and actual
data for direct labor and overhead for the year are as follows:

Budget Actual
Direct labor hours ........................................................... 600,000 650,000
Factory overhead costs .................................................. P720,000 P760,000

The factory overhead for Cherokee for the year is:

A. overapplied by P20,000
B. overapplied by P40,000
C. underapplied by P20,000
D. underapplied by P40,000
E. neither underapplied nor overapplied

8.At the end of the year, Paola Company had the following account balances after applied
factory overhead had been closed to Factory Overhead Control:

Factory Overhead Control .................................................................. P 1,000 CR

Cost of Goods Sold............................................................................. 980,000 DR
Work in Process .................................................................................. 38,000 DR
Finished Goods ................................................................................... 82,000 DR
The most common treatment of the balance in Factory Overhead Control would be to:
A. carry it as a deferred credit on the balance sheet
B. report it as miscellaneous operating revenue on the income statement
C. credit it to Cost of Goods Sold
D. prorate it between Work in Process and Finished Goods
E. prorate it among Work in Process, Finished Goods, and Cost of Goods Sold

9.Overapplied factory overhead would result if:

A. the plant were operated at less than normal capacity
B. factory overhead costs incurred were less than costs charged to production
C. factory overhead costs incurred were unreasonably large in relation to units
produced
D. factory overhead costs incurred were greater than costs charged to production
E. a firm incurred a significant amount of overhead

10.The Waitkins Company estimated Department A's overhead at P255,000 for the period
based on an estimated volume of 100,000 direct labor hours. At the end of the
period, the factory overhead control account for Department A had a balance of
P265,500; actual direct labor hours were 105,000. What was the over- or under-
applied overhead for the period?
A. P2,250
B. P(2,250)
C. P15,000
D. P(15,000)
E. P(5,000)

11. Corporation has a job order cost system. The following debits (credits) appeared in Work in
Process for the month of July:

July 1, balance ........................................................................................ P 12,000

July 31, direct materials .......................................................................... 40,000
July 31, direct labor................................................................................. 30,000
July 31, factory overhead ....................................................................... 27,000
July 31, to finished goods ....................................................................... (100,000)

Howell applies overhead to production at a predetermined rate of 90% based on the direct labor
cost. Job 1040, the only job still in process at the end of July, has been charged with factory
overhead of P2,250. What was the amount of direct materials charged to Job 1040?
A. P6,750
B. P2,250
C. P2,500
D. P4,250
E. P9,000
12.Valentino Corporation makes aluminum fasteners. Among Valentino's 19-- manufacturing
costs were:

Wages and salaries:

Machine operators ........................................................................... P80,000
Factory supervisors .......................................................................... 30,000
Machine mechanics ......................................................................... 20,000

Direct labor amounted to:

A. P50,000
B. P100,000
C. P110,000
D. P130,000
E. none of the above

13. Rudolpho Corporation makes aluminum fasteners. Among Rudolpho's 19-- manufacturing
costs were:

Materials and supplies:

Aluminum ............................................................................................... P400,000
Machine parts ........................................................................................ 18,000
Lubricants for machines......................................................................... 5,000

Direct materials amounted to:

A. P23,000
B. P400,000
C. P405,000
D. P418,000
E. P423,000

14.Selected cost data (in thousands) concerning the past fiscal year's operations of the Moscow
Manufacturing Company are presented below.
Inventories
Beginning Ending
Materials ......................................................................... P75 P 85
Work in process .............................................................. 80 30
Finished goods ............................................................... 90 110

Materials used, P326

Total manufacturing costs charged to production during the year (including direct
materials, direct labor, and factory overhead applied at the rate of 60% of direct
labor cost), P686
 Cost of goods available for sale, P826
Selling and general expenses, P25

The cost of direct materials purchased during the year amounted to:
A. P360
B. P316
C. P336
D. P411
E. none of the above

15.Selected cost data (in thousands) concerning the past fiscal year's operations of the Moscow
Manufacturing Company are presented below.
Inventories
Beginning Ending
Materials ......................................................................... P75 P 85
Work in process .............................................................. 80 30
Finished goods ............................................................... 90 110

Materials used, P326

Total manufacturing costs charged to production during the year (including direct
materials, direct labor, and factory overhead applied at the rate of 60% of direct
labor cost), P686
Cost of goods available for sale, P826
Selling and general expenses, P25

Direct labor costs charged to production during the year amounted to:
A. P216
B. P135
C. P225
D. P360
E. none of the above

16.Selected cost data (in thousands) concerning the past fiscal year's operations of the Moscow
Manufacturing Company are presented below.
Inventories
Beginning Ending
Materials ......................................................................... P75 P 85
Work in process .............................................................. 80 30
Finished goods ............................................................... 90 110

Materials used, P326

Total manufacturing costs charged to production during the year (including direct
materials, direct labor, and factory overhead applied at the rate of 60% of direct
labor cost), P686
 Cost of goods available for sale, P826
Selling and general expenses, P25

The cost of goods manufactured during the year was:

A. P736
B. P716
C. P636
D. P766
E. none of the above

17.Selected cost data (in thousands) concerning the past fiscal year's operations of the Moscow
Manufacturing Company are presented below.

Inventories
Beginning Ending
Materials ......................................................................... P75 P 85
Work in process .............................................................. 80 30
Finished goods ............................................................... 90 110

Materials used, P326

Total manufacturing costs charged to production during the year (including direct
materials, direct labor, and factory overhead applied at the rate of 60% of direct
labor cost), P686
Cost of goods available for sale, P826
Selling and general expenses, P25

The cost of goods sold during the year was:

A. P716
B. P691
C. P801
D. P736
E. none of the above

18. J. D. Doonesbury Company manufactures tools to customer specifications. The following

data pertain to Job 1501 for April:

Direct materials used ................................................................................ P 4,200

Direct labor hours worked......................................................................... 300
Direct labor rate per hour.......................................................................... P 8.00
Machine hours used ................................................................................. 200
Applied factory overhead rate per machine hour ..................................... P 15.00
 What is the total manufacturing cost recorded on Job 1501 for April?
A. P9,600
B. P10,300
C. P11,100
D. P5,400
E. P8,800
19. In service businesses using job order costing, the most commonly used base for applying
overhead to jobs is:
A. machine hours
B. direct materials consumed
C. direct labor cost
D. meals, travel, and entertainment
E. none of the above

20.In service businesses using job order costing, the hourly rate used to charge costs to a job
usually includes:
A. both labor and overhead cost
B. labor cost only
C. overhead cost only
D. labor, overhead, and miscellaneous costs
E. none of the above

21.Work in Process is debited and Materials is credited for:

A. the issuance of direct materials into production
B. the issuance of indirect materials into production
C. the return of materials to the storeroom
D. the application of materials overhead
E. none of the above

22.Factory Overhead Control is debited and Payroll is credited for:

A. the recording of payroll
B. the distribution of indirect labor costs
C. the distribution of direct labor costs
D. the distribution of withholding taxes
E. none of the above

23.Applied Factory Overhead is debited and Factory Overhead is credited to:

A. close the estimated overhead account to actual overhead
B. record the actual factory overhead for the period
C. charge estimated overhead to all jobs worked on during the period
D. to record overapplied overhead for the period
E. none of the above
24.The best overhead allocation base to use in a labor-intensive manufacturing environment
probably would be:
A. materials cost
B. machine hours
C. direct labor hours
D. units of production
E. none of the above

25.Finished Goods is debited and Cost of Goods Sold is credited for:

A. transfer of completed goods to the customer
B. sale of a customer order
C. return of materials to the supplier
D. return of goods by the customer
E. none of the above
26. The tie-in between general accounts and cost accounts is often discussed with accounting
procedures. An example of a general account is:
A. Materials
B. Work in Process
C. Factory Overhead Control
D. Finished Goods
E. Accumulated Depreciation

27. One feature of a standard cost system is that:

A. selection of the cost unit becomes simplified
B. predetermined amounts are ignored
C. an analysis of cost variances is facilitated
D. historical costs are recorded as they are incurred
E. reports are delayed until operations have been performed

28. An industry that would most likely use job order costing procedures is:
A. road building
B. fertilizer manufacturing
C. flour milling
D. petroleum refining
E. textile manufacturing

29. An industry that would most likely use process costing procedures is:
A. musical instrument manufacturing
B. construction
C. aircraft
D. chemicals
E. office equipment
30. Supplies needed for use in the factory are issued on the basis of:
A. materials requisitions
B. time tickets
C. factory overhead analysis sheets
D. clock cards
E. purchase invoices

31. Finished Goods is debited and Work in Process is credited for a:

A. transfer of materials to the factory
B. return of unused materials from the factory
C. purchase of goods on account
D. transfer of completed production
E. transfer of completed goods out of the factory

32, The best cost accumulation procedure to use when many batches, each differing as to
product specifications, are produced is:
A. absorption
B. job order
C. process
D. actual
E. standard

33. Job order costs are most useful for:

A. determining the cost of a specific project
B. determining the labor cost involved in production
C. determining inventory valuation using lifo
D. estimating overhead costs
E. controlling indirect costs of future production

34. Under a job order cost system, the dollar amount of the entry to transfer the inventory from
Finished Goods to Cost of Goods Sold is the sum of the costs charged to all jobs:
A. completed during the period
B. started in process during the period
C. in process during the period
D. completed and sold during the period
E. sold during the period

35. The industry most likely to use job order costing in accounting for costs is:
A. accounting firms
B. textile manufacturer
C. paint manufacturer
D. oil refinery
E. none of the above
36. Job order cost accounting systems and process accounting systems differ in the way:
A. costs are traced to cost objects
B. orders are taken and in the number of units in the orders
C. product profitability is determined and compared with planned costs
D. manufacturing processes can be accomplished and in the number of
production runs that may be performed in a year
E. none of the above

37. In a job order cost system, the distribution of direct labor costs usually are recorded as an
increase in:
A. Cost of Goods Sold
B. Factory Overhead Control
C. Finished Goods
D. Work in Process
E. none of the above

38. Process costing techniques should be used in assigning costs to products:

A. if the product is manufactured on the basis of each order received
B. when production is only partially completed during the accounting period
C. if the product is composed of mass-produced homogeneous units
D. whenever standard costing techniques should not be used
E. none of the above

39. A characteristic of a process costing system is:

A. partially processed inventory is restated in terms of completed units
B. costs are accumulated by order
C. it is used by a company manufacturing custom machinery
D. standard costs are not applicable
E. none of the above

40. The industry most likely to use process costing in accounting for costs is:
A. road builder
B. electrical contractor
C. airlines
D. automobile repair shop
E. none of the above

41. .Ziffel Company had the following account balances and results from operations for the
month of July: direct materials consumed, P10,400; direct labor, P8,000; factory
overhead, P8,800; July 1, work in process inventory, P2,400; July 31, work in
process inventory, P1,800; finished goods inventory, July 1, P1,200; finished goods
inventory, July 31, P1,000. The total manufacturing cost for the month of July was:
 A. P27,800
B. P28,000
C. P18,400
D. P27,200
E. none of the above

42. Ziffel Company had the following account balances and results from operations for the
month of July: direct materials consumed, P10,400; direct labor, P8,000; factory
overhead, P8,800; July 1, work in process inventory, P2,400; July 31, work in
process inventory, P1,800; finished goods inventory, July 1, P1,200; finished goods
inventory, July 31, P1,000. The cost of goods manufactured was:
A. P27,200
B. P28,000
C. P27,800
D. P26,600
E. none of the above

43. Ziffel Company had the following account balances and results from operations for the
month of July: direct materials consumed, P10,400; direct labor, P8,000; factory
overhead, P8,800; July 1, work in process inventory, P2,400; July 31, work in
process inventory, P1,800; finished goods inventory, July 1, P1,200; finished goods
inventory, July 31, P1,000. The cost of goods sold was:
A. P27,200
B. P28,000
C. P27,800
D. P27,600
E. none of the above

44. Chicago Processing Co. uses the average costing method and reported a beginning
inventory of 5,000 units that were 20% complete with respect to materials in one
department. During the month, 11,000 units were started; 8,000 units were finished;
ending inventory amounted to 8,000 units that were 60% complete with respect to
materials. Total materials cost during the period for work in process should be
spread over:
A. 7,200 units
B. 16,000 units
C. 11,200 units
D. 13,200 units
E. 12,800 units
45. Dover Corporation's production cycle starts in the Mixing Department. The following
information is available for April:

Units
Work in process, April 1 (50% complete) ................................................ 40,000
Started in April ......................................................................................... 240,000
Work in process, April 30 (60% complete) .............................................. 25,000

Materials are added at the beginning of the process in the Mixing Department. Using
the average cost method, what are the equivalent units of production for the month
of April?

Materials Conversion
A. 255,000 255,000
B. 270,000 280,000
C. 280,000 270,000
D. 305,000 275,000
E. 240,000 250,000

46. Information concerning Department A of Neeley Company for June is as follows:

Materials
Units Costs
Beginning work in process................................................... 17,000 P12,800
Started in June ..................................................................... 82,000 69,700
Units completed ................................................................... 85,000
Ending work in process ....................................................... 14,000

All materials are added at the beginning of the process. Using the average cost
method, the cost per equivalent unit for materials is:
A. P0.825
B. P0.833
C. P0.85
D. P0.97
E. P1.01
47. Kennedy Company adds materials in the beginning of the process in the Forming
Department, which is the first of two stages of its production cycle. Information
concerning the materials used in the Forming Department in October is as follows:

Materials
Units Costs
Work in process, October 1 ................................................. 6,000 P 3,000
Units started ......................................................................... 50,000 25,560
Units completed and transferred out ................................... 44,000

Using the average cost method, what was the materials cost of work in process at
October 31?
A. P3,000
B. P6,120
C. P3,060
D. P5,520
E. P6,000

48. Roger Company manufactures Product X in a two-stage production cycle in Departments A

and B. Materials are added at the beginning of the process in Department B. Roger
uses the average costing method. Conversion costs for Department B were 50%
complete as to the 6,000 units in beginning work in process and 75% complete as to
the 8,000 units in ending work in process. A total of 12,000 units were completed
and transferred out of Department B during February. An analysis of the costs
relating to work in process and production activity in Department B for February
follows:

Transferred- Materials Conversion

in Costs Costs Costs
Work in process, February 1:
Costs attached ...................................... P12,000 P2,500 P1,000
February activity:
Costs added .......................................... 29,000 5,500 5,000

The total cost per equivalent unit transferred out for February of Product X, rounded
to the nearest penny, was:
A. P2.82
B. P2.85
C. P2.05
D. P2.75
E. P2.78
49. Simpson Co. adds materials at the beginning of the process in Department M. The following
information pertains to Department M's work in process during April:

Units
Work in process on April 1
(60% complete as to conversion cost) .............................................. 3,000
Started in April ......................................................................................... 25,000
Completed in April ................................................................................... 20,000
Work in process on April 30
(75% complete as to conversion cost) .............................................. 8,000

Under the average costing method, the equivalent units for conversion cost are:
A. 26,000
B. 25,000
C. 24,000
D. 21,800
E. none of the above

50. During March, Quig Company's Department Y equivalent unit product costs, computed
under the average cost method, were as follows:

Materials ...................................... P1
Conversion ................................... 3
Transferred-in .............................. 5

Materials are introduced at the end of the process in Department Y. There were
4,000 units (40% complete as to conversion costs) in work in process at March 31.
The total costs assigned to the March 31 work in process inventory should be:
A. P36,000
B. P28,800
C. P27,200
D. P24,800
E. none of the above
ANSWERS:
1. A
2. B
3. B
4. A
5. A
6. B
7. A

8. C
9. B
10. A

11. D
Job 1040 = P12,000 + P40,000 + P30,000 + P27,000 - P100,000 = P9,000

12. E
13. B
14. C
P326 + P85 - P75 = P336
15. C
P686 = P326 + x + .6x
x = P225
16. A
P80 + P686 - P30 = P736
17. A
P90 + P736 - P110 = P716
18. A
P4,200 + (300 x P8) + (200 x P15) = P9,600
19. C
20. A
21. A
22. B

23. A
24. C
25. D
26. E
27. C
28. A
29. D
30. A
31. D
32. B
33. A
34. E
35. A
36. A
37. D
38. C
39. A
40. C
41. D
P10,400 + P8,000 + P8,800 = P27,200
42. C
P27,200 + P2,400 - P1,800 = P27,800
43. B
P27,800 + P1,200 - P1,000 = P28,000
44. E
8,000 + .60(8,000) = 12,800 units
45. C
Materials = 40,000 + 240,000 = 280,000
Conversion = (280,000 - 25,000) + .6(25,000) = 270,000
46. B
(P12,800 + P69,700) / (85,000 + 14,000) = P.833
47. B
(P3,000 + P25,560) / (44,000 + 12,000) = P.51
P.51 x 12,000 = P6,120
48. E
Transferred-in costs = P41,000/ 20,000 P2.05
Materials cost = P8,000/ 20,000 .40
Conversion cost = P6,000/18,000 .33
P2.78
49. A
20,000 + .75(8,000) = 26,000
50. D
P5(4,000) + P3(4,000 x .4) = P24,800