COST ACCOUNTING ASSESSMENT 1

1. Prime cost and conversion cost share what common element of total cost?
a. Variable overhead c. Direct materials
b. Fixed overhead d. Direct labor

2. For a manufacturing company, which of the following is an example of a period rather than a
product cost?
a. depreciation of factory equipment c. wages of machine operators
b. wages of a salesperson d. insurance on factory equipment

3. What is the best cost accumulation procedure to use when many batches, each differing as to
product specification, are produced?
a. job order b. process c. actual d. standard
4. The most common treatment of under-or-overapplied overhead is close it to:
a. work in process b. retained earnings c. cost of goods sold d. finished goods
5. Cost of goods sold is
a. an expense b. a period cost c. an asset d. none of these
6. In a job order costing, what journal entry should be made for the return to the stockroom of direct
materials previously issued to production for use on a particular job?
a. Debit to Materials and credit Factory Overhead
b. Debit Materials and credit Work in Process
c. Debit Purchase returns and credit Work in Process
d. Debit Work in Process and credit Materials

7. Under job-order costing system, the peso amount of the entry involved in the transfer of
inventory from work in process to finished goods is the sum of the costs charged to all jobs:
a. Started in process during the period
b. In process during the period
c. Completed and sold during the period
d. Completed during the period.

8. At the end of the last fiscal year, Bayer Co. had the following account balances:
Overapplied overhead P 6,000
Cost of Goods sold 980,000
Work in process 38,000
Finished goods 82,000
If the most common treatment of assigning overapplied was used the final balance in cost of
goods sold would have been
a. P985,340 c. P974,000
b. P974,660 d. P986,000

9. The following data are given by Domestic Mfg. Corp.:

Increase in finished goods invty. P12,000
Decrease in raw materials invty. 10,000
Increase in work in process invty. 5,000
Purchase returns and allow. 6,000
 Freight in 7,000
Factory overhead 25,000
Labor cost 65,000
Cost of goods sold 153,000
How much must be raw materials purchases?
a. 57,000 c. 55,000
b. 69,000 d. Not given

10. Golden Manufacturers provides you with the ff. Data:

Cost of goods sold P360,000
Raw materials used 150,000
Labor cost 100,000
Factory Overhead 100,000
Ending inventory of work in process and beginning inventory of finished goods inventories are
50% and 83 1/3% of beginning inventory of work in process, respectively. Finished goods
inventory, end is 140% of finished goods inventory beginning.
Cost of goods manufactured is:
a. 340,000 c. 380,000
b. 350,000 d. Not given

11. How much should be the net change in finished goods inventory based on the ff. Information:
Increase in raw materials inventory P8,000
Decrease in work in process inventory 11,000
Direct labor cost 55,000
Factory overhead 30,000
Raw materials purchases 85,000
Freight in 7,000
Purchase returns and allowances 9,500
Freight out 2,500
Sales 275,000
Gross profit percentage (based on cost) 66 2/3%
a. Increase by P5,500 c. Decrease by P5,500
b. Decrease by P21,500 d. None of the above

12.An industry that would most likely use job order costing procedures is:
a. road building c. Flour milling
b. fertilizer manufacturing d. Petroleum refining

13.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

14.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

The following events took place at the Dreams Co. for the current year.
 1.Purchased P120,000 in direct materials.
2.Incurred labor costs as follow
a. Direct labor, P72,000
b. Supervisor labor, P26,000 (part of manufacturing overhead)
3.Purchased manufacturing equipment for P94,000.
4.Other manufacturing overhead (excluding supervisor labor was P88,000)
5.Transferred 80% of the materials to the manufacturing assembly line.
6.Completed work on 70% of the goods in process. Costs are assigned equally across work in
process.
7.Sold 60% of the completed goods.
There was no beginning balances in the inventory accounts. All costs incurred were debited to the
appropriate account and credited to accounts payable.

15.Ending balance in direct materials inventory

a. 24,000 c. 96,000
b. 36,000 d. 120,000

16.The cost of goods sold is

a. P84,600 c. P197,440
b. P118,440 d. 282,000

17. 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

18.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

19.Howell 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. 6,750 c. 2,500
B. 2,250 d. 4,250

20.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 C. P405,000
B. P400,000 D. P418,000

21.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 C. P336
B. P316 D. P441

22.Direct labor costs charged to production during the year amounted to:
A. P216 C. P225
B. P135 D. 360

23.The cost of goods manufactured during the year was:

A. $736 C. P636
B. $716 D. P766
24.The cost of goods sold during the year was:
A. P716 C. P801
B. P691 D. 736

25.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 C. P11,100
B. P10,300 D. P5,400

26. Under Brent Co’s job order cost system, estimated costs of defective work (considered normal in
the manufacturing process) are included in the predetermined factory overhead rate. During
March, Jon No. 210 for 2,000 hand saws was completed at the following costs per unit:
Direct materials P5
Direct labor 4
Factory overhead (applied at 150% of direct labor cost 6
P15
===
Final inspection disclosed 100 defective saws, which were reworked at a cost of P2 per unit for
direct labor, plus overhead at the predetermined rate. The defective units fall within the normal
range. What is the total rework cost and to what account should it be charged?
a. P200 to work-in-process c. P500 to work-in-process
b. P200 to factory overhead control d. P500 to factory overhead control

27. During March, Andrey Co. incurred the following costs on Job 109 for the manufacture of 200
motors:
Original cost accumulation:
Direct materials P660
Direct labor 800
Factory overhead (150% of DL) 1,200
P2,660
=======
Direct costs of reworking 10 units:
Direct materials P100
Direct labor 160
P 260
======
The rework costs were attributable to the exacting specifications of Job 109, and the full rework
costs were charged to this specific job. What is cost per finished unit of Job 109?
a. 15.80 b. 14.60 c. 14.00 d. 13.30

28. Using the same information in No. 27 assuming the rework cost were attributable to internal
failure or charged to factory overhead, what is the cost per finished unit of Job 109?
a. 15.80 b. 14.60 c. 14.00 d. 13.30

29. Angel Co’s Job 205 for the manufacture of P6,600 coats was completed during August 2008 at
the following unit costs:
Direct materials P1,500
Direct labor 1,000
Factory overhead (include an allow
of P50 for spoiled work) 500
P3,000
=====
 Final inspection of Job 205 disclosed 600 spoiled coats which were sold to a jobber for P600,000.
Assume that spoilage loss is charged to all production during August 2008.

What would be the unit cost of the good coats produced on Job 205?
a. 2,900 b. 2,950 c. 3,000 d. 3,145

30. Using the same information No. 29, assuming the spoilage loss is attributable to exacting
specifications or chargeable to a particular job, what would be the unit cost of the good coats
produced on Job 205?
a. 2,900 b. 2,950 c. 3,000 d. 3,145

31. Brian Co. manufactures electric drills to the exacting specifications of various customers. During
April 2008, Job 403 for the production of 1,100 drills was completed at the following costs per
unit:
Direct materials P10
Direct labor 8
Applied factory overhead 12
Total 30
===
Final inspection of Job 403 disclosed 50 defective units and 100 spoiled units. The defective
drills were reworked at a total cost of P500, and the spoiled drills were sold to a jobber for
P1,500. What would be the unit cost of the good units produced on Job 403?
a. 33 b. 32 c. 30 d. 29

32. Some units of output failed to pass final inspection at the end of the manufacturing process. The
production and inspection supervisors determined that the incremental revenue from reworking
the units exceeded the cost of rework. The rework of the defective units was authorized, and the
following costs were incurred in reworking the units:
Materials requisitioned from stores:
Direct Materials P5,000
Miscellaneous supplies 300
Direct labor 14,000
The manufacturing overhead budget includes an allowance for rework. The predetermined
manufacturing overhead rate is 150% of direct labor cost. The account(s) to be charged and the
appropriate charges for rework cost would be:
a. Work-in process inventory control for P19,000
b. Work-in process inventory control for P5,000 and factory overhead control for P35,300.
c. Factory overhead control for P19,300.
d. Factory overhead control for P40,300.

33. Hilltop Co. sells a new product. During a move to a new location, the inventory records for the
product were misplaced. The bookkeeper has been able to gather some information from the
purchases and sales records. The July purchases are as follows:
Quantity Unit Cost Total Cost
July 5 10,000 65 650,000
9 12,000 63 756,000
12 15,000 60 900,000
25 14,000 62 868,000
51,000 3,174,000
====== ========
 Only July 31, 15,000 units were on hand. The sales for July amount to P6,000,000, or 60,000
units at P100 per unit. Hilltop has always used a periodic FIFO inventory costing system. Gross
profit on sales for July was P2,400,000. What was the cost of inventory on July 1?
a. 1,354,000 b. 2,400,000 c. 2,826,000 d. 426,000

34. Wowbulagas Co’s Job 501 for the manufacture of 2,200 coats, which was completed during
August at unit costs presented below. Final inspection of Job 501 disclosed 200 spoiled coats
which were sold to a jobber for P6,000
Direct Materials P20
Direct Labor 18
FOH (includes an allowance of P1 spoiled work) 18
Assume that spoilage loss is charged to all production during August. What would be the unit
cost of the good coats produced on Job 501?
a. 53 b. 55 c. 56 d. 58.60

35. Using the same information above, assume instead that the spoilage loss is attributable to the
exacting specifications of Job 501 and is charged to this specific job. What would be the unit cost
of the good coats produced on Job 501?
a. 56 b. 57.50 c. 58.60 d. 61.60

36. Papi Corp. is a manufacturing concern that uses a perpetual inventory system. The following data
on the material inventory account is provided for 2008.
Material balance P275,000
Other debits to the materials account during the year 825,000
Increase of ending over beginning inventory 55,000
How much is the cost of materials issued to production?
a. 1,045,000 b. 770,000 c. 880,000 d. 430,000

37. Jeff Co. sells 20,000 radios evenly throughout the year. The cost of carrying one unit of inventory
for one year is P8, and the purchase order cost per order is P32. What is the economic order
quantity?
a. 200 b. 400 c. 283 d. 625

38. The following data relate to inventories for a given year of Cloud Co:
Economic order quantity 7,500 units
Cost to place one purchase order P 75
Total cost to place purchase orders for the year P15,000
Cost to carry one unit for one year P 6
The estimated annual usage in units would be
a. 2,250,000 b. 2,000,000 c. 1,250,000 d. 5,625,000

Use the following data in answering numbers 39 to 45:

Sweet Co. use normal costing in its job costing system. Additional information for the year 2020
follows:
Material Work in Process Finished goods
Debit Credit Debit Credit Debit Credit
1/1 30,000 380,000 1/1 20,000 1/1 10,000 900,000
400,000 DL 360,000 940,000

Manufacturing Overhead Control

 Debit Credit
540,000

Additional information:
a. Direct labor cost rate was P15 per hour.
b. Manufacturing overhead was applied at P20 per direct labor hour.
c. During the year, sales revenues were P1,090,000 and marketing expenses were P140,000.

39. What was the amount of direct materials issued to production during 2020?
a. 350,000 c. 360,000
b. 380,000 d. 390,000
40. What was the amount of manufacturing overhead applied to jobs during 2020?
a. 450,000 c. 460,000
b. 480,000 d. 360,000

41. What was the cost of jobs completed during 2020?

a. 940,000 c. 950,000
b. 900,000 d. 930,000

42. What was the balance of work in process inventory on Dec. 31, 2020?
a. 300,000 c. 310,000
b. 250,000 d. 320,000

43. What was the cost of goods sold before adjustment for over or underapplied overhead?
a. 910,000 c. 850,000
b. 900,000 d. 950,000

44. What was the under-overapplied manufacturing overhead in 2020?

a. 50,000 c. 70,000
b. 60,000 d. 80,000

45. What is the operating income (loss) for 2020 assuming the under or overapplied overhead is
closed to cost of goods sold?
a. (P10,000) c. (P20,000)
b. P10,000 d. P20,000

II. Problem on Inventory Cost Flow (Supply the answer- 2 pts each)
1. MEGA CO. had the following inventory transactions during 2019.
Units Unit Cost Unit Selling Price
Inventory 1/1 250 10.50
Purchases March 7 200 11
Sale, May 20 (120) 14
Sale, June 30 ( 55) 15
Purchases7/15 275 11.75
Sale, Sept 17 (245) 16
Inventory, Dec. 31 305
Determine the cost of ending inventory, cost of goods sold, & gross profit under each of the following
inventory cost flow method
Ending Inventory Cost of goods sold gross profit
a. FIFO ______________ _______________ _________
b. moving average ______________ _______________ _________
Lani Co. charges its actual overhead to Work in Process. Selected account balances for September are as
follows:
July 1 July 31
Finished Goods P34,000 P30,000
Work in Process 7,000 ?
Materials and Supplies 20,000 15,000
Accrued Payroll 13,000 9,000
Accounts Receivable 54,000 22,000
Accounts Payable 18,000 6,000
Sales 500,000
Additional Information:
a. All sales are on account
b. The accounts payable account is used for the purchase of materials and supplies only
c. Markup is 30% of sales.
d. At the end of July, the work in process account had P2,000 of materials, P6,000 of direct labor,
and P3,000 of factory overhead charged to it.
e. Actual factory overhead costs for July were:
Supplies P20,000
Indirect labor 55,000
Depreciation 10,000
Insurance 2,000
Miscellaneous 13,000
f. Materials and supplies purchased on account were P65,000.

Required: Using a schedule of cost of goods sold, determine:(2 pts each)

1.Materials issued to production
2.Direct Labor
3.Total factory overhead
4.Cost of goods manufactured
5.Cost of goods sold
6.Payment of accounts payable
7.Collection of accounts receivable
8.Payment of payroll