1.

An expense that is likely to contain both fixed and variable components is:
a. Heat, light and power.
b. Small tools
c. Supplies
d. Security guard wages

2. A type of employee whose wages are not a component of indirect labor is a(n):
a. Maintenance worker
b. Supervisor
c. Inspector
d. Assembler

3. 5. Andeng Enterprise
Inventories: March 1 March 31
Raw Material P18,000 P15,000
Work in Process 9,000 6,000
Finished foods 27,000 36,000

Additional information for March:

Raw material purchased P42,000
Direct labor payroll 30,000
Direct labor rate per hour 7.50
Overhead rate per direct labor hour 10.00

Refer to Andeng Enterprises, For March, Cost of Goods Manufactured was

a. P109,000
b. P115,000
c. P118,000
d. P112,000

4. A company manufactures plastic products for the home and restaurant market. The company
also does contract work for other customers and utilizes a job order costing system. The flexible
budget covering next year’s expected range of activity is:

Direct labor hours 50,000 80,000 110,000

Machine hours 40,000 64,000 88,000
Variable overhead costs P100,000 P160,000 P220,000
Fixed overhead costs 150,000 150,000 150,000
Total overhead costs P250,000 P310,000 P370,000

A predetermined overhead rate based on direct labor hours at expected actual capacity is used
to apply total overhead. Management has estimated that 100,000 direct labor hours will be
used next year. The predetermined overhead rate per direct labor hour to be used to apply total
overhead to individual jobs next year is:

a. P3.50
b. P3.36
 c. P3.88
d. P3.70

5. An example of a cost that is irrelevant to a future decision is a(n):

a. Opportunity cost
b. Differential cost
c. Out-of-pocket cost
d. Sunk Cost

6. The term “relevant range” as used in cost accounting means the range over which:
a. Costs may fluctuate
b. Relevant costs are incurred
c. Production may vary
d. Cost relationships are valid

7. Expenses that require a series of payments over a long period of time such as long-term debt
and lease rentals are frequently known as:
a. Programmed fixed expenses
b. Avoidable expenses
c. Variable expenses
d. Committed fixed expenses

8. Andeng Enterprise
Inventories: March 1 March 31
Raw Material P18,000 P15,000
Work in Process 9,000 6,000
Finished foods 27,000 36,000

Additional information for March:

Raw material purchased P42,000
Direct labor payroll 30,000
Direct labor rate per hour 7.50
Overhead rate per direct labor hour 10.00

Refer to Andeng Enterprises, For March, prime cost incurred was

a. P75,000
b. P45,000
c. P69,000
d. P39,000

9. The following information was available from the inventory records of the Anthony Company for
January 20X7:
Unit Total
Units Costs Costs
Balance at January 1, 20X1…………… 2,000 P9,775 P19,550
Purchases:
January 6, 20X7………………. 1,500 10,300 15,450
January 26, 20X7……………. 3,400 10,750 36,550
Sales:
January 7, 20X7…………….. 1,800
January 31, 20X7…………… 3,200
Balance at January 31, 20X7………. 1,900

Assuming that Anthony does not maintain perpetual inventory records, what should be the inventory at
January 31. 20X7, using the average cost inventory method rounded to the nearest peso?
a. P9,702
b. P19,950
c. P19,998
d. P19,523

10. Andeng Enterprise

Inventories: March 1 March 31
Raw Material P18,000 P15,000
Work in Process 9,000 6,000
Finished foods 27,000 36,000

Additional information for March:

Raw material purchased P42,000
Direct labor payroll 30,000
Direct labor rate per hour 7.50
Overhead rate per direct labor hour 10.00

Refer to Andeng Enterprises, For March, conversion cost incurred was

a. P70,000
b. P40,000
c. P72,000
d. P30,000

11. Hoyden Co. developed the following equation to predict certain components of it’s budget for
the coming period:
Costs = P50,000 + (P5 x direct labour hours)
The P5 would approximate:
a. Direct labor rate per hour
b. Variable costs per direct labor hour
c. Total costs
d. Fixed costs per direct labor hour

12. If an employee earns P10 per hour and receives time-and-a-half for hours worked In excess of
40 per week, in a week when 45 hours were worked the overtime premium would be:
a. P5
b. P25
c. P10
d. P50
 13. Denver Corporation
The records of Denver Corporation revealed the following data for the current year.

Work in Process P73,150

Finished Goods 115,000
Cost of Goods Sold 133,650
Direct Labor 111,600
Direct Material 84,200

Refer to Denver Corporation. Assume, for this question only, actual overhead is P98,700 and
applied overhead is P93,250/ Manufacturing overhead is:
a. Underapplied by P5,450
b. Overapplied by P12,900
c. Underapplied by P18,350
d. Overapplied by P5,450

14. The following information was available from the inventory records of the Anthony Company for
January 20X7:
Unit Total
Units Costs Costs
Balance at January 1, 20X1…………… 2,000 P9,775 P19,550
Purchases:
January 6, 20X7………………. 1,500 10,300 15,450
January 26, 20X7……………. 3,400 10,750 36,550
Sales:
January 7, 20X7…………….. 1,800
January 31, 20X7…………… 3,200
Balance at January 31, 20X7………. 1900

Assuming that Anthony does not maintain perpetual inventory records, what should be the inventory at
January 31. 20X7, using the average cost inventory method rounded to the nearest peso?
e. P9,702
f. P19,950
g. P19,998
h. P19,523

15. Wages of the security guard for a small plant are an example of:
a. Indirect Labor: YES Fixed Factory Overhead: YES
b. Indirect Labor: NO Fixed Factory Overhead: YES
c. Indirect Labor: YES Fixed Factory Overhead: NO
d. Indirect Labor: NO Fixed Factory Overhead: YES
16. The company division that is responsible for recording the direct labor cost on the appropriate
production reports the indirect labor on the departmental cost analysis sheets is:
a. Payroll Department
b. Personnel Department
c. Cost Department
d. Production Planning Department

17. General corporate-level costs, such as bond interest and taxes, would be readily traceable to:
a. each batch of production
b. none of the above
c. each unit of product
d. each division of the company

18. Direct Labor 0 1.00 per unit produced

Manufacturing overhead P150,000 0.50 per unit produced
Selling & Admin Expense 80,000 0.50 per unit sold

Kellman Corporation had no inventory at the beginning of the year.

Refer to Kellman Corporation. What is the net income under absorption costing?

a. P90,000
b. P50,000
c. P80,000
d. P120,000

19. Grant Corporation distributes its service department overhead costs directly to producing
departments without allocation to the other service departments. Information for January is
presented here.

Maintenance Utilities
Overhead costs incurred P18,700 P9,000
Service provided to:
Maintenance Dept. 10%
Utilities Dept. 20%
Producing Dept. A 40% 30%
Producing Dept. B 40% 60%

Refer to Grant Corporaton. The amount of Utilities Department costs distributed to Dept B for
January should be (rounded to the nearest peso).

a.P6,000

20. Denver Corporation

The records of Denver Corporation revealed the following data for the current year.

Work in Process P73,150

Finished Goods 115,000
 Cost of Goods Sold 133,650
Direct Labor 111,600
Direct Material 84,200

Refer to Denver Corporation. Assume that Denver has overapplied overhead of P25,000 and
that this amount is material. What is the balance in Cost of Goods Sold after the overapplied
overhead is closed?

a.P144,033
b. P123,267
c.

21. Grant Corporation distributes its service department overhead costs directly to producing
departments without allocation to the other service departments. Information for January is
presented here.

Maintenance Utilities
Overhead costs incurred P18,700 P9,000
Service provided to:
Maintenance Dept. 10%
Utilities Dept. 20%
Producing Dept. A 40% 30%
Producing Dept. B 40% 60%

Refer to Grant Corporaton. The amount of Utilities Department costs distributed to Dept B for
January should be (rounded to the nearest peso).

a.P6,000

22. Grant Corporation distributes its service department overhead costs directly to producing
departments without allocation to the other service departments. Information for January is
presented here.

Maintenance Utilities
Overhead costs incurred P18,700 P9,000
Service provided to:
Maintenance Dept. 10%
Utilities Dept. 20%
Producing Dept. A 40% 30%
Producing Dept. B 40% 60%

Refer to Grant Corporation. Using the step method, how much of Grant Corporation’s Utilities
Department cost is allocated between Departments A and B?

a. P27,700
b. P12,740
c. P10,800
 23. Denver Corporation
The records of Denver Corporation revealed the following data for the current year.

Work in Process P73,150

Finished Goods 115,000
Cost of Goods Sold 133,650
Direct Labor 111,600
Direct Material 84,200

Refer to Denver Corporation. Assume that Denver has underapplied overhead of P10,000 and
that this amount is immaterial. What is the balance in Cost of Goods Sold after the underapplied
overhead is closed?

A. P143,650
B. P123,650
C. P137,803
D. P133,650

24. Denver Corporation

The records of Denver Corporation revealed the following data for the current year.

Work in Process P73,150

Finished Goods 115,000
Cost of Goods Sold 133,650
Direct Labor 111,600
Direct Material 84,200

Refer to Denver Corporation. Assume that Denver has underapplied overhead of P37,200 and
that this amount is material. What journal entry is needed to close the overhead account?
(Round decimals to nearest whole percent.)

A. Debit Cost of Goods Sold P37,200 and credit Overhead P37,200

B. Debit Work in Process P37,200 and credit Overhead P37,200
C. Debit Overhead P37,200 and credit Work in Process P8,45; Finished Goods P13,294; Cost of
Goods Sold
D. Debit Work in Process P8,456; Finished Goods P13,294; Cost of Goods Sold P15,450 and
credit Overhead

25. The following information was available from the inventory records of the Anthony Company for
January 20X7:
Unit Total
Units Costs Costs
Balance at January 1, 20X1…………… 2,000 P9,775 P19,550
Purchases:
January 6, 20X7………………. 1,500 10,300 15,450
January 26, 20X7……………. 3,400 10,750 36,550
Sales:
January 7, 20X7…………….. 1,800
 January 31, 20X7…………… 3,200
Balance at January 31, 20X7………. 1900

Assuming that Anthony maintains perpetual inventory records, what should be the inventory at January
31. 20X7, using the average cost inventory method rounded to the nearest peso?

a. P19,523
b. P19,703
c. P19.950
d. P19,998

26. Actual:
Direct labor hours
Variable overhead
Fixed overhead

Refer to Fleetwood Company. Using the three-variance approach, what is the volume variance?
a. P6,062.50 U
b. P3,875.00 F
c. P3,875.00 U
d. P3,125.00 F

27. Current Period Costs:

Material P24,500
Conversion 68.905

Material P75,600
Conversion 130,053

Refer to Simpson Compant. What is the cost of all units transferred out using the FIFO method?

a. P191,289
b. P287,004
c. P298,029
d. P204,624

28. Mart Company 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

29. Simpson Company adds material at the start of production. The following production
information is available for September:

Beginning Work in Process Inventory

(45% complete as to conversion) 10,000 units
Started this period 120,000 units
Ending Work in Process Inventory
(80% complete as to conversion) 8,200 units

Beginning Work in Process Inventory Costs

Material P24,500
Conversion 68,905

Current Period Costs:

Material P24,500
Conversion 68.905

Material P75,600
Conversion 130,053

30. In a process costing system, the journal entry to record the transfer of goods from Department
#2 to Finished Goods Inventory is a
a. debit Finished Goods Inventory, credit Work in Process Inventor #2.
b. debit Work in Process Inventory #2, credit Finished Goods Inventory.
c. debit Finished Goods Inventory, credit Work in Process Inventor #1.
d. debit Cost of Goods Sold, credit Work in Process Inventory #2.

31. Actual:
Material 4,250 pounds purchased and used @P5.65 per pound
Labor 6,300 direct labor hours at P9.75 per hour

Refer to Strong Manufacturing Company. What is the material price variance?

a.P630.00 U
b. P637.50 F
c. P637.50 U
d. P630.00 F
 32. Direct costs of reworking 10 units:
Direct materials P100
Direct labor 160
P260

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 the cost per finished unit of job 109?

A. P13.30
B. P15.80
C. P14.60
D. P13.80

33. Below is an income statement for Palmer Company:

Sales P400,000
Variable Costs (125,000)
Contribution Margin P275,000
Fixed Costs (200,000)
Profit before taxes P75,000

Refer to Palmer Company. Based on the cost and revenue structure on the income statement,
what was Palmer’s break-even point in peso?

a.P300,000
b. P290,909
c. P325,000
d. P200,000

34. Simpson Company adds material at the start of production. The following production
information is available for September:

Beginning Work in Process Inventory

(45% complete as to conversion) 10,000 units
Started this period 120,000 units
Ending Work in Process Inventory
(80% complete as to conversion) 8,200 units

Beginning Work in Process Inventory Costs

Material P24,500
Conversion 68,905

Current Period Costs:

Material P24,500
Conversion 68.905
 Material P75,600
Conversion 130,053

Refer to Simpson Company. What is the material cost per equivalent unit using the weighted
average method?
a.P0.82
b. P0.58
c. P0.77
d. P0.62

35. Below is an income statement for Palmer Company:

Sales P 400,000
Variable Costs (125,000)
Contribution Margin P275,000
Fixed Costs (200,000)
Profit before taxes P75,000

Refer to Palmer Company. Assuming that the fixed costs are expected to remain at P200,000 for
the coming year and the sales price per unit and variable costs per unit are also expected to
remain constant, how much profit before taxes will be produced if the company anticipates
sales for the coming year rising to 130 percent of the current year’s level?

A. P97,500
b. P157,500
c. P195,000
d. A prediction cannot be made from the information given.

36. Actual:
Direct labor hours 10,000
Variable overhead P26,250
Fixed overhead P38,000

Refer to Fleetwood Company. Using the three-variance approach, what is the volume variance?
a. P2,937.50 F
b. P2,187.50 U
c. P2,187.50 F
d. P9,937.50 F

37. The following information is available for Strong Manufacturing Company for the month of June
when the company produced 2,100 units:

Standard:
Material 2 pounds per unit @ P5.80 per pound
Labor 3 direct labor hours per unit @ P10.00 per hour

Actual:
Material 4,250 pounds purchased and used @ P5.65 per pound
Labor 6,300 direct labor hours at P9.75 per hour
 Refer to Strong Manufacturing Company. What is the material price variance?

38. Actual:
Direct labor hours 10,000
Variable overhead P26,250
Fixed overhead P38,000

Refer to Fleetwood Company. Using the three-variance approach, what is the spending
variance?

a. P8,000.00 U
b. P4,375.00 U
c. P15,750.00 U
d. P3,625.00 F

39. Adams Company is a graphic design shop that produces jobs to customer specifications. During
January, Job #3051 was worked on and the following information is available:

Direct Material Used P2,500

Direct Labor Hours worked 15
Machine Time Used 6
Direct Labor rate per hour P7
Overhead Application rate per hour P18
Of machine time

What was the total cost of job #3051 for January?

a. P3,052
b. P2,770
c. P2,812
d. P2,713

40. Which of the following is subtracted from weighted average EUP to derive FIFO EUP?

A. Beginning WIP EUP completed in current period

b. Ending WIP EUP not completed
c. Beginning WIP EUP produced in prior period
d. Ending WIP EUP completed
 41. The following information pertains to Mercury Company’s cost-volume-profit relationships:

Break-even point in units sold 1,000

Variable costs per unit P500
Total fixed costs P150,000

How much will be contributed to profit before taxes by 1,001st unit sold?

a. P650
b. P0
c. P150
d. P500

42. Simpson Company adds material at the start of production. The following production
information is available for September:

Beginning Work in Process Inventory

(45% complete as to conversion) 10,000 units
Started this period 120,000 units
Ending Work in Process Inventory
(80% complete as to conversion) 8,200 units

Beginning Work in Process Inventory Costs

Material P24,500
Conversion 68,905

Current Period Costs:

Material P24,500
Conversion 68.905

Material P75,600
Conversion 130,053

Refer to Simpson Company. What is the conversion cost per equivalent unit using the FIFO
method?

a. P1.61
b. P0.95
c. P1.55
d. P1.05
43. In standaed cost system, work in process inventory is ordinarily debited with
a. Standard costs based on the level of input activity (such as direct labor hours worked).
b. Actual costs of material and labor and a predetermined overhead cost for overhead.
c. Actual costs of material, labor, and overhead.
d. Standard costs based on production output.

44. Below is an income statement for Palmer Company:

Sales P 400,000
Variable Costs (125,000)
Contribution Margin P275,000
Fixed Costs (200,000)
Profit before taxes P75,000

Refer to Palmer Company. What was Palmer’s margin of safety?

a. P109,091
b. P200,000
c. P100,000
d. P75,000

45. Direct Labor 0 1.00 per unit produced

Manufacturing overhead P150,000 0.50 per unit produced
Selling & Admin Expense 80,000 0.50 per unit sold

Kellman Corporation had no inventory at the beginning of the year.

Refer to Kellman Corporation. What is the net income under variable costing?

a. P50,000
b. P80,000
c. P90,000
d. P120,000

46. Fixed costs:

Manufacturing overhead P70,000
SG & A 30,000

Cost-volume-profit analysis is a technique available to management to understand better the

interrelationships of several factors that affect a firm’s profit. As with many such techniques, the
47. The following information has been taken from the cost records of Jordan Company for the past
year:

Raw material used in production P326

Total manufacturing costs charged to production 686
during the year (includes direct material, direct labor,
and overhead equal to 60% of direct labor cost)

Cost of goods available for sale 826

Selling and Administrative expenses 25

Inventories Beginning Ending

Raw Material P75 P85
Work in Process 80 30
Finished Goods 90 110

Refer to Jordan Company, Cost of Goods Sold was

a.P801
b. P736
c. P716
d. P691

48. The following information has been taken from the cost records of Jordan Company for the past
year:

Raw material used in production P326

Total manufacturing costs charged to production 686
during the year (includes direct material, direct labor,
and overhead equal to 60% of direct labor cost)

Cost of goods available for sale 826

Selling and Administrative expenses 25

Inventories Beginning Ending

Raw Material P75 P85
Work in Process 80 30
Finished Goods 90 110

Refer to Jordan Company. Direct labor cost charged to production during the year was

a. P360
b. P135
c. P225
d. P216
49. The following information has been taken from the cost records of Jordan Company for the past
year:

Raw material used in production P326

Total manufacturing costs charged to production 686
during the year (includes direct material, direct labor,
and overhead equal to 60% of direct labor cost)

Cost of goods available for sale 826

Selling and Administrative expenses 25

Inventories Beginning Ending

Raw Material P75 P85
Work in Process 80 30
Finished Goods 90 110

Refer to Jordan Company. The cost of raw material purchased during the year was
a. P316
b. P411
c. P360
d. P336

50. Grant Corporation distributes its service department overhead costs directly to producing
departments without allocation to the other service departments. Information for January is
presented here.

Maintenance Utilities
Overhead costs incurred P18,700 P9,000
Service provided to:
Maintenance Dept. 10%
Utilities Dept. 20%
Producing Dept. A 40% 30%
Producing Dept. B 40% 60%

Refer to Grant Corporaton. Assume that Grant Corporation distributes service department
overhead costs based on the algebraic method. What would be the formula to determine the
total maintenance costs?

a.M = P27,000 + .40A + .40B

b. M = P18,700 + .30U + .40A + .40B
c. M = P9,000 + .20U
d. M = P18,700 + .10U

51. Refer to Bush Corporation. Based on absorption costing, Bush