Rizal Technological University-Accountancy Department (Cost Accounting)

Questionnaire

1. When job-order costing is used, the primary focal point of cost accumulation is the
a. Department
b. Item
c. Job
d. Supervisor

2. In normal costing, a debit to Work in process would not be made for

a. Actual overhead
b. Actual direct materials
c. Applied overhead
d. Actual direct labor

3. A credit to Work in Process inventory represents

a. Raw materials put into production
b. Work still in process
c. The transfer of completed goods to finished goods
d. The application of overhead production

4. Which of the following would least likely to be supported by a subsidiary ledger in a company that employs job-order costing
system?
a. Work in Process inventory
b. Supplies Inventory
c. Accounts Payable
d. Raw Materials inventory

5. The source document that records the amount of time an employee worked on a job order and his pay rate
a. Job cost sheet
b. Time ticket
c. Timecard
d. Direct labor subsidiary ledger

6. Which of the following journal entries records the accrual of the cost indirect labor used in production?
a. Debit WIP; Credit Wages Payable
b. Debit WIP; Credit Manufacturing Overhead
c. Debit Manufacturing Overhead; Cr. WIP
d. Debit Manufacturing Overhead; Credit Wages Payable

7. A journal entry includes a debit to work in process and credit to raw materials. The explanation for this would be
a. Indirect materials were placed into production
b. Raw materials were purchased on account
c. Direct materials were placed into production
d. Direct labor was used for production

8. In perpetual inventory system, a transaction that requires two journal entries is needed when
a. Raw materials are purchased on account
b. Goods are sold for cash

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c. Goods are finished and transfer to Finished goods inventory

d. Overhead is applied to WIP

9. If overhead is underapplied, then:

a. Actual overhead cost is less than estimated overhead cost
b. The predetermined overhead rate is too high
c. The amount of overhead cost applied to WIP is less than the actual overhead cost incurred
d. The manufacturing overhead account will have a credit balance at the end of the year

10. Total manufacturing costs for the year plus beginning WIP is equal to
a. Total manufacturing cost to account for
b. Cost of goods available for sale
c. Ending Inventory
d. Cost of goods manufactured

11. Overhead is applied to jobs in a job-order costing system

a. At the end of the period
b. As jobs are completed
c. At the end of the period as jobs are completed, whichever is later
d. At the end of the period as jobs are completed, whichever is earlier

12. In job order costing, payroll taxes paid by the employer for factory employees are commonly accounted for as:
a. Direct labor cost
b. Manufacturing overhead cost
c. Indirect labor cost
d. Administrative cost

13. Under which method are one-way reciprocal services recognized?

a. Direct method
b. Fixed method
c. Reciprocal method
d. Step-down method

14. Which of the following is not a management function?

a. Planning
b. Constraining
c. Controlling
d. Directing

15. For merchandising companies, inventoriable costs include the following except
a. The cost of the goods themselves
b. Insurance cost for the goods
c. Outgoing freight cost
d. All the above

16. All the cost categories listed below are usually found in a company’s accounting records, except for
a. Sunk cost
b. Inventoriable cost
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c. Opportunity cost
d. Marketing cost

17. Cost of goods manufactured will usually include:

a. Cost incurred during the current period
b. Direct labor cost and direct materials
c. Some cost incurred from prior period
d. Some period cost and product cost

18. When 10,000 units are produced, fixed costs are 14 per unit. Therefore, when 20,000 units are produced, fixed costs
a. Will increase to 28 per unit
b. Will remain at 14 per unit
c. Will decrease to 7 per unit
d. Will total to 280,000

19. Within the relevant range, if there is a change in the level of cost driver then
a. Fixed and variable costs per unit will change
b. Fixed and variable per unit will remain the same
c. Fixed cost per unit will remain the same and variable costs per unit will change
d. Fixed cost per unit will change and variable costs per unit will remain the same

20. Costs of abnormal spoilage are usually accounted for as

a. part of the cost of goods sold
b. part of the cost of goods manufactured
c. a separate line item in the income statement
d. an asset in the balance sheet

21. Companies that attempt to achieve zero defects in the manufacturing process treat spoilage as
a. Scrap
b. abnormal spoilage
c. reworked units
d. normal spoilage

22. An “Ordering and Receiving Materials” cost pool would most likely have as a cost driver
a. machine hours
b. number of setups
c. number of purchase orders
d. number of inspection tests

23. Activity-based costing

a. accumulates overhead in one cost pool, then assigns the overhead to products and services by means of a cost driver
b. allocates overhead to activity cost pools, and it then assigns the activity cost pools to products and services by means
of cost drivers
c. allocates overhead directly to products and services based on activity levels
d. assigns activity cost pools to products and services, then allocates overhead back to the activity cost pools.

24. Predetermined overhead rates in traditional costing are often based on

a. direct labor cost for job order costing and machine hours for process costing
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b. machine hours for job order costing and direct labor cost for process costing
c. multiple bases for job order costing and direct labor cost for process costing
d. multiple bases for both job order costing and process costing

25. An activity that has a direct cause-effect relationship with the resources consumed is a(n)
a. product activity
b. overhead rate
c. cost driver
d. cost pool

26. An example of an activity cost pool is

a. machine hours
b. setting up machines
c. number of setups
d. number of inspections

27. Assigning overhead using ABC will usually

a. increase the cost per unit for low volume products as compared to a traditional overhead allocation
b. decrease the cost per unit for low volume products as compared to a traditional overhead allocation
c. provide less accurate cost per unit for low volume products than will traditional costing
d. result in the same cost per unit for low volume products as does traditional costing

28. The method that allocates costs by explicitly including all the services rendered among all support departments is the
a. direct method
b. step-down method
c. reciprocal method
d. sequential method

29. The direct allocation method

a. partially recognizes the services provided among support departments
b. is also referred to as the sequential method
c. is conceptually the most precise method
d. results in allocating only the support costs used by producing departments

30. The step-down allocation method

a. recognizes the total amount of services that support departments provide to each other
b. allocates complete reciprocated costs
c. typically begins with the support department that provides the highest percentage of its total services to other
support departments
d. offers key input for outsourcing decisions

31. Indirect labor is a

a. Non-manufacturing cost
b. Raw material cost
c. Period Cost
d. Product Cost
e.

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32. A cost of goods manufactured schedule shows beginning and ending inventories for
a. Raw materials and work in process only
b. Work in process only
c. Raw materials only
d. Raw materials, work in process, and finished goods

33. Material left over when making a product is referred to as

a. reworked units
b. spoilage
c. scrap
d. defective units

34. An example of a cost which would not be assigned to an overhead cost pool is
a. indirect salaries
b. advertising
c. depreciation
d. supplies

35. The employer’s contribution of SSS should be charged to

a. An expense for the employee
b. An expense for the employer
c. A revenue for the employee
d. A revenue for the employer

Problem Solving (2 pts each)

Number 36 to 38 pertain to Glenn Company’s manufacturing operations

Inventories 3/1/19 3/31/2019

Raw Materials 36,000 30,000
Work in Process 18,000 12,000
Finished Goods 54,000 72,000

Additional information for the month of March 2016

Direct Materials purchased 84,000

Direct Labor Payroll 60,000
Direct Labor rate per hour 7.50
Factory overhead rate per direct labor hour 10.00

36. Prime Cost was

a. 90,000
b. 120,000
c. 144,000
d. 150,000
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37. Conversion Cost was

a. 90,000
b. 140,000
c. 144,000
d. 170,000

38. Cost of goods manufactured was

a. 218,000
b. 224,000
c. 230,000
d. 236,000

39. Zun Company uses a job order cost system and applies factory overhead to production orders based on direct labor cost. The
overhead rates for 2019 are 200% for Department A and 50% for Department B. Job 123 started and completed during 2019,
was charged with the following costs.

Department
A B
Direct Materials 25,000 5,000
Direct Labor ? 30,000
Factory Overhead 40,000 ?

The total manufacturing costs associated with Job 123 should be

a. 135,000
b. 180,000
c. 195,000
d. 240,000

40. The following information relates to Job No. 210, which is being manufactured by Gum company to meet customer’s order

Department A Department B
Direct Materials used 5,000 3,000
Direct Labor hours used 400 200
Direct Labor Rate 4.00 5.00
Overhead rate per DLH 4.00 4.00

Profit Mark Up 25% of selling price

The amount that should be billed to customer should be

a. 16,250
b. 13,000
c. 15,860
d. 17,333

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Adams Co. uses job order costing and the following information is available from the records. The company has 3 jobs in process.
501, 502 and 503.

Raw materials used 120,000

Direct Labor per hour 8.50
Overhead applied based on direct labor cost 120%

Direct material was requisitioned as follows for each job, respectively: 30%, 25% and 25%, the balance of the requisitions was
considered indirect. Direct labor hours per job are 2,500 , 3,100 and 4,200 respectively. Indirect labor is 33,000. Other actual overhead
costs totaled 36,000.

41. What is the total amount of actual factory overhead?

a. 36,000
b. 69,000
c. 93,000
d. 99,960

42. If job 503 is completed and transferred, how much is the total cost transferred to finished goods inventory?
a. 96,700
b. 99,020
c. 108,540
d. 139,540

Ben Manufacturing had worked on two jobs, Job 101 and Job 102 last year. The estimated manufacturing overhead for last year was
30,00 (fixed) and 5.00 per DLH (variable) and estimated 2,000 direct labor hours. The factory overhead control account has a balance
of 37,000. Actual hours for Job 101 was 1,200 and For Job 102 was 1,000.

43. What is the total spending variance?

a. 4,000 unfavorable
b. 3,000 unfavorable
c. 4,000 favorable
d. 7,000 favorable

44. What is the total production variance?

a. 4,000 unfavorable
b. 3,000 unfavorable
c. 3,000 favorable
d. 7,000 favorable

The following information for Check Co. related to the next 2 questions.

Service Departments
Building and ground maintenance 21,960.40
Storeroom 15,990.00
Producing Department
Department A 42,000.00
Department B 51,000.00
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Est. DL hrs. Est. Sq. Ft. No. of Requisition

Bldg. and ground maintenance 750 150
Storeroom 130 40
Department A 1,925 890 2,500
Department B 1,200 2330 1,400

The base to be used for allocating cost of Building and ground maintenance is square feet and for the storeroom cost is the number of
requisitions. Direct labor hours are used to compute the producing departments’ factory overhead application rate.

45. Using direct method, what is Department A’s factory overhead rate
a. 30.30
b. 47.46
c. 21.82
d. 24.97

46. Using reciprocal method, compute for the building and grounds maintenance department total amount to be allocated to
Storeroom service department and both producing departments (take all calculations to four decimal places but round all
answers to the nearest peso)
a. 21,960
b. 22,584
c. 23,467
d. 24,722

The summary of the usage of the service department services by other service departments as well as by the two producing
departments is as follows:

Service Cost Supervision Maintenance Building Production Dept 1 Production Dept 2

Center Occupancy
Supervision 0% 10% 5% 40% 45%
Maintenance 0% 0% 0% 45% 55%
Building 10% 10% 0% 35% 45%
Occupancy

Direct Cost in the various departments are as follows

Department Direct Cost Label

Supervision 35,000 S1
Maintenance 30,000 S2
Building Occupancy 90,000 S3
Production Dept 1 350,000 P1
Production Dept 2 450,000 P2

47. If the direct method of allocation is used, how much of the supervision department’s cost would be allocated to the building
occupancy department?
a. 1,750
b. 0
c. 3,500
d. 5,250

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48. If the step method of allocation is used, how much would be allocated from supervision to production department 1?
a. 14,000
b. 16,471
c. 17,600
d. 18,526

49. Job 75 incurred the following costs for the manufacture of 200 units of motors:

Original cost accumulation

Direct Materials 13,200
Direct Labor 16,000
Factory Overhead 24,000

Direct cost of reworked 10 units

Direct Materials 2,000
Direct Labor 3,200
The total reworked cost was attributable to exacting specification of Job 75 and the full rework costs were charged to specific
job. The cost of Job 75 was?

a. 266
b. 316
c. 280
d. 292

50. Kick Company had 150 units of product on hand at January 1 costing 21 each. Purchases of Product A during the
month of January were as follows:

Units Unit Cost

January 10 200 22.00
18 250 23.00
28 100 24.00

Physical on January 31 shows 250 units of product A on Hand.

The Ending inventoty under FIFO method is:

a. 9,850
b. 9,700
c. 5,850
d. 9,600

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