College of Business and Accountancy Notre Dame University Cotabato City Acctg 106-Cost Accounting Final E amination Name!

""""""""""""""""""""""""""""""""""""""""" #ENE$A% &N'($UC(&)N'! You are given 3 hours to answer all the questions. Shade the box corresponding to the letter of your choice in the answer sheet. ABSOL !"LY #O "$AS $"S in the answer sheet% any erasure will be &ar'ed as wrong. (.) * + A standard cost card is prepared after &anufacturing standards have been developed for direct &aterials% direct labor% and factory overhead ** + !he total variance can provide useful infor&ation about the source of cost differences a. * is true c. both are true b. ** is true d. both are false * + !he for&ula for price-rate variance is .A/ + S/) x A0 ** + !he for&ula for price-rate variance is .A/ + S/) x S0 a. * is true c. both are true b. ** is true d. both are false * + !he price variance reflects the difference between the price paid for inputs and the standard price for those inputs ** + !he usage variance reflects the difference between the price paid for inputs and the standard price for those inputs a. * is true c. both are true b. ** is true d. both are false * + !he for&ula for usage variance is .A0 + S0) 2 S/ ** + !he for&ula for usage variance is .A0 + S0) 2 A/ a. * is true c. both are true b. ** is true d. both are false * + !he difference between the actual wages paid to e&ployees and the standard wages for all hours wor'ed is the labor rate variance ** + !he difference between the standard hours wor'ed for a specific level of production and the actual hours wor'ed is the labor efficiency variance a. * is true c. both are true b. ** is true d. both are false * + !he difference between actual variable overhead and budgeted variable overhead based upon actual hours is referred to as the variable overhead spending variance ** + !he difference between budgeted variable overhead for actual hours and standard overhead is the variable overhead efficiency variance a. * is true c. both are true b. ** is true d. both are false * + A fixed overhead volu&e variance is a controllable variance ** + A one+variance approach calculates only a total overhead variance a. * is true c. both are true b. ** is true d. both are false * + !he effect of substituting a non+standard &ix of &aterials during the production process is referred to as a &aterial yield variance ** + 7hen &ultiple labor categories are used% the financial effect of using a different &ix of wor'ers in a production process is referred to as a labor yield variance a. * is true c. both are true b. ** is true d. both are false * + 7hen &ultiple labor categories are used% the &onetary i&pact of using a higher or lower nu&ber of hours than a standard allows is referred to as a labor &ix variance ** + 7hen &ultiple labor categories are used% the &onetary i&pact of using a higher or lower nu&ber of hours than a standard allows is referred to as a labor yield variance a. * is true c. both are true b. ** is true d. both are false * + Business value+added activities add value to a product ** + Business value+added activities increase the value of a product without increasing production ti&e a. * is true c. both are true b. ** is true d. both are false * + A co&pany should strive to reduce all non+value added activities to a &ini&u& ** + 7hen non+value added ti&e is greater% &anufacturing cycle efficiency is higher.

,.)

3.)

1.)

3.)

4.)

5.)

6.)

8.)

(9.)

((.)

a. b. (,.)

* is true ** is true

c. both are true d. both are false

* + :irect &aterials are nor&ally considered as unit+level costs. ** + nit level costs occur once for each unit produced. a. * is true c. both are true b. ** is true d. both are false * + ;achine setup is nor&ally considered a batch+level cost ** + Building depreciation is generally considered an organi<ational or facility cost. a. * is true c. both are true b. ** is true d. both are false * + Building depreciation is generally considered an product or process level cost. ** + Activity+based costing is appropriate for a co&pany that &anufactures a single product a. * is true c. both are true b. ** is true d. both are false * + Activity+based costing is appropriate for a co&pany that has low overhead costs that are proportional to the unit volu&es of products ** + Activity+based costing confor&s to =AA/ with regard to which costs should be expensed a. * is true c. both are true b. ** is true d. both are false * + >inancial accounting is &ost concerned with &eeting the needs of internal users. ** + ;anagerial accounting is &ost concerned with addressing the needs of the fir& as a whole a. * is true c. both are true b. ** is true d. both are false * + !he relevant range is valid for all levels of activity ** + An indirect cost can be easily traced to a cost ob?ect a. * is true c. both are true b. ** is true d. both are false !he ter& @relevant range@ as used in cost accounting &eans the range over which a. costs &ay fluctuate. b. cost relationships are valid. c. production &ay vary. d. relevant costs are incurred. /redeter&ined overhead rates are co&puted based on esti&ated overhead costs esti&ated level of activity a. yes yes b. yes no c. no yes d. no no One reason annual overhead application rates are used is a. because of seasonal variability of overhead costs. b. !o help budget overhead costs. c. !o &ini&i<e the overhead cost assigned to products. d. !o &axi&i<e the overhead cost assigned to products. 7hich of the following could not be used in ?ob order costingA a. Standards b. An average cost per unit for all ?obs c. nor&al costing d. overhead allocation based on the ?obBs direct labor hours A ?ob order costing syste& is li'ely to provide better .() inventory valuations for financial state&ents. .,) control over inventory. .3) infor&ation about ability to accept additional production wor'. a. b. c. d. .() yes #o #o yes .,) no yes no yes .3) no yes no yes

(3.)

(1.)

(3.)

(4.)

(5.)

(6.)

(8.)

,9.)

,(.)

,,.)

,3.)

* + !he >*>O &ethod co&bines beginning inventory and current production to co&pute cost per unit of production ** + !he weighted average &ethod separates beginning inventory and current production to co&pute cost per unit of production a. * is true c. both are true b. ** is true d. both are false *n a >*>O process costing syste&% which of the following are assu&ed to be co&pleted first in the current periodA

,1.)

a. b. c. d.

units started this period units started last period units transferred out units still in process

,3.)

* + "fficient inventory &anage&ent relies largely on cost+&ini&i<ation strategies ** + *n a pull syste& of production control% inventory is produced in anticipation of custo&er or wor' center de&and
a. b. * is true ** is true c. both are true d. both are false

,4.)

* + "cono&ic order quantity ."O0) is co&patible with ?ust+in+ti&e syste&s ** + !he "O0 for&ula can be &odified to calculate the nu&ber of units that should be &anufactured in a production run
a. b. * is true ** is true c. both are true d. both are false

,5.)

* + Coint costs occur after the split+off point in a production process ** + nder the net reali<able value approach% no value is recogni<ed for by+products or scrap until they are actually sold a. * is true c. both are true b. ** is true d. both are false * + Coint costs are allocated to by+products as well as pri&ary products ** + !he net reali<able value approach is used to account for scrap and by+products when the net reali<able value is insignificant a. * is true c. both are true b. ** is true d. both are false *+ !he pri&ary distinction between by+products and scrap is the difference in volu&e produced ** +!he point at which individual products are first identifiable in a ?oint process is referred to as the split+off point a. * is true c. both are true b. ** is true d. both are false * + Coint costs include all &aterials% labor and overhead that are incurred before the split+off point ** + !wo &ethods of allocating ?oint costs to products are physical &easure allocation and &onetary allocation. a. * is true c. both are true b. ** is true d. both are false * + A decision that &ust be &ade at split+off is to sell a product or process it further. ** + Allocating ?oint costs based upon a physical &easure considers the revenue+generating ability of individual products a. * is true c. both are true b. ** is true d. both are false * + #et reali<able value equals product sales revenue at split+off &inus any costs necessary to prepare and dispose of the product ** + ;onetary allocation &easures recogni<e the revenue generating ability of each product in a ?oint process. a. * is true c. both are true b. ** is true d. both are false * + !he relative sales value &ethod requires a co&&on physical unit for &easuring the output of each product. ** + Coint costs are allocated to &ain products% but not to by+products a. * is true c. both are true b. ** is true d. both are false * + *f incre&ental revenues beyond split+off are less than incre&ental costs% a product should be sold at the split+ off point ** + *f incre&ental revenues beyond split+off exceed incre&ental costs% a product should be processed further a. * is true c. both are true b. ** is true d. both are false * + !he net reali<able value approach requires that the net reali<able value of by+products and scrap be treated as a reduction in ?oint costs allocated to pri&ary products ** + #et reali<able value is considered to be the best &easure of the expected contribution of each product to the coverage of ?oint costs a. * is true c. both are true b. ** is true d. both are false * + Specifications for &aterials are co&piled on a purchase requisition ** + An operations flow docu&ent shows all processes necessary to &anufacture one unit of a product a. * is true c. both are true b. ** is true d. both are false :uc' Do&pany &anufactures des's. !he beginning balance of $aw ;aterial *nventory was /1%399E raw &aterial purchases of /,8%499 were &ade during the &onth. At &onth end% /5%599 of raw &aterial was on hand. $aw &aterial used during the &onth was

,6.)

,8.)

39.)

3(.)

3,.)

33.)

31.)

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a. b. c. d. 36.)

/,4%199. /31%(99. /35%399. /,8%499.

!he following infor&ation has been ta'en fro& the cost records of 7itch Do&pany for the past yearF $aw &aterial used in production /3,4 !otal &anufacturing costs charged to production during the year .includes direct &aterial% 464 direct labor% and overhead equal to 49G of direct labor cost) Dost of goods available for sale 6,4 Selling and Ad&inistrative expenses ,3 *nventories $aw ;aterial 7or' in /rocess >inished =oods Beginning /53 69 89 "nding / 63 39 ((9

!he cost of raw &aterial purchased during the year wasF a. /3(4. b. /334. c. /349. d. /1((. 38.) A fir& has fixed costs of /,99%999 and variable costs per unit of /4. *t plans on selling 19%999 units in the co&ing year. !o reali<e a profit of /,9%999% the fir& &ust have a sales price per unit of at least a. /((.99. b. /((.39. c. /(9.99. d. /(9.39. Dhippy Do&pany. uses a ?ob order costing syste&. :uring April ,9H4% the following costs appeared in the 7or' in /rocess *nventory accountF Beginning balance :irect &aterial used :irect labor incurred Applied overhead Dost of goods &anufactured / ,1%999 59%999 49%999 16%999 (63%999

19.)

Dhippy Do&pany applies overhead on the basis of direct labor cost. !here was only one ?ob left in 7or' in /rocess at the end of April which contained /3%499 of overhead. 7hat a&ount of direct &aterial was included in this ?obA a. /1%199 b. /1%169 c. /4%8,9 d. /6%999 (urtle Com*any has a ?ob order costing syste& and an overhead application rate of (,9 percent of direct labor cost. Cob I43 is charged with direct &aterial of /(,%999 and overhead of /5%,99. Cob I41 has direct &aterial of /,%999 and direct labor of /8%999. 1(.) $efer to !urtle Do. 7hat a&ount of direct labor cost has been charged to Cob I43A a. / 4%999 b. / 5%,99 c. / 6%419 d. /(1%199 $efer to !urtle Do&pany. 7hat is the total cost of Cob I41A a. /(9%699 b. /((%999 c. /,(%699 d. /39%,99 =reen Do&pany started 8%999 units in >ebruary. !he co&pany transferred out 5%999 finished units and ended the period with 3%399 units that were 19 percent co&plete as to both &aterial and conversion costs. Beginning 7or' in /rocess *nventory units were a. 399. b. 499. c. (%399. d. ,%999.

1,.)

13.)

!he +ouston Com*any &a'es wreaths in two depart&entsF >or&ing and :ecorating. >or&ing began the &onth with 399 wreaths in process that were (99 percent co&plete as to &aterial and 19 percent co&plete as to conversion. :uring the &onth% 4%399 wreaths were started. At &onth end% >or&ing had ,%(99 wreaths that were still in process that were (99 percent co&plete as to &aterial and 39 percent co&plete as to conversion. Assu&e >or&ing uses the weighted average &ethod of process costing. Dosts in the >or&ing :epart&ent are as followsF Beginning ,or- in .rocess Costs! ;aterial Donversion Current Costs! ;aterial Donversion /(%999 (%399 /3%,99 3%913

!he :ecorating :epart&ent had 499 wreaths in process at the beginning of the &onth that were 69 percent co&plete as to &aterial and 89 percent co&plete as to conversion. !he depart&ent had 399 units in ending 7or' in /rocess that were 39 percent co&plete as to &aterial and 53 percent co&plete as to conversion. :ecorating uses the >*>O &ethod of process costing% and costs associated with :ecorating areF Beginning ,&. &nventory! !ransferred *n ;aterial Donversion Current .eriod! !ransferred *n ;aterial Donversion 11.) /(%(59 1%3,9 4%,(9 A /45%513 83%6,9

$efer to Jouston Do&pany. Jow &any units were transferred to :ecorating during the &onthA a. 499 b. 1%899 c. 3%839 d. 5%999 $efer to Jouston Do&pany. 7hat was the cost transferred out of >or&ing during the &onthA a. /3%31( b. /4%1(8 c. /6%,13 d. /6%339

13.)

/ebra Cor*oration Kebra DorporationBs "O0 for ;aterial A is 399 units. !his "O0 is based onF Annual de&and 3%999 units Ordering costs /(,.39 14.) $efer to Kebra Dorporation. 7hat is the annual carrying cost per unit for ;aterial AA a. /9.39 b. /,.99 c. /,.39 d. /3.99 $efer to Kebra Dorporation. 7hat are KebraLs Dorp.Bs total annual ordering costs for ;aterial AA a. /4%999 b. /499 c. /(,3 d. /(%999

15.)

'nac-s Com*any Snac's Do&pany produces two products .A and B). :irect &aterial and labor costs for /roduct A total /33 .which reflects 1 direct labor hours)E direct &aterial and labor costs for /roduct B total /,, .which reflects (.3 direct labor hours). !hree overhead functions are needed for each product. /roduct A uses , hours of >unction ( at /(9 per hour% ( hour of >unction , at /5 per hour% and 4 hours of >unction 3 at /(6 per hour. /roduct B uses (% 6% and ( hours of >unctions (% ,% and 3% respectively. Snac's produces 699 units of A and 6%999 units of B each period. 16.) $efer to Snac's Do&pany *f total overhead is assigned to A and B on the basis of units produced% /roduct A will have an overhead cost per unit of a. / 66.41. b. /(,3.41. c. /(33.99. d. #one of the responses are correct.

18.)

$efer to Snac's Do&pany *f total overhead is assigned to A and B on the basis of units produced% /roduct B will have an overhead cost per unit of a. /61.99. b. /66.41. c. /((9.41. d. #one of the responses are correct. $efer to Snac's Do&pany *f total overhead is assigned to A and B on the basis of direct labor hours% /roduct A will have an overhead cost per unit of a. /3(.3,. b. /,93.,6. c. /14(.66. d. #one of the responses are correct. $efer to Snac's Do&pany *f total overhead is assigned to A and B on the basis of direct labor hours% /roduct B will have an overhead cost per unit of a. /3(.3,. b. /54.86. c. /3(9.3,. d. #one of the responses are correct. $efer to Snac's Do&pany *f total overhead is assigned to A and B on the basis of overhead activity hours used% the total product cost per unit assigned to /roduct A will be a. /64.3,. b. /83.99. c. /((3.39. d. #one of the responses are correct. $efer to Snac's Do&pany *f total overhead is assigned to A and B on the basis of overhead activity hours used% the total product cost per unit assigned to /roduct B will be a. /((3.39. b. /53.3,. c. /31.49. d. #one of the responses are correct.

39.)

3(.)

3,.)

33.)

+a0el Com*any Ja<el Do&pany uses activity+based costing. !he co&pany produces two productsF coats and hats. !he annual production and sales volu&e of coats is 6%999 units and of hats is 4%999 units. !here are three activity cost pools with the following expected activities and esti&ated total costsF Activity Cost .ool Activity ( Activity , Activity 3 31.) Estimated Cost /,9%999 /35%999 /8(%,99 E *ected Activity Coats (99 699 699 E *ected Activity +ats 199 ,99 3%999

(otal 399 (%999 3%699

$efer to Ja<el Do&pany. sing ABD% the cost per unit of coats is approxi&atelyF a. /,.19 c. / 4.49 b. /3.89 d. /(9.38 $efer to Ja<el Do&pany. sing ABD% the cost per unit of hats is approxi&atelyF a. b. /,.19 /3.89 c. d. /(,.99 /(3.89

33.)

%oft 'avings and %oan Loft Savings and Loan had the following activities% traceable costs% and physical flow of driver unitsF Activities Open new accounts /rocess deposits /rocess withdrawals /rocess loan applications !raceable Dosts /39%999 34%999 (3%999 ,5%999 /hysical flow of :river nits (%999 accounts 199%999 deposits ,99%999 withdrawals 899 applications

!he above activities are used by the Cennings branch and the Drowley branchF #ew accounts :eposits Cennings ,99 19%999 Drowley 199 ,9%999

7ithdrawals Loan applications 34.)

(3%999 (99

(6%999 (49

$efer to Loft Savings and Loan. 7hat is the cost per driver unit for new account activityA a. /9.98 c. /39.99 b. /9.953 d. /39.99 $efer to Loft Savings and Loan. 7hat is the cost per driver unit for the deposit activityA a. /9.98 c. /39.99 b. /9.953 d. /39.99 $efer to Loft Savings and Loan. 7hat is the cost per driver unit for the withdrawal activityA a. /9.98 c. /39.99 b. /9.953 d. /39.99 $efer to Loft Savings and Loan. 7hat is the cost per driver unit for the loan application activityA a. /9.98 c. /39.99 b. /9.953 d. /39.99 $efer to Loft Savings and Loan. Jow &uch of the loan application cost will be assigned to the Cennings branchA a. /3%999 c. / 5%699 b. /1%699 d. /,5%999 $efer to Loft Savings and Loan. Jow &uch of the deposit cost will be assigned to the Drowley branchA a. /(%699 c. / 3%199 b. /3%499 d. /34%999 $efer to Loft Savings and Loan. Jow &uch of the new account cost will be assigned to the Drowley branchA a. /(9%999 c. /39%999 b. /,9%999 d. /39%999

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36.)

38.)

49.)

4(.)

4,.)

Barley Com*any !he following Culy infor&ation is for Barley Do&panyF 'tandards! ;aterial Labor Actual! /roduction ;aterial Labor 3.9 feet per unit M /1.,9 per foot ,.3 hours per unit M /5.39 per hour ,%539 units produced during the &onth 6%599 feet usedE 8%999 feet purchased M /1.39 per foot 5%999 direct labor hours M /5.89 per hour

.$ound all answers to the nearest peso.) 43.) $efer to Barley Do&pany. 7hat is the &aterial price variance .calculated at point of purchase)A a. /,%599 b. /,%599 > c. /,%4(9 > d. /,%4(9 $efer to Barley Do&pany. 7hat is the &aterial quantity varianceA a. /3%(93 > b. /(%939 > c. /3%(93 d. /(%689 $efer to Barley Do&pany. 7hat is the labor rate varianceA a. /3%169 b. /3%169 > c. /,%699 d. /,%699 > $efer to Barley Do&pany. 7hat is the labor efficiency varianceA a. /(%653 b. /836 c. /(%653 d. /(%(,3

41.)

43.)

44.)

Fisc1er Com*any >ischer Do&pany uses a standard cost syste& for its production process and applies overhead based on direct labor hours. !he following infor&ation is available for August when >ischer &ade 1%399 unitsF 'tandard!

:LJ per unit Nariable overhead per :LJ >ixed overhead per :LJ Budgeted variable overhead Budgeted fixed overhead Actual! :irect labor hours Nariable overhead >ixed overhead 45.)

,.39 /(.53 /3.(9 /,(%653 /36%539 (9%999 /,4%,39 /36%999

$efer to >ischer Do&pany. sing the one+variance approach% what is the total overhead varianceA a. /4%94,.39 b. /3%4,3.99 c. /8%465.39 d. /4%34,.39 $efer to >ischer Do&pany. sing the two+variance approach% what is the controllable varianceA a. /3%6(,.39 b. /3%6(,.39 > c. /1%353.99 d. /1%353.99 > $efer to >ischer Do&pany. sing the two+variance approach% what is the noncontrollable varianceA a. /3%(,3.99 > b. /3%653.99 c. /3%653.99 > d. /4%94,.39 $efer to >ischer Do&pany. sing the three+variance approach% what is the spending varianceA a. /1%353 b. /3%4,3 > c. /6%999 d. /(3%539 $efer to >ischer Do&pany. sing the three+variance approach% what is the efficiency varianceA a. /8%835.39 > b. /,%(65.39 > c. /,%(65.39 d. /,%835.39 >

46.)

48.)

59.)

5(.)

$odent Com*any $odent Do&pany produces four solvents fro& the sa&e processF D% :% "% and =. Coint product costs are O8%999. .$ound all answers to the nearest dollar.) Sales price per barrel at split+off O(9.99 6.99 ((.99 (3.99 :isposal cost per barrel at split+off O4.39 1.99 5.99 8.39 >urther processing costs O,.99 ,.39 1.99 1.39 >inal sales price per barrel O(3.39 (9.99 (3.39 (8.39

D : " =

Barrels 539 (%999 (%199 ,%999

*f $odent sells the products after further processing% the following disposal costs will be incurredF D% O,.39E :% O(.99E "% O3.39E =% O4.99. 5,. $efer to $odent Do&pany. sing a physical &easure&ent &ethod% what a&ount of ?oint processing cost is allocated to /roduct :A a. O(%516 b. O,%115 c. O(%3(( d. O3%183 53.$efer to $odent Do&pany. sing a physical &easure&ent &ethod% what a&ount of ?oint processing cost is allocated to /roduct "A a. O3%183 b. O,%115 c. O(%516 d. O(%3((

51.$efer to $odent Do&pany. sing a physical &easure&ent &ethod% what a&ount of ?oint processing cost is allocated to /roduct DA a. O3%183 b. O,%115 c. O(%516 d. O(%3(( 53.$efer to $odent Do&pany. sing a physical &easure&ent &ethod% what a&ount of ?oint processing cost is allocated to /roduct =A a. O3%183 b. O,%115 c. O(%516 d. O(%3(( 54. $efer to $odent Do&pany. sing sales value at split+off% what a&ount of ?oint processing cost is allocated to /roduct :A a. O1%133 b. O,%,54 c. O(%(96 d. O(%(6, 55. $efer to $odent Do&pany. sing sales value at split+off% what a&ount of ?oint processing cost is allocated to /roduct DA a. O1%133 b. O,%,54 c. O(%(96 d. O(%(6, 56. $efer to $odent Do&pany. sing sales value at split+off% what a&ount of ?oint processing cost is allocated to /roduct =A a. O1%133 b. O(%(6, c. O(%(96 d. O,%,54 58.$efer to $odent Do&pany. sing sales value at split+off% what a&ount of ?oint processing cost is allocated to /roduct "A a. O1%133 b. O(%(6, c. O(%(96 d. O,%,54 69.$efer to $odent Do&pany. sing net reali<able value at split+off% what a&ount of ?oint processing cost is allocated to /roduct DA a. O(%339 b. O(%9(5 c. O1%,43 d. O,%(59