Cost Accounting Systems

(A. Traditional Cost Accounting)

COST ACCOUNTING SYSTEMS

C. should be cost effective in design and selection

D. all the above answers are correct

A. TRADITIONAL COST ACCOUNTING

Cost concepts
Committed vs. Discretionary fixed costs
Commited fixed costs
7. Which of the following is an example of a committed fixed costs?
A. direct materials
C. supervisors salary
B. depreciation on a factory building
D. insurance on a building

THEORIES:
Basic concepts
Cost Accounting
1. Cost accounting involves the measuring, recording, and reporting of
A. product costs
C. future costs
B. manufacturing process
D. managerial accounting decisions

16. An example of a committed fixed cost is:

A. a training program for salespersons.
B. executive travel expenses.
C. property taxes on the factory building.
D. new product research and development.

Cost management
3. The cost management function is usually under
A. the chief information officer.
C. purchasing manager.
B. treasurer.
D. controller.
2. The cost management information system provides information
A. that the accountant needs to prepare the financial statements.
B. that the manager needs to effectively manage the firm.
C. that the manager needs to effectively manage not-for-profit organization.
D. b and c.

Discretionary fixed cost

8. Which of the following is an example of discretionary fixed cost?
A. direct labor
C. property taxes on a factory building
B. insurance on a building
D. depreciation on a factory building
Controllable costs
10. Controllable costs are:
A. Costs that management decides to incur in the current period to enable the company to
achieve operating objectives other than the filling of orders placed by customers.
B. Costs that are governed mainly by past decisions that established the present levels of
operating and organizational capacity and that only change slowly in response to small
changes in capacity.
C. Costs that will unaffected by current managerial decisions.
D. Costs that are likely to respond to the amount of attention devoted to them by a specified
manager.

4. The main focus of cost management information must be

A. usefulness and accuracy.
C. usefulness and timeliness.
B. timeliness and accuracy.
D. relevance and good format.
5. With regard to the task of managements decision making, cost management information is
needed to
A. make sound strategic decisions regarding choice of products, methods, and techniques.
B. support recurring decisions regarding replacement of equipment, managing cash flow,
etc.
C. provide a fair and effective basis for identifying inefficient operations.
D. provide accurate accounting for inventory, receivables, and other assets.

11. Controllable costs for responsibility accounting purposes are directly influenced only by
A. A given manager within a given period.
B. A change in activity.
C. Production volume.
D. Sales volume.

Product costing
6. Product costing system design or selection:
A. requires an understanding of the nature of the business
B. should provide useful cost information for strategic and operational decision needs
739

Cost Accounting Systems

(A. Traditional Cost Accounting)

Imputed costs
12. An imputed cost is
A. The difference in total costs which results from selecting one choice instead of another.
B. A cost that does not entail any cash outlay but which is relevant to the decision-making
process.
C. A cost that may be shifted to the future with little or no effect on current operations.
D. A cost that continues to be incurred even though there is no activity.

B. cannot be identified readily with a given product

C. can be assigned to product only by a process of allocation
D. would not be incurred if the product did not exist
9. The distinction between direct and indirect costs depends on whether a cost
A. is controllable or non-controllable.
B. is variable or fixed.
C. can be conveniently and physically traced to a cost object under consideration.
D. will increase with changes in levels of activity.

Cost According to Behavior

Semi-variable costs
14. Semi-variable costs
A. per unit remain the same regardless of total output
B. remain the same within the relevant range of output
C. increase in steps as the amount of the cost driver volume increases
D. have both fixed and variable components in them

19. Of most relevance in deciding how indirect costs should be assigned to products is the degree
of
A. Linearity.
C. Avoidability.
B. Causality.
D. Controllability.
Comprehensive
13. Almos, Inc. makes ski-boards in Davao. Identify the correct matching of terms.
A. Fiberglass is factory overhead
B. Plant real estate taxes are a period cost
C. Depreciation on delivery trucks is a product cost
D. Payroll taxes for workers in the Packaging Dept. are direct labor

Step cost
15. A step cost is
A. the same as semi-fixed cost
B. the same as mixed cost
C. a cost that increases in steps as the amount of cost-driver volume increases
D. a and c only.

Traditional Costing Accounting

28. An accounting system that focuses on transactions is
A. an activity-based accounting system.
C. a traditional accounting system.
B. a product life cycle costing system.
D. all of the above.

Product Cost vs. Period Cost

Period cost
18. Which of the following would NOT be a period cost for a manufacturing firm?
A. Selling expenses
B. Salary paid to the CEO of the company
C. Repairs to the Receptionist's computer
D. Utilities in manufacturing plant

29. Traditionally, managers have focused cost reduction efforts on

A. activities.
C. departments.
B. processes.
D. costs.

Direct vs. indirect costs

17. What kind of costs can be conveniently and economically traced to a cost object or pool?
A. Indirect Costs.
C. Direct Costs.
B. Relevant Costs.
D. Overhead Costs.

33. Which of the following is a trait of a traditional cost management system?

A. unit-based drivers
C. tracing is intensive
B. detailed activity information
D. focus on managing activities
23. Which of the following is typically regarded as a cost driver in traditional accounting practices?
A. number of purchase orders processed
C. number of transactions processed
B. number of customers served
D. number of direct labor hours worked

47. Direct product expenses

A. are incurred for the benefit of the business as a whole
740

Cost Accounting Systems

(A. Traditional Cost Accounting)

C. both a and b
D. neither a nor b

21. Which of the following is not a trait of a traditional cost management system?
A. unit-based drivers
C. focus on managing activities
B. allocating intensive
D. narrow and rigid product costing
24. Which of the following is not typical of traditional costing systems?
A. Use of a single predetermined overhead rate.
B. Use of direct labor hours or direct labor cost to assign overhead.
C. Assumption of correlation between direct labor an incurrence of overhead cost.
D. Use of multiple cost drivers to allocate overhead.

Process Costing
40. Which of the following items is not a characteristic of a process cost system?
A. Once production begins, it continues until the finished product emerges
B. The products produced are heterogeneous in nature
C. The focus is on continually producing homogeneous products
D. When the finished product emerges, all units have precisely the same amount of
materials, labor, and overhead

Overhead allocation
35. Conventional product costing uses which of the following procedures?
A. Overhead costs are traced to departments, then costs are traced to products.
B. Overhead costs are traced to activities, then costs are traced to products.
C. Overhead costs are traced directly to product.
D. All overhead costs are expensed as incurred.

Actual Costing, Normal costing, & Standard Costing

Predetermined overhead rate
39. The formula for computing the predetermined manufacturing overhead rate is estimated
annual overhead costs divided by an expected annual operating activity, expressed as
A. direct labor cost
C. direct labor hours
B. machine hours
D. any of these

36. The overhead rates of the traditional approach to product costing use
A. nonunit-based cost drivers
C. unit-based cost drivers
B. process costing
D. job-order costing

37. The two main advantages of using predetermined factory overhead rates are to provide more
accurate unit cost information and to:
A. simplify the accounting process
B. provide cost information on a timely basis
C. insure transmission of correct data
D. adjust for variances in data sources

Effect of Traditional overhead allocation

22. The use of unit-based activity drivers to assign costs tends to
A. overcost low-volume products.
C. overcost all products.
B. overcost high-volume products.
D. undercost all products.

34. The effect of uniform production levels on production cost per unit can be achieved
A. by using a factory overhead rate based on different production levels for each year
B. by using a factory overhead rate based on selling price
C. by closing the factory overhead at the end of the accounting period
D. by using a factory overhead rate based on long-run normal production activity level

30. Traditional overhead allocations result in which of the following situations?

A. Overhead costs are assigned as period costs to manufacturing operations.
B. High-volume products are assigned too much overhead, and low-volume products are
assigned too little overhead.
C. Low-volume products are assigned too much, and high-volume products are assigned too
little overhead.
D. The resulting allocations cannot be used for financial reports.

38. No matter which method is used, underapplied or overapplied overhead usually is adjusted
only:
A. at the end of a year.
B. monthly during the year
C. if the difference exceeds P1,000 or one percent of total overhead.
D. when the company's profit projections require an adjustment

32. Product costs can be distorted if a unit-based cost driver is used and
A. nonunit-based overhead costs are a significant proportion of total overhead
B. the consumption ratios differ between unit-based and nonunit-based input categories
741

Cost Accounting Systems

(A. Traditional Cost Accounting)

Actual Costing
43. Disadvantages of actual costing include
A. actual cost systems cannot provide accurate unit cost information on a timely basis
B. actual cost systems produce unit costs that fluctuate from period to period
C. estimates must be used when calculating the actual overhead rate
D. a and b

B. overhead rate.

D. product activity.

27. The term cost driver refer to:

A. any activity that can be used to predict cost changes.
B. the attempt to control expenditures at a reasonable level.
C. the person who gathers and transfers cost data to the management accountant.
D. any activity that causes costs to be incurred.

Normal Costing
42. The principal difficulty with normal costing is that
A. the unit cost information is not received on a timely basis
B. it can result in fluctuating per-unit overhead costs
C. estimated overhead and estimated activity are likely to differ from actual overhead and
actual costs, resulting in underapplied or overapplied overhead
D. there is no difficulty associated with using normal costing

26. Each group of overhead costs should be applied based on

A. direct labor hours or cost.
B. units produced.
C. whatever activity drives those specific overhead costs.
D. machine time.
31. Which of the following statements is true?
A. The traditional approach to costing uses many different cost drivers.
B. Costs that are indirect to products are by definition traceable to directly to products.
C. Costs that are indirect to products are traceable to some activity.
D. All of the above statements are true.

46. Normal costing and standard costing differ in that

A. the two systems can show different overhead budget variances.
B. only normal costing can be used with absorption costing.
C. the two systems show different volume variances if standard hours do not equal actual
hours.
D. normal costing is less appropriate for multiproduct firms.

41. Why is it better to use separate overhead rates?

A. Some departments are labor-intensive, some are machine-intensive.
B. Labor rates vary considerably among departments.
C. The resulting overhead rates are all about the same.
D. All jobs require about the same percentage of time in all departments.

Standard Costing
20. The product cost which is determined in a conventional standard cost accounting system is
a(an)
A. Joint cost.
C. Expected cost.
B. Fixed cost.
D. Direct cost.

Operating Leverage
45. If company A has a higher degree of operating leverage than company B, then:
A. the company A has higher variable expenses.
B. the company A's profits are more sensitive to percentage changes in sales.
C. the company A is more profitable.
D. the company A is less risky.

Plant-wide vs. Department-side Overhead Rates

44. Volume-based plant-wide rates produce inaccurate product cost when:
A. a large share of factory overhead cost is not volume-based
B. firms produce a diverse mix of product
C. large volumes of production occur
D. Both a and b are correct.
Activity-based Costing
25. An activity that has a direct cause-effect relationship with the resources consumed is a(n)
A. cost driver.
C. cost pool.
742

Cost Accounting Systems

(A. Traditional Cost Accounting)

PROBLEMS:
Total manufacturing costs
i. Direct materials and direct labor costs total P120,000, conversion costs total P100,000, and
factory overhead costs total P400 per machine hour. If 150 machine hours were used for Job
#201, what is the total manufacturing cost for Job #201?
A. 120,000
C. 180,000
B. 160,000
D. 280,000

vi. ABC Company had a total overhead of P360,000 and selling and administration expense of
P140,000 for the year. 1,000 units of A and 3,000 units of B were produced. Assuming that
20% of all overhead are batch-related for 1,000 batches, 40% of which was for producing
product A, batch-related overhead for product A per unit amounts to
A. P20
C. P60
B. P40
D. P80

Overhead
Budgeted overhead
ii. Machine hours used to set the predetermined overhead rate were 25,000, actual hours were
24,000, and overhead applied was P60,000. Budgeted overhead for the year was
A. P57,600.
C. P60,000.
B. P59,000.
D. P62,500.

vii. ABC Company had a total overhead of P360,000 and selling and administration expense of
P140,000 for the year. 1,000 units of A and 3,000 units of B were produced. Assuming that
30% of overhead is product related overhead - 20% of which is related to product A, productrelated overhead per unit of A amounts to
A. P30
C. P50
B. P40
D. P60

Overhead per unit

iii. ABC Company had a total overhead of P360,000 and selling and administrative expense of
P140,000 for the year. 1,000 units of A and 3,000 units of B were produced. A requires 3
machine hours and B requires one machine hour per unit. What is overhead chargeable per
unit of A
A. P 60
C. P120
B. P 90
D. P180

Total overhead variance

viii. Cooke Company uses the equation P450,000 + P1.50 per direct labor hour to budget
manufacturing overhead. Cooke has budgeted 150,000 direct labor hours for the year. Actual
results were 156,000 direct labor hours and P697,500 total manufacturing overhead. The total
overhead variance for the year is
A. P4,500 favorable.
C. P4,500 unfavorable.
B. P18,000 favorable.
D. P18,000 unfavorable.

iv. ABC Company had a total overhead of P360,000 and selling and administration expense of
P140,000 for the year. 1,000 units of A and 3,000 units of B were produced. A requires 3 and
B requires one machine hours per unit. A requires 6 direct labor hours and B requires 4 direct
labor hours per unit. 40% of overhead is related to labor and the balance to machines. Laborrelated overhead per hour amounts to
A. P 8
C. P18
B. P12
D. P24

Over(under)-applied overhead
ix. If estimated annual factory overhead is P800,000, estimated annual direct labor hours are
400,000, actual June factory overhead is P82,000, and actual June direct labor hours are
38,000, then overhead is:
A. P6,000 overapplied
C. P1,800 underapplied
B. P1,800 overapplied
D. P6,000 underapplied
Gross profit
x. BKY Company predicted that factory overhead for 2006 and 2007 would be P60,000 for each
year. The predicted and actual activity for 2006 and 2007 were 30,000 and 20,000 direct labor
hours, respectively.
2006
2007
Sales in units
25,000
25,000
Selling price per unit
P10
P10
Direct materials and direct labor per unit
P 5
P 5

v. ABC Company had a total overhead of P360,000 and selling and administration expense of
P140,000 for the year. 1,000 units of A and 3,000 units of B were produced. A requires 3 and
B requires one machine hours per unit. A requires 6 direct labor hours and B requires 4 direct
labor hours per unit. 40% of overhead is related to labor and the balance to machines. The
overhead per unit of B amounts to
A. P 60
C. P156
B. P 68
D. P180
743

Cost Accounting Systems

(A. Traditional Cost Accounting)

The company assumes that the long-run production level is 20,000 direct labor hours per year.
The actual factory overhead cost for the end of 2006 and 2007 was P60,000. Assume that it
takes one direct labor hour to make one finished unit.
When the annual estimated factory overhead rate is used, the gross profits for 2006 and 2007,
respectively, are
A. P 75,000 and P 75,000
C. P125,000 and P125,000
B. P 75,000 and P 55,000
D. P 75,000 and P 50,000

A. 22,000 and 24,000

B. 26,000 and 24,000

C. 24,000 and 26,000

D. 26,000 and 26,000

xv. Dodge Company has a mixing department and a refining department. Its process-costing
system in the mixing department has two direct materials cost categories (material J and
material P) and one conversion costs pool. The company uses First-in, First out cost flow
method. The following data pertain to the mixing department for November 2006
Units
Work in process, November 1: 50 percent completed
15,000
Work in process, November 30, 70 percent completed
25,000
Units started
60,000
Completed and transferred
50,000
Costs
Work-in-process, November 1
P218,000
Material J
720,000
Material P
750,000
Conversion Costs
300,000
Material J is introduced at the start of operations in the Mixing department, and Material P is
added when the product is three-fourths completed in the mixing department. Conversion
costs are added uniformly during the process.
The respective equivalent units for Material J and Material P in the mixing department for
November 2006, are
A. Both 50,000 units
C. 75,000 units and 60,000 units
B. 60,000 units and 50,000 units
D. 60,000 units and 75,000 units

Process costing
Work in process
xi. Britney Company has unit costs of P10 for materials and P30 for conversion costs. If there are
2,500 units in ending work in process, 40% complete as to conversion costs, and fully
complete as to materials cost, the total cost assignable to the ending work in process inventory
is
A. P 45,000
C. P 75,000
B. P 55,000
D. P100,000
Overhead component
xii. In the Star Company, the predetermined overhead rate is 80% of direct labor cost. During the
month, P210,000 of factory labor costs are incurred, of which P180,000 is direct labor and
P30,000 is indirect labor. Actual overhead incurred was P200,000. The amount of overhead
debited to Work in Process Inventory should be
A. P120,000
C. P168,000
B. P144,000
D. P160,000
Equivalent unit of production
xiii. The Assembling Departments output during the period consists of 20,000 units completed and
transferred out, and 5,000 units in ending work in process 60% complete as to materials and
conversion costs. Beginning inventory is 1,000 units, 40% complete as to materials and
conversion costs. The equivalent units of production are
A. 22,600
C. 24,000
B. 23,000
D. 25,000

xvi. The cost of goods completed and transferred out to the Refining department was
A. P1,930,750
C. P1,600,500
B. P1,350,000
D. P1,550,500
xvii. The Amor Companys accounting records reflected the following data for April 2003. The
company accounts its production using First-in, First-out cost flow method:
Work in process, March 31,2003, 60% completed as to
materials and conversion costs
? units
Work in process, April 30, 2003, 30% completed as to
materials and conversion costs
24,000 units
Equivalent units of production for April 2003
64,000
Units started and completed in April
50,000

xiv. The Amor Company has 2,000 units in beginning work in process, 20% complete as to
conversion costs, 23,000 units transferred out to finished goods, and 3,000 units in ending
work in process one-third complete as to conversion costs. The beginning and ending
inventory is fully complete as to materials costs. Equivalent units for materials and conversion
costs are
744

Cost Accounting Systems

(A. Traditional Cost Accounting)

How many units were in the beginning work-in-process?

A. 6,800
C. 17,000
B. 11,333
D. 24,000

Started during the period

Material Alpha
Material Beta
Direct labor cost
Factory overhead
Transferred to finished goods
Work in process (95% complete), April 30

xviii.Had the company used the weighted-average method of accounting for its production, the
equivalent units should be
A. 74,200
C. 81,000
B. 57,200
D. 53,800

20,000 units
P26,800
P22,500
P75,160
P93,950
14,000
4,000

xxi. How much were Material cost per equivalent unit for Alpha and Beta, respectively?
A. P1.40; P1.36
C. P1.34; P1.06
B. P1.40; P1.06
D. P1.34; P1.25

Units to be accounted for

xix. In the Newman Company, there are zero units in beginning work in process, 7,000 units
started into production, and 500 units in ending work in process 20% completed. The physical
units to be accounted for are
A. 7,000
C. 7,600
B. 7,360
D. 7,340

xxii. The equivalent units of production for Material Alpha and Beta are
Alpha Beta
A. 18,000 14,000
B. 18,000 18,000
C. 20,000 18,000
D. 20,000 14,000

Cost of Finished Goods Transferred

xx. For the month of May, the Production Control Department of La Mesa, Inc. reported the
following production data for Finishing Department (second department):
Transferred-in from Assembly Department
75,000
Transferred-out to Packaging Department
59,250
In-process end of May (with 1/3 labor and factory overhead)
15,750
All materials were put into process in Assembly Department. The Cost Accounting Department
collected these figures for Finishing Department.
Unit cost for unit transferred-in from Assembly Department
P
2.70
Labor cost in Finishing Department
41,280.00
Applied factory overhead
112.5% of labor cost
How much was the cost of Finished goods transferred out to the Packaging Department?
A, P240,555
C. P260,580
B. P 80,580
D. P159,975

xxiii.The number of normal and abnormal lost units are:

Normal
Abnormal
A.
700
1,400
B. 1,400
700
C.
900
1,100
D. 1,100
900
Material cost
Unit material cost
xxiv.
Catridge Company has no beginning work in process; 9,000 units are transferred out and
3,000 units in ending work in process are one-third finished as to conversion costs and fully
complete as to materials cost. If total materials cost is P60,000, the unit materials cost is
A. P5.00
C. P5.45
B. P6.00
D. P5.35

Comprehensive
Use the following data to answer question Nos. 18 through 20.
Mergy Company uses process costing in accounting for its production department, which uses two
raw materials. Material Alpha is placed at the beginning of the process. Inspection is at the 85%
completion stage. Material Bravo is then added to the good units. Normal spoilage units amount to
5% of good output. The company records contain the following information for April:

Lost units
xxv. Lapid Company uses process costing. All materials are added at the beginning of the process.
The product is inspected when it is 90 percent converted, and spoilage is identified only at that
point. Normal spoilage is expected to be 5% of good output.
745

Cost Accounting Systems

(A. Traditional Cost Accounting)

The following are extracted from the production records of Lapid Company for May 2003:
Units put into process
21,000
Units transferred to finished goods
14,000
In-process, May 31, 75% complete
6,000
How many are considered abnormal lost units?
A. Zero
C. 15
B. 300
D. 850

Total manufacturing cost

ii. Answer: D
Overhead rate per hour
Budgeted overhead

P 20,000
20,000
40,000
10,000
100,000
50,000
140,000
160,000
200,000

xxvi.
What is the amount of direct materials used during the period?
A. P140,000
C. P 60,000
B. P130,000
D. P150,000

6,000
P 60
P180
P144,000
18,000
P 8

v. Answer: B
Machine-related overhead: (P360,000 x 0.6)
Total number of machine hours (1,000 x 3) + 3,000
Machine-related OH per MH: (P216,000 6,000)

P216,000
6,000
P36
P32
36
P68

The overhead is broken down into two volume-based cost pools. This is a more modified
example of traditional costing

xxviii. What is the amount of cost of goods sold during the period?
A. P430,000
C. P470,000
B. P420,000
D. P510,000
Answer: C
Direct materials and direct labor
Factory overhead P400 x 150

P2.50
P62,500

iv. Answer: A
Labor-related overhead: (P360,000 x 0.40)
Total number of labor hours: (1,000 x 6) + (3,000 x 4)
Labor-related overhead per DLH: (P144,000 18,000)

Overhead applied per unit of Product B:

Labor-related (4 hours x P8)
Machine-related (1 x P36)
Overhead per unit

xxvii. What is the amount of cost of goods manufactured during the period?
A. P430,000
C. P470,000
B. P420,000
D. P510,000

i.

(P60,000 24,000)
(25,000 x P2.50)

iii. Answer: D
Total number of hours: (1,000 x 3) + (3,000 x 1)
Overhead cost per hour (P360,000 6,000)
Overhead charged per unit of product A: 3 hrs. x P60

Statement of Cost of Goods Manufactured & Sold

Use the following information that pertains to beta manufacturing company to answer questions 21
through 23:
Beginning direct materials inventory
Beginning WIP inventory
Beginning finished goods inventory
Ending direct materials inventory
Ending WIP inventory
Ending finished goods inventory
Purchases
Direct labor
Factory overhead

P180,000

vi. Answer: B
Batch related costs: (360,000 + 140,000) 20%
P100,000
Batch related costs, Product A: 100,000 40%
40,000
Batch-related overhead per unit of Product A: 40,000 / 1,000
P 40
In ABC costing, there is no need to make a distinction between manufacturing and nonmanufacturing costs in computing the relevant product costs

P120,000
60,000

vii Answer: A
746

Cost Accounting Systems

(A. Traditional Cost Accounting)

Product-related overhead cost (360,000 + 140,000) 30%

Product-related overhead cost, Product A: 150,000 20%
Product-related overhead cost per unit, Product A: 30,000 / 1,000 P 30
viii. Answer: A
Variable overhead
Predetermined fixed overhead
(P450,000 150,000)
Total overhead rate
Actual overhead
Applied overhead
(156,000 hours x P4.50)
Total overhead variance, favorable
ix. Answer: D
Applied overhead
Actual overhead
Underapplied overhead
Overhead rate per direct labor hour

38,000 x P2

(P800,000 400,000)

P150,000
P 30,000

xi. Answer: B
Materials cost (2,500 x P10)
Conversion cost (2,500 x 0.4 x P30)
Total costs of Work in Process

P1.50
3.00
P4.50
P697,500
702,000
P 4,500

xii. Answer: B
The amount of overhead applied to production should be 80 percent of direct labor cost
(P180,000 x 0.80) = P144,000

P25,000
30,000
P55,000

xiii. Answer: B
Completed units
20,000
Work in process, End (5,000 x 0.6) 3,000
Total equivalent units, average
23,000

P76,000
82,000
P6,000

xiv. Answer: B
Units completed and transferred out
Work in Process, End

P2.00

x. Answer: B
Gross Profit:
2006: (25,000 x 10) - 175,000 = P75,000
2007: (25,000 x 10) - 195,000 = P55,000

Completed units
WIP - End
Weighted-Average EUP

Overhead application rates:

2006: 60,000/30,000 = P2.00
2007: 60,000/20,000 = P3.00

23,000
3,000

Materials
% of Completion
EUP
100
23,000
100
3,000
26,000

Conversion Costs
% of Completion
EUP
100.00
23,000
33.33
1,000
24,000

xv. Answer: B
Computation of equivalent units
Work-in-process, Nov. 1
Units started and completed
Work-in-process, Nov. 30
EUP

Unit Costs:
2006: 5 + 2 = P7.00
2007: 5 + 3 = P8.00
Costs of goods sold:
2006: 25,000 x P7
P175,000
2007: (5,000 x P7) + (20,000 x P8)
P195,000
Note: In 2007 the company has a beginning inventory of 5,000 units at unit cost of P7.

xvi. Answer: C
Work in process-beginning
Cost, Nov. 1
Cost, November
747

Material J
35,000
25,000
60,000

P218,000

Material P
15,000
35,000
50,000

Cost Accounting Systems

(A. Traditional Cost Accounting)

Material P (15,000 x P5)

Conversion 7,500 x P5
Started, completed 35,000 P32

225,000
37,500

262, 500

1,120,000

Cost of goods transferred out

Unit Costs
Material J
Material P
Conversion costs
Total
xvii.

xviii.

Unit Cost:
Transferred in
Labor and overhead 87,720/64,500
Total
Cost of finished goods transferred out 59,250 x 4.06

P 480,500

P1.600,500
720,000/60,000
750,000/50,000
300,000/60,000

Answer: C
Equivalent units for April
Less: EU started and completed during:
April
Work-in-process, end
(24,000 x 3)
Equivalent units - work-in-process end Mar 31
Number of units in process as of
March 31
6,800 40
Answer: A
Equivalent units FIFO
Add equivalent units in March 31 (17,000 x .6)
Weighted Average EUP

xxi. Answer: D
Equivalent units

P12
15
5
P32

Transferred to F.G.
End Process
Normal lost units
Abnormal lost unit
Total
Unit cost
Alpha P26,800 20,000 = P1.34
Beta P22,500 18,000 = P1.25

64,000
50,000
7,200

57,200
6,800

xxii.

17,000
64,000
10,200
74,200
xxiii.

xix. Answer: A
The number of units to be accounted should be the sum of the units in beginning work in
process and the number of units that have been started during the period
xx. Answer: A
EUP:
Transferred out to Packaging Dept.
In process, end 15,750 x 1/3
Total

xxiv.
59,250
5,250
64,500
748

Answer: C
Equivalent units
Transferred to F.G.
End Process
Normal lost units
Abnormal lost unit
Total

2.70
1.36
4.06
P240,555

Alpha
14,000
4,000
900
1,100
20,000

Beta
14,000
4,000
0
0
18,000

Alpha
14,000
4,000
900
1,100
20,000

Beta
14,000
4,000
______
18,000

Answer: C
Total lost units (20,000 18,000)
Total lost units 5% x 18,000
Abnormal lost units
Answer: A
Completed and transferred out
Units in work-in-process, End (3,000 x 100%)
Equivalents units of production - Materials
Materials cost per EUP (P60,000 12,000)

2,000
900
1,100
9,000
3,000
12,000
P5.00

Cost Accounting Systems

(A. Traditional Cost Accounting)

xxv.

xxvi.

Answer: B
Total lost units (21,000 20,000)
Less normal lost units 5% of 14,000
Abnormal lost unit
Answer: D
Beginning materials inventory
Add Materials Purchased
Total cost of materials available for use
Deduct Materials inventory, End
Cost of materials used

1,000
700
300
P 20,000
140,000
160,000
10,000
P150,000

xxvii. Answer: A
Direct materials used
Direct labor
Overhead
Total manufacturing costs
Add Work in process, beginning
Total costs placed in process
Deduct Work in process, end
Cost of goods manufactured

P150,000
160,000
200,000
510,000
20,000
530,000
100,000
P430,000

xxviii. Answer: B
Cost of goods manufactured
Add finished goods inventory, beginning
Total cost of goods available for sale
Deduct finished goods inventory, end
Cost of goods sold

P430,000
40,000
470,000
50,000
P420,000

749