Colegio de San Juan de Letran
COLLEGE OF BUSINESS ADMINISTRATION AND ACCOUNTANCY
Marketing Management Area
MIDTERM EXAMINATION
Cost Accounting (ACCTG307)
2nd Semester AY2018-19
Asst. Prof. Gian Carlo D. Rodriguez
Name __________________________________Score __________Grade _______
Year and Section ______________ Permit No. ________________ Date___________
Test I. MODIFIED TRUE OR FALSE (30 points)
Directions: Write TRUE if the statement is true, and FALSE if the statement is false. If
false, change the underlined word/s that made the statement false and write the correct
answer on the space provided before each item. (2 points each)
True or
False
Correct Answer
______
_____________
______
_____________
1.
A company producing furniture would probably
use a job order costing.
2.
The cost of indirect materials used in production
is added to the manufacturing overhead account
rather than added directly to Work in Process.
Actual manufacturing overhead costs are
charged directly to Work in Process account as
the costs are incurred
If more overhead is applied to Work in Process
than is usually incurred, then overhead will be
overapplied
All of the raw materials purchased during a
period are included in the cost of goods
manufactured figure.
In a job order cost system, depreciation of
factory equipment should be charged directly to
the Work in Process account.
When raw materials are purchased, the Work in
Process Inventory account is debited.
3.
______
_____________
______
_____________
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5
______
_____________
______
_____________
______
_____________
6.
7.
______
Product cost consist of the sum of prime cost
and conversion cost.
9.
Fixed cost remains constant if expressed on a
unit basis.
10.
The materials, labor and overhead costs incurred
to produce a product are called period costs.
11.
Period Costs are generally expensed in the
same period in which they are incurred.
12.
The three primary inventory accounts in a
manufacturing company are Raw Material
Inventory, Work in Process Inventory, and
Finished Goods Inventory.
The indirect costs of converting raw material into
finished goods are called prime costs.
_____________
______
_____________
______
_____________
______
_____________
______
8.
_____________
13.
______
_____________
______
_____________
______
_____________
14.
Conversion cost includes direct material, direct
labor and overhead.
15.
All costs related to the manufacturing function in
a company are prime costs.
Test II. MULTIPLE CHOICE (40 points)
Direction: In the blank before each item, place the letter that identifies the correct
response. (2 points each)
_______
1.
In 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.
b.
c.
d.
_______
2.
Under a 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.
b.
c.
d.
_______
3.
4.
5.
6.
7.
Job order
Process
Actual
Standard
The most common treatment under-or overapplied overhead is to
close it to:
a.
b.
c.
d.
_______
Invoice
Purchase order
Requisition sheet
Job Cost sheet
What is the best cost accumulation procedure to use when many
batches, each differing as to product specification, are produced?
a.
b.
c.
d.
_______
Payroll liability
Work in Process Control
Finished Goods Control
Factory Overhead Control
Which of the following is the basic document that is used to
accumulate the cost of each order in job order costing:
a.
b.
c.
d.
_______
started in process during the period
in process during the period
completed and sold during the period
completed during the period
In a job-order costing system, indirect labor used should be debited to:
a.
b.
c.
d.
_______
debit Materials and credit Factory Overhead
debit Materials and credit Work in Process
debit Purchase Returns and credit Work in Process
debit Work in Process and credit Materials
Work in process
Retained Earnings
Cost of Goods sold
Finished Goods
It’s two o’clock in the morning and you’ve been studying job-order
costing for the past three hours. You drift off to sleep and in your first
dream you visit JOB-ORDER COSTING LAND. You are a direct labor
peso and are traveling through a giant ledger. By the time you finish
your journey, which accounts will you travel through and in what
order?
a. Work in process, Cost of goods manufactured, Finished
goods, and Cost of goods sold
b. Direct labor, Work in process, Finished goods, and Cost of
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goods sold
c. Work in process, Finished goods, and Cost of goods sold
d. Manufacturing overhead, Work in process, Cost of goods
manufactured, and Finished goods
_______
8.
Which of the following production operations would be most likely to
employ a job order system of cost accounting?
a.
b.
c.
d.
_______
9.
Someone told Marco de Santos, president of D’Santos Company, that
under-or overapplied manufacturing overhead can be allocated to
three accounts. What are those three accounts:
a.
b.
c.
d.
_______
Toy manufacturing
Shipbuilding
Crude oil refining
Candy manufacturing
Raw materials, Manufacturing overhead, and Direct labor
Raw materials, Finished goods, and Cost of goods sold
Cost of goods sold, Work in process, and Finished goods
Cost of goods sold, Work in process, and Raw materials
10. Which of the following statements are false?
I. A manufacturing company can use direct labor hours as an
overhead base in one department and machine hours as an
overhead base in another.
II. A debit balance in the work in process account indicates that not
all goods completed during the period were sold.
III. The predetermined OH rate is computed by dividing estimated
units in the overhead base by budgeted or estimated
manufacturing overhead costs.
a.
b.
c.
d.
_______
11. What accounts would be debited and credited when the direct
materials are purchased on account?
a.
b.
c.
d.
_______
Work in process
Direct materials
Materials
Work in process
Direct materials
Work in process
Accounts payable
Accounts payable
12. What accounts would be debited and credited when the wages for
indirect laborers are recorded?
a.
b.
c.
d.
_______
I only
II only
I and II only
II and III only
Debited
Factory overhead
Factory overhead
Payroll
Work in process
Credited
Wages payable
Payroll
Accrued payroll
Payroll
13. Which of the following statements pertaining to job-order costing are
TRUE?
I. The issuance of indirect materials from the storeroom is recorded
on job-cost sheets.
II. Overapplied factory overhead can be properly disposed off with a
debit to cost of goods sold and a credit to factory overhead.
III. Both an overstated forecast of overhead and an understated
forecast of units of the overhead base can cause overhead to be
overapplied.
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a.
b.
c.
d.
_______
14. A material requisition form normally does not contain which of the
following?
a.
b.
c.
d.
_______
Each job is distinguishable from other jobs.
Identical units are produced on an ongoing basis.
It is not possible to compare actual costs with estimated costs.
Job cost data are used for setting prices and bidding prices.
19. Under a job order costing system, the cost of direct materials, direct
labor and factory overhead must first flow through the
a.
b.
c.
d.
_______
Direct labor activity was overestimated
Overhead was under applied by P4,000
Overhead was over applied by P4,000
The difference must be reported as a loss.
18. Which of the following is not a characteristic of job costing?
a.
b.
c.
d.
_______
direct labor
factory overhead
indirect labor
administrative cost
17. Overhead applied was P120,000, while actual overhead was
P124,000. Which of the following is always true of the above?
a.
b.
c.
d.
_______
Direct materials
Direct labor
Actual factory overhead
Applied factory overhead
16. In a job order costing system, payroll taxes deductions paid by the
employer for factory employees are normally accounted for as
a.
b.
c.
d.
_______
Vendor’s name
Quantity requisitioned
Unit cost
Job number
15. A job order cost sheet normally does not contain which of the
following?
a.
b.
c.
d.
_______
I only
II only
III only
II and III only
Finished goods account
Cost of goods sold account
Work in process account
Cost of goods manufactured account
20. The unit cost of a product, under job order costing, can be determined
only
a.
b.
c.
d.
At the end of the manufacturing process
Upon completion of a job
At the end of the month
At the point of time
Test III. PROBLEM SOLVING (40 points)
(Answers should be supported by solution)
Problem I (20 Points)
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The Alexis Company had the following inventories on Aug 1 of the current year.
Finished goods
Work in process
Materials
P 25,000
18,500
22,000
The work in process account controls two jobs
Materials
Labor
Factory overhead
Job 401
P 3,000
2,500
2,000
P 7,500
Job 402
P 5,600
3,000
2,400
P 11,000
The following information pertains to August operations:
1) Materials purchased on account, P28,000.
2) Materials issued for production, P25,000. Of this amount, P3,000 was for indirect
materials; the difference was distributed: P5,500 to Job 401; P7,000 to Job 402; and
P9,500 for Job 403.
3) Materials returned to the warehouse from the factory, P800, of which P300 was for
indirect materials, the balance from job 403.
4) Materials returned to vendors, P1,000.
5) Payroll after deducting P3,025 for withholding taxes, P1,600 for SSS Premiums, P375
for Medicare, and P1,200 for Pag-ibig, was P32,800. The payroll due the employees
was paid during the month.
6) The payroll was distributed as follows: P10,400 to Job 401; P12,500 to Job 402,
P10,500 to Job 403 and the balance represents indirect labor.
7) The share of the employer for payroll was recorded – P2,000 for SSS Premiums, P375
for Medicare Contributions, and P1,200 for Pag-ibig Funds.
8) Factory overhead, other than any previously mentioned, amounted to P15,000. Included
in this figure were P3,000 for depreciation of factory building and equipment, and P950
for expired insurance on the factory. The remaining overhead was unpaid at the end of
August.
9) Factory overhead was applied to production at the rate of 80% of direct labor cost.
10) Jobs 401 and 402 were completed and transferred to the finished goods warehouse.
11) Job 401 was shipped and billed at a gross profit of 40% of the cost.
12) Cash collections from accounts receivable during August were P35,000.
Required:
1. Compute for the total manufacturing cost of Job 401.
____________
2. Compute for the total manufacturing cost for Job 402.
____________
3. How much is the cost of goods sold for Job 401?
____________
4. How much is the applied manufacturing overhead for Job 401?
____________
5. How much is the applied manufacturing overhead for Job 402?
____________
Problem II (20 Points)
The following inventory data relate to Abner Corporation.
Finished goods
Work in process
Direct materials
Revenues and costs for the period
Sales
Cost of goods available for sale
Total manufacturing costs
Factory overhead
Direct materials used
Inventories
Beginning
Ending
P 90,000
P 110,000
80,000
70,000
95,000
90,000
P 900,000
775,000
675,000
165,000
205,000
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Required: Compute the following for the year:
1. Direct materials purchased
____________
2. Direct labor costs incurred.
____________
3. Cost of goods incurred
____________
4. Gross profit
____________
5. Net Income
____________
-END OF EXAMINATION-
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