COST ACCOUNTING

Quizzer No. 1

Basic Concepts:

1. Management and financial accounting are used for which of the following purposes?
Management accounting Financial accounting
a. internal external
b. external internal
c. internal internal
d. external external

2. One major difference between financial and management accounting is that

a. financial accounting reports are prepared primarily for users external to the company.
b. management accounting is not under the jurisdiction of the Securities and Exchange Commission.
c. government regulations do not apply to management accounting.
d. all of the above are true.

3. Which of the following statements about management or financial accounting is false?

a. Financial accounting must follow GAAP.
b. Management accounting is not subject to regulatory reporting standards.
c. Both management and financial accounting are subject to mandatory recordkeeping requirements.
d. Management accounting should be flexible.

4. Management accounting
a. is more concerned with the future than is financial accounting.
b. is less concerned with segments of a company than is financial accounting.
c. is more constrained by rules and regulations than is financial accounting.
d. all of the above are true.

5. Modern management accounting can be characterized by its

a. flexibility b. standardization c. complexity d. precision

6. Broadly speaking, cost accounting can be defined as a(n)

a. external reporting system that is based on activity-based costs.
b. system used for providing the government and creditors with information about a company’s internal operations.
c. internal reporting system that provides product costing and other information used by managers in performing
their functions.
d. internal reporting system needed by manufacturers to be in compliance with Cost Accounting Standards Board
pronouncements.

7. Cost accounting is directed toward the needs of

a. regulatory agencies b. external users c. internal users d. stockholders

8. Cost accounting standards

a. are legal standards set by the Institute of Management Accountants for use in all manufacturing and professional
businesses.
b. are set by the Cost Accounting Standards Board and are legally binding on all manufacturers, but not service
organizations.
c. do not exist except for those legal pronouncements for companies bidding or pricing cost-related contracts with
the government.
d. are developed by the Cost Accounting Standards Board, issued by the Institute of Management Accountants, and
are legally binding on CMAs.

9. Financial accounting
a. is primarily concerned with internal reporting.
b. is more concerned with verifiable, historical information than is cost accounting.
c. focuses on the parts of the organization rather than the whole.
d. is specifically directed at management decision-making needs.

10. Financial accounting and cost accounting are both highly concerned with
a. preparing budgets.
b. determining product cost.
c. providing managers with information necessary for control purposes.
d. determining performance standards.
11. Which of the following topics is of more concern to management accounting than to cost accounting?
a. generally accepted accounting principles
b. inventory valuation
c. cost of goods sold valuation
d. impact of economic conditions on company operations

12. Cost and management accounting

a. require an entirely separate group of accounts than financial accounting uses.

b. focus solely on determining how much it costs to manufacture a product or provide a service.
c. provide product/service cost information as well as information for internal decision making.
d. are required for business recordkeeping as are financial and tax accounting.

Cost Concepts & Cost Behavior Analysis:

13. The relationship between cost and activity is termed:

a. cost estimation b. cost prediction c. cost behavior d. cost analysis

14. Which of the following costs changes in direct proportion to a change in the activity level?
a. Variable cost b. Fixed cost c. Semi-variable cost d. Step-variable cost

15. Montgomery Company has a variable selling cost. If sales volume increases, how will the total variable cost and the
variable cost per unit behave?
Total Variable Cost Variable Cost Per Unit
a. Increase Increase
b. Increase Remain constant
c. Increase Decrease
d. Remain constant Decrease
e. Decrease Increase

16. What type of cost exhibits the behavior that follows?

Manufacturing
Volume (Units) Cost Per Unit
50,000 P1.95
70,000 1.95
a. Variable cost d. Discretionary fixed cost
b. Fixed cost e. Step-fixed cost
c. Semi-variable cost

17. Plaza Corporation observed that when 25,000 units were sold, a particular cost amounted to P70,000, or P2.80 per
unit. When volume increased by 15%, the cost totaled P80,500 (i.e., P2.80 per unit). The cost that Plaza is
studying can best be described as a:
a. variable cost d. discretionary fixed cost
b. fixed cost e. step-fixed cost
c. semi-variable cost

18. A company observed a decrease in the cost per unit. All other things being equal, which of the following is probably
true?
a. The company is studying a variable cost, and total volume has increased.
b. The company is studying a variable cost, and total volume has decreased.
c. The company is studying a fixed cost, and total volume has increased.
d. The company is studying a fixed cost, and total volume has decreased.
e. The company is studying a fixed cost, and total volume has remained constant.

19. Webster has the following budgeted costs at its anticipated production level (expressed in hours): variable overhead,
P150,000; fixed overhead, P240,000. If Webster now revises its anticipated production slightly downward, it would
expect:
a. total fixed overhead of P240,000 and a lower hourly rate for variable overhead.
b. total fixed overhead of P240,000 and the same hourly rate for variable overhead.
c. total fixed overhead of P240,000 and a higher hourly rate for variable overhead.
d. total variable overhead of less than P150,000 and a lower hourly rate for variable overhead.
e. total variable overhead of less than P150,000 and a higher hourly rate for variable overhead.
20. What type of cost exhibits the behavior that follows?
Manufacturing Total Cost
Volume (Units) Cost Per Unit
50,000 P150,000 P3.00
80,000 150,000 1.88

a. Variable cost b. Fixed cost c. Semi-variable cost d. Step-variable cost

21. When graphed, a typical variable cost appears as:

a. a horizontal line
b. a vertical line
c. a u-shaped line
d. a diagonal line that slopes downward to the right
e. a diagonal line that slopes upward to the right

22. Norman Company pays a sales commission of 5% on each unit sold. If a graph is prepared, with the vertical axis
representing per-unit cost and the horizontal axis representing units sold, how would a line that depicts sales
commissions be drawn?
a. As a straight diagonal line, sloping upward to the right.
b. As a straight diagonal line, sloping downward to the right.
c. As a horizontal line.
d. As a vertical line.
e. As a curvilinear line.

23. When graphed, a typical fixed cost appears as:

a. a horizontal line.
b. a vertical line.
c. a u-shaped line.
d. a diagonal line that slopes downward to the right.
e. a diagonal line that slopes upward to the right.

24. Costs that remain the same over a wide range of activity, but jump to a different amount outside that range, are
termed:
a. step-fixed costs b. step-variable costs c. semi-variable costs d. curvilinear costs

25. Straight-line depreciation is a typical example of a:

a. variable cost b. step-variable cost c. fixed cost d. mixed cost

26. Which of the following choices denotes the typical cost behavior of advertising and sales commissions?
Advertising Sales Commissions
a. Variable Variable
b. Variable Fixed
c. Fixed Variable
d. Fixed Fixed
e. Semi-variable Variable

27. Douglas Corporation recently produced and sold 100,000 units. Fixed costs at this level of activity amounted to
P50,000; variable costs were P100,000. How much cost would the company anticipate if during the next period it
produced and sold 102,000 units?
a. P150,000 b. P151,000 c. P152,000 d. P153,000

28. Extron, Inc., has only variable costs and fixed costs. A review of the company's records disclosed that when
100,000 units were produced, fixed manufacturing costs amounted to P200,000 and the cost per unit manufactured
totaled P5. On the basis of this information, how much cost would the firm anticipate at an activity level of 97,000
units?
a. P485,000 b. P491,000 c. P494,000 d. P500,000

29. A review of Parry Corporation's accounting records found that at a volume of 90,000 units, the variable and fixed
cost per unit amounted to P8 and P4, respectively. On the basis of this information, what amount of total cost would
Parry anticipate at a volume of 85,000 units?
a. P1,020,000 b. P1,040,000 c. P1,060,000 d. P1,080,000

30. Each of Davidson's production managers (annual salary cost, P45,000) can oversee 60,000 machine hours of
manufacturing activity. Thus, if the company has 50,000 hours of manufacturing activity, one manager is needed;
for 75,000 hours, two managers are needed; for 125,000 hours, three managers are needed; and so forth.
Davidson's salary cost can best be described as a:
 a. variable cost b. semi-variable cost d. fixed cost d. step-fixed cost

31. A cost that has both fixed and variable component is termed a:
a. step-fixed cost b. step-variable cost c. semi-variable cost d. curvilinear cost

32. A mixed cost is often known as a:

a. semi-variable cost b. step-fixed cost c. variable cost d. curvilinear cost

33. Richard Hamilton has a fast-food franchise and must pay a franchise fee of P350,000 plus 3% of gross sales. In
terms of cost behavior, the fee is a:
a. variable cost b. fixed cost c. step-fixed cost d. semi-variable cost

34. Which of the following are examples of a mixed cost?

I. A building that is used for both manufacturing and sales activities.

II. An employee's compensation, which consists of a flat salary plus a commission.
III. Depreciation that relates to five different machines.
IV. Maintenance cost that must be split between sales and administrative offices.

a. I only b. II only c. I and III d. I, III, and IV

35. Which of the following costs exhibits both decreasing and increasing marginal costs over a specific range of activity?
a. Semi-variable cost b. Curvilinear cost c. Step-fixed cost d. Step-variable cost

36. The relevant range is that range of activity:

a. where a company achieves its maximum efficiency.
b. where units produced equal units sold.
c. where management expects the firm to operate.
d. where the firm will earn a profit.

37. Within the relevant range of activity, costs:

a. can be estimated with reasonable accuracy.
b. can be expected to change radically.
c. exhibit decreasing marginal cost patterns.
d. exhibit increasing marginal cost patterns.

38. Within the relevant range, a curvilinear cost function can sometimes be graphed as a:
a. straight line b. vertical line c. curved line d. horizontal line

39. As a firm begins to operate outside the relevant range, the accuracy of cost estimates for fixed and variable costs:
Fixed Variable
a. increases increases
b. increases decreases
c. decreases increases
d. decreases decreases
e. decreases remains unchanged

40. Property taxes are an example of a(n):

a. committed fixed cost c. discretionary fixed cost
b. committed variable cost d. discretionary variable cost

41. Which of the following is not an example of a committed fixed cost?

a. Property taxes d. Outlays for advertising programs
b. Depreciation on buildings e. Equipment rental costs
c. Salaries of management personnel

42. Committed fixed costs would include:

a. advertising d. contributions to charitable organizations
b. research and development e. expenditures for direct labor
c. depreciation on buildings and equipment

43. Amounts spent for charitable contributions are an example of a(n):

a. committed fixed cost c. discretionary fixed cost
b. committed variable cost d. discretionary variable cost

44. Which of the following would not typically be classified as a discretionary fixed cost?
 a. Equipment depreciation.
b. Employee development (education) programs.
c. Advertising.
d. Outlays for research and development.

45. Which of the following choices correctly classifies a committed fixed cost and a discretionary fixed cost?
Committed Discretionary
a. Promotion Management salaries
b. Building depreciation Charitable contributions
c. Management training Property taxes
d. Equipment rentals Equipment depreciation
e. Research and development Advertising

46. Which type of fixed cost (1) tends to be more long-term in nature and (2) can be cut back more easily in bad
economic times without doing serious harm to organizational goals and objectives?
Long Term in Can be Cut Back More Easily In
Nature Bad Economic Times
a. Committed Committed
b. Committed Discretionary
c. Discretionary Committed
d. Discretionary Discretionary
e. Committed No difference between
committed and discretionary

47. High-tech automation combined with a downsizing of a company's hourly labor force often results in:
a. increased fixed costs and increased variable costs.
b. increased fixed costs and reduced variable costs.
c. reduced fixed costs and increased variable costs.
d. reduced fixed costs and reduced variable costs.
e. increased discretionary fixed costs and reduced committed fixed costs.

48. Which of the following techniques is not used to analyze cost behavior?
a. Least-squares regression d. Linear programming
b. High-low method e. Multiple regression
c. Visual-fit method

49. The high-low method and least-squares regression are used by accountants to:
a. evaluate divisional managers for purposes of raises and promotions.
b. choose among alternative courses of action.
c. maximize output.
d. estimate costs.
e. control operations.

50. Which of the following methods of cost estimation relies on only two data points?
a. Least-squares regression c. Account analysis
b. The high-low method d. Multiple regression

Use the following to answer questions 51 and 52:

Swanson and Associates presently leases a copy machine under an agreement that calls for a fixed fee each month
and a charge for each copy made. Swanson made 7,000 copies and paid a total of P360 in March; in May, the firm
paid P280 for 5,000 copies. The company uses the high-low method to analyze costs.

51. Swanson's variable cost per copy is:

a. P0.040 b. P0.051 c. P0.053 d. P0.056

52. Swanson's monthly fixed fee is:

a. P80 b. P102 c. P106 d. P112

Use the following to answer questions 53 to 55:

Atlanta, Inc., which uses the high-low method to analyze cost behavior, has determined that machine hours best
explain the company's utilities cost. The company's relevant range of activity varies from a low of 600 machine
hours to a high of 1,100 machine hours, with the following data being available for the first six months of the year:
Month Utilities Machine Hours
January P8,700 800
 February 8,360 720
March 8,950 810
April 9,360 920
May 9,625 950
June 9,150 900

53. The variable utilities cost per machine hour is:

a. P0.18 b. P4.50 c. P5.00 d. P5.50

54. The fixed utilities cost per month is:

a. P3,764 b. P4,400 c. P4,760 d. P5,100

55. Using the high-low method, the utilities cost associated with 980 machine hours would be:
a. P9,510 b. P9,660 c. P9,700 d. P9,790

56. Hitchcock, Inc., uses the high-low method to analyze cost behavior. The company observed that at 12,000 machine
hours of activity, total maintenance costs averaged P7.00 per hour. When activity jumped to 15,000 machine hours,
which was still within the relevant range, the average cost per machine hour totaled P6.40. On the basis of this
information, the variable cost per machine hour was:
a. P4.00 b. P6.40 c. P6.70 d. P7.00

57. Northridge, Inc., uses the high-low method to analyze cost behavior. The company observed that at 20,000
machine hours of activity, total maintenance costs averaged P10.50 per hour. When activity jumped to 24,000
machine hours, which was still within the relevant range, the average cost per machine hour totaled P9.75. On the
basis of this information, the company's fixed maintenance costs were:
a. P24,000 b. P90,000 c. P210,00 d. P234,000

58. The following data relate to the Hodges Company for May and August of the current year:
May August
Maintenance hours 10,000 12,000
Maintenance cost P260,000 P300,000

May and August were the lowest and highest activity levels, and Hodges uses the high-low method to analyze cost
behavior. Which of the following statements is true?
a. The variable maintenance cost is P25 per hour.
b. The variable maintenance cost is P25.50 per hour.
c. The variable maintenance cost is P26 per hour.
d. The fixed maintenance cost is P60,000 per month.

Use the following to answer questions 59 to 61:

Yang Manufacturing, which uses the high-low method, makes a product called Yin. The company incurs three
different cost types (A, B, and C) and has a relevant range of operation between 2,500 units and 10,000 units per
month. Per-unit costs at two different activity levels for each cost type are presented below.
Type A Type B Type C Total
5,000 units P4 P9 P4 P17
7,500 units P4 P6 P3 P13

59. The cost types shown above are identified by behavior as:
Type A Type B Type C
a. Fixed Variable Semivariable
b. Fixed Semivariable Variable
c. Variable Semivariable Fixed
d. Variable Fixed Semivariable
e. Semivariable Variable Fixed

60. If Yang produces 10,000 units, the total cost would be:
a. P90,000 b. P100,000 c. P110,000 d. P125,000

61. The cost formula that expresses the behavior of Yang's total cost is:
a. Y = P20,000 + P13X b. Y = P40,000 + P9X c. Y = P45,000 + P4X d. Y = P60,000 + P5X

62. In regression analysis, the variable that is being predicted is known as the:
a. independent variable. d. interdependent variable.
b. dependent variable. e. functional variable.
c. explanatory variable.
63. Mohawk Products has determined that the number of machine hours worked (MH) drives the amount of
manufacturing overhead incurred (MOH). On the basis of this relationship, a staff analyst has constructed the
following regression equation:

MOH = 240,000 + 8MH

Which of the choices correctly depicts the nature of Mohawk's variables?

Dependent Independent
a. MOH MOH
b. MOH MH
c. MH MOH
d. MH MH
e. 8 240,000

64. Checkers Corporation, which uses least-squares regression analysis, has derived the following regression equation
for estimates of manufacturing overhead: Y = 495,000 + 5.65X. Which of the following statements is true if the
primary cost driver is machine hours?
a. Total manufacturing overhead is represented by the variable "X."
b. The company anticipates P495,000 of fixed manufacturing overhead.
c. "X" is commonly known as the dependent variable.
d. "X" represents the number of machine hours.
e. Both "B" and "D" are true.

65. Boulder, Inc., recently conducted a least-squares regression analysis to predict selling expenses. The company has
constructed the following regression equation: Y = 329,000 + 7.80X. Which of the following statements is false if
the primary cost driver is number of units sold?
a. The company anticipates P329,000 of fixed selling expenses.
b. "Y" represents total selling expenses.
c. The company expects both variable and fixed selling expenses.
d. For each unit sold, total selling expenses will increase by P7.80.
e. "X" represents the number of hours worked during the period.

66. Tempe, Inc., is studying marketing cost and sales volume, and has generated the following information by use of a
scatter diagram and a least-squares regression analysis:
Scatter Diagram Regression Analysis
Variable cost per unit sold P6.50 P6.80
Total monthly fixed cost P45,000 P42,500

Tempe is now preparing an estimate for monthly sales of 18,000 units. On the basis of the data presented, compute
the most accurate sales forecast possible.
a. P159,500 b. P162,000 c. P164,900 d. P167,400

67. Waller Enterprises has determined that three variables play a key role in determining company revenues. To arrive
at an objective forecast of revenues for the next accounting period, Waller should use:
a. simple regression b. multiple regression c. a scatter diagram d. high-low method

Cost Accounting Cycle:

68. Which of the following costing methods of valuation are acceptable in a job order costing system?
Actual Standard Actual Predetermined
Material Material Labor Overhead
Cost Cost Cost Cost
a. yes yes no yes
b. yes no yes no
c. no yes yes yes
d. yes yes yes yes

69. In a normal cost system, debits to Work in Process Inventory would not be made for
a. actual overhead b. applied overhead c. actual direct material d. actual direct labor

70. A credit to Work in Process Inventory represents

a. work still in process.
b. raw material put into production.
c. the application of overhead to production.
d. the transfer of completed items to Finished Goods Inventory.
71. In a job order costing system, the dollar amount of the entry that debits Finished Goods Inventory and credits Work
in Process Inventory is the sum of the costs charged to all jobs
a. started in process during the period. c. completed and sold during the period.
b. in process during the period. d. completed during the period.

72. Total manufacturing costs for the year plus beginning Work in Process Inventory cost equals
a. cost of goods manufactured in the year c. total manufacturing costs to account for
b. ending Work in Process Inventory d. cost of goods available for sale

73. Which of the following would be least likely to be supported by subsidiary accounts or ledgers in a company that
employs a job order costing system?
a. Work in Process Inventory c. Accounts Payable
b. Raw Material Inventory d. Supplies Inventory

74. A journal entry includes a debit to Work in Process Inventory and a credit to Raw Material Inventory. The explanation
for this would be that
a. indirect material was placed into production c. direct material was placed into production
b. raw material was purchased on account d. direct labor was utilized for production

75. Which of the following journal entries records the accrual of the cost of indirect labor used in production?
a. debit Work in Process Inventory, credit Wages Payable
b. debit Work in Process Inventory, credit Manufacturing Overhead
c. debit Manufacturing Overhead, credit Work in Process Inventory
d. debit Manufacturing Overhead, credit Wages Payable

76. In job order costing, payroll taxes paid by the employer for factory employees are commonly accounted for as
a. direct labor cost c. indirect labor cost
b. manufacturing overhead cost d. administrative cost

77. The logical explanation for an entry that includes a debit to Manufacturing Overhead control and a credit to Prepaid
Insurance is
a. the insurance company sent the company a refund of its policy premium.
b. overhead for insurance was applied to production.
c. insurance for production equipment expired.
d. insurance was paid on production equipment.

78. The journal entry to apply overhead to production includes a credit to Manufacturing Overhead control and a debit to
a. Finished Goods Inventory c. Cost of Goods Sold
b. Work in Process Inventory d. Raw Material Inventory

79. Production overhead does not include the costs of

a. factory depreciation and supplies c. production line workers
b. factory employees’ cafeteria departments d. the maintenance department for the factory

80. In a job order costing system, the use of indirect material would usually be reflected in the general ledger as an
increase in
a. stores control c. manufacturing overhead applied
b. work in process control d. manufacturing overhead control

81. A credit to the Manufacturing Overhead control account represents the

a. actual cost of overhead incurred.
b. actual cost of overhead paid this period.
c. amount of overhead applied to production.
d. amount of indirect material and labor used during the period.

82. The journal entry to record the incurrence and payment of overhead costs for factory insurance requires a debit to
a. Cash and a credit to Manufacturing Overhead.
b. Manufacturing Overhead and a credit to Accounts Payable.
c. Manufacturing Overhead and a credit to Cash.
d. Work in Process Inventory and a credit to Cash.

83. Overapplied overhead would result if

a. the plant were operated at less than normal capacity.
b. overhead costs incurred were less than costs charged to production.
c. overhead costs incurred were unreasonably small in relation to units produced.
d. overhead costs incurred were greater than costs charged to production.

84. Debits to Cost of Goods Sold typically represent the

 a. transfer of completed items to Finished Goods Inventory.
b. costs of items sold.
c. selling price of items sold.
d. the cost of goods manufactured.

85. In a perpetual inventory system, a transaction that requires two journal entries (or one compound entry) is needed
when
a. raw materials are purchased on account.
b. goods are sold for either cash or on account.
c. goods are finished and transferred out of Work in Process Inventory.
d. overhead is applied to Work in Process Inventory.

Use the following to answer questions 86 to 89:

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

Raw material used in production P326

Total manufacturing costs charged to production during the year (includes direct 686
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 materials P 75 P 85
Work in process 80 30
Finished goods 90 110

86. The cost of raw material purchased during the year was
a. P316 b. P336 c. P360 d. P411

87. Direct labor cost charged to production during the year was
a. P135 b. P216 c. P225 d. P360

88. Cost of Goods Manufactured was

a. P636 b. P716 c. P736 d. P766

89. Cost of Goods Sold was

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

Use the following to answer questions 90 to 93:

Brandt Company manufactures wood file cabinets. The following information is available for June 2014:

Beginning Ending
Raw Material Inventory P 6,000 P 7,500
Work in Process Inventory 17,300 11,700
Finished Goods Inventory 21,000 16,300

90. Direct labor is P9.60 per hour and overhead for the month was P9,600. Compute total manufacturing costs for June,
if there were 1,500 direct labor hours and P21,000 of raw material was purchased.
a. P58,500 b. P46,500 c. P43,500 d. P43,100

91. Direct labor is paid P9.60 per hour and overhead for the month was P9,600. What are prime costs and conversion
costs, respectively if there were 1,500 direct labor hours and P21,000 of raw material was purchased?
a. P29,100 and P33,900 b. P33,900 and P24,000 c. P33,900 and P29,100 d. P24,000 and P33,900

92. Direct labor is paid P9.60 per hour and overhead for the month was P9,600. If there were 1,500 direct labor hours
and P21,000 of raw material purchased, Cost of Goods Manufactured is:
a. P49,100 b. P45,000 c. P51,000 d. P49,500

93. Direct labor is paid P9.60 per hour and overhead for the month was P9,600. If there were 1,500 direct labor hours
and P21,000 of raw material purchased, how much is Cost of Goods Sold?
a. P64,500 b. P59,800 c. P38,800 d. P53,800
 94. Davis Company manufacturers desks. The beginning balance of Raw Material Inventory was P4,500; raw material
purchases of P29,600 were made during the month. At month end, P7,700 of raw material was on hand. Raw
material used during the month was
a. P26,400 b. P34,100 c. P37,300 d. P29,600

95. Urban Company manufacturers tables. If raw material used was P80,000 and Raw Material Inventory at the
beginning and end of the period, respectively, was P17,000 and P21,000, what was amount of raw material was
purchased?
a. P76,000 b. P118,000 c. P84,000 d. P101,000

96. Putnam Company manufacturers computer stands. What is the beginning balance of Finished Goods Inventory if
Cost of Goods Sold is P107,000; the ending balance of Finished Goods Inventory is P20,000; and Cost of Goods
Manufactured is P50,000 less than Cost of Goods Sold?
a. P70,000 b. P77,000 c. P157,000 d. P127,000

97. TMNT Products has no WIP or FG inventories at the close of business on December 31, 2014. The balances of TMNT’s
accounts as of December 31, 2014, are as follows:

Cost of goods sold-unadjusted P 2,040,000 Factory overhead-control 700,000

Selling & administrative expenses 900,000 Factory overhead-applied 648,000
Sales 3,600,000

Pretax income for 2014 is

a. P 608,000 b. P 660,000 c. P 712,000 d. P 620,000

98. The accounting records of Wagan Co. showed the following: Increase in raw materials inventory, P45,000; Decrease
in finished goods inventory, P150,000; Raw materials purchased, P1,290,000; Direct labor payroll, P600,000;
Factory overhead, P900,000; Freight-out, P135,000.

The cost of raw materials used for the period amounted to

a. P1,245,000 b. P1,335,000 c. P1,290,000 d. P1,380,000

99. Killua Company is a manufacturing concern using the perpetual inventory system. The following materials inventory
account data is provided:

Beginning balance P 275,000

Other debits to the account 825,000
Excess of ending over beginning inventory 55,000

How much is the cost of materials issued to production?

a. P770,000 b. P1,045,000 c. P1,100,000 d. P1,155,000

100. Eiji Company has the following data on April 30, 2014:
April manufacturing overhead P 30,101.80
Decrease in ending inventories
Materials 2,430.00
Goods in process 590.00
Increase in ending inventory:
Finished goods 1,320.40

The manufacturing overhead amounts to 50% of the direct labor and the direct labor and manufacturing, combined
equal 50% of the total cost of manufacturing. All materials are purchased FOB shipping point.

What is the cost of goods manufactured?

a. P 180,610.80 b. 181,200.80 c. P 182,300.00 d. 183,200.80

Use the following data in answering questions 101 through 104:

Selected data concerning the past fiscal year’s operations (000 omitted) of the Clark Manufacturing Company are
presented below:
Inventories
Beginning Ending
Raw materials P75 P85
Work in process 80 30
Finished goods 90 110

Other data:
 Raw materials used P326
Total manufacturing costs incurred (FOH is applied at
a rate of 60% of DL) 686
Cost of goods available for sale 826
Selling and general expenses 25

101. The cost of raw materials purchased during the year amounted
a. P411 b. P360 c. P316 d. P336

102. Direct labor costs charged to production during the year amounted to
a. P135 b. P225 c. P360 d. P216

103. The cost of goods manufactured was

a. P363 b. P766 c. P736 d. P716

104. The cost of goods sold was

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

105. Milagrosa Manufacturing Company manufactured 50,000 kilos of compound BB in 2014 at the following costs:

Beginning work in process P 88,125

Materials (10% indirect) 182,500
Labor (7% indirect) 242,500
Ending work in process 67,500
Factory overhead 125% of DLC

The cost of goods manufactured is

a. P651,056 b. P692,306 c. P706,906 d. P727,531