CPA REVIEW SCHOOL OF THE PHILIPPINES

MANILA

ADVANCED FINANCIAL ACCOUNTING AND REPORTING Sunday, July 31, 2022

First Preboard Examination 1:00 p.m to 4:00 p.m.

Numbers 1, 2 and 3

Use the following information for the next 3 items:

On January 1, 2022, Newcastle Constructions entered into a long-term construction contract with a
customer, with a target completion date of December 31, 2024. The following information were made
available:

2022 2023 2024

Cost incurred P6,000,000 P5,000,000 P9,000,000
Estimated cost to complete P18,000,000 P16,500,000 nil

The contract provides that the transaction price is P25 million, subject to a P1 million bonus for early
completion, and P1 million penalty for late completion. On December 31, 2022, the company
estimated that there is a 50% chance of the project being completed on time, and a 50% chance of an
early completion. On December 31, 2023, the company estimated that there is a 90% chance of the
project being delayed, and 10% chance of the project being completed on time. The project was
actually completed on time on December 31, 2024.

The expected value approach is determined to be the best basis for estimating the contract price and the
performance obligation is being satisfied over time.

1. How much is the construction in progress as of December 31, 2023?

A. 9,640,000
B. 9,000,000
C. 8,500,000
D. 7,600,000

2. How much is the construction revenue for the year ended December 31, 2022?
A. 6,375,000
B. 6,250,000
C. 6,025,000
D. 6,000,000

3. How much is the realized gross profit for the year ended December 31, 2024?
A. 8,400,000
B. 7,500,000
C. 5,000,000
D. 1,600,000

Number 4

Statement 1: The consignor acts as an agent on behalf of the consignee for the purpose of selling
merchandise for a commission.
Statement 2: Control over the merchandise on consignment does not transfer between the consignee
and consignor
A. Both statements are true
B. Both statements are false
C. Statement 1 is true, statement 2 is false
D. Statement 1 is false, statement 2 is true
 Page 2

Numbers 5 and 6
Use the following information for the next 2 items:

On January 1, 2022, Earthshaker Constructions Inc. entered into a long-term construction contract for a
contract price of P40,800,000. Relevant information are as follows:

2022 2023 2024

Cost incurred to date 4,686,000 ? 15,600,000
Percentage of completion 10% 25% 40%
Realized gross profit ? 2,400,000 ?

5. How much is the cost of construction for the year ended December 31, 2023?
A. 9,600,000
B. 6,855,000
C. 6,390,000
D. 3,720,000

6. How much is the realized gross profit for the year ended December 31, 2024?
A. 720,000
B. 2,940,000
C. 4,380,000
D. 5,340,000

Numbers 7 and 8
Use the following information for the next 2 items:
On July 1, 2022, Scuderia Franchise Corporation signed a contract which granted a franchise license to
Mattia Binotto for a contract price of P1,500,000. A down payment of P300,000 is payable upon
contract signing and the balance is payable in 5 equal tranches evidenced by a non-interest bearing
note, with the first tranche payable exactly 1 year after contract signing. The effective rate in the
market for similar notes is 10% (use 2 decimal places for the PV factor, if applicable).
The contract also entitles Scuderia a continuing franchise fee equivalent to 5% of Mattia’s net sales.
Costs incurred by Scuderia are as follows:

Initial costs Continuing costs

Direct costs 665,280 83,160
Indirect costs 166,320 62,370
Mattia commenced operations on October 1, 2022. Net sales for the quarter ended December 31, 2022
amounted to P3,900,000. The revenue attributable to the grant of the franchise license is to be
recognized at a point in time.

7. How much is the total franchise revenue for the year ended December 31, 2022?
A. 909,600
B. 1,104,600
C. 1,209,600
D. 1,404,600

8. How much is the net income for the year ended December 31, 2022?
A. 375,450
B. 420,930
C. 472,950
D. 518,430
 Page 3

Numbers 9, 10 and 11
On January 1, 2022, Thresh Franchising Company entered into a franchising contract with Lucian to
grant the latter several rights for a transaction price of P1,700,000. These rights include:
 License to access the trademark, tradename, and other intellectual property of the franchisor
for a term of 5 year, renewable at the end of every term.
 Receipt of interior decoration and equipment to be used in the store premise.
 Employee training course for proper conduct of business operations
 Initial delivery of one thousand units of merchandise.
Each of the enumerated performance obligations of the franchisor are determined to be separate and
distinct from one another based on the guidance of IFRS 15. The directly observable standalone selling
price of these performance obligations are as follows:
License P1,200,000
Fixed assets 200,000
Training 100,000
Merchandise ?
By December 31, 2022, the interior decoration and equipment have all been installed and the training
course has been fully completed by the employees. However, only 400 units of merchandise has been
received by the franchisee.

9. Assuming the standalone selling price of the merchandise is highly variable and cannot be
reliably estimated, how much is the revenue recognized due to the satisfaction of the
performance obligation relating to the license to access the intellectual property of the
franchisor?
A. 240,000
B. 620,000
C. 1,200,000
D. 1,580,000

10. Assuming the cost of the merchandise is P450 per unit and a desired margin of 10% based
on sales is applicable, how much is the transaction price to be allocated to the performance
obligation relating to the employee training if standalone selling price of the merchandise is
to be estimated using the estimated cost plus a margin approach?
A. 85,000
B. 100,000
C. 170,000
D. 425,000

11. Assuming the standalone selling price of the merchandise is P1 million and that the contract
instead provides the franchisee a license to use the intellectual property of the franchisor,
how much is the total franchise revenue to be recognized for the year ended December 31,
2022?
A. 639,200
B. 816,000
C. 1,292,000
D. 1,700,000

Number 12
Which of the following is not a possible estimation approach of the stand-alone selling price of a
performance obligation when the same is not directly observable?
A. Adjustment market assessment approach
B. Expected cost plus a margin approach
C. Net realizable value approach
D. Residual approach
 Page 4

Numbers 13, 14 and 15

Chamber Corp. shipped goods to Kayo Inc. out on consignment. The following information were
made available:
Unit selling price P1,000
Unit cost P510
Delivery charge from 3rd party supplier P45,000
Delivery charge from consignor P10,000
Delivery charge from consignee P30,000
Installation costs shouldered by consignee P25,000
Marketing expenses shouldered by consignee P15,000

13. If the delivery charge to the consignee is under the terms freight collect, and delivery
charge from the consignee is under the terms freight prepaid, and the consignee remitted
a total of P180,000 to the consignor, how many units were shipped by the consignor to the
consignee if 75 units are left unsold by the consignee? Assume a 20% commission rate.
A. 325
B. 400
C. 260
D. 335

14. If the consignor rightfully paid for all the delivery charges, and a total of 500 units were
shipped by the consignor to the consignee, 80% of which were sold to customers, how
much is the consignment profit/(loss) to be recognized by the consignor assuming a
commission rate of 15% is applicable?
A. 11,000
B. 22,000
C. 82,000
D. 96,000

15. If the consignor shipped 600 units but only 540 were sold to customers, how much is the
cost of inventory still out on consignment?
A. 30,600
B. 35,100
C. 36,100
D. 39,100

Number 16
The following costs are directly related to a specific construction contract, except
A. Site supervision cost
B. Depreciation of idle equipment
C. Costs of direct and indirect materials used in construction
D. General administration costs which are specifically chargeable to the customer under the terms of
the contract

Number 17
Which of the following provides the customer with a license to access the seller’s intellectual
property?
A. The customer purchased and downloaded “Moves like Jagger” by Maroon 5 on iTunes.
B. The customer is given a copy of the installers for Microsoft Office 2013, such as Word,
Powerpoint, Excel, etc., which is the only version of that software.
C. The customer is granted a right to all the intellectual property of the franchisor, including any
changes to be made to those intellectual property in the future.
D. The customer purchased an ebook copy of the Advanced Financial Accounting and Reporting
Textbook by German C., Valix R., dela Cruz K., and Marasigan L.
 Page 5

Number 18

Which of the following is not to be considered when determining the transaction price of a contract
under IFRS 15 Revenue from Contracts with Customers?
A. Time value of money
B. Penalties expected to be incurred
C. Bonuses which are likely to be earned
D. Number of performance obligations in the contract

Numbers 19, 20, 21

The partnership of Thor, Jane and Valkyrie was formed on January 2, 2022. The original investments
were as follows:

Thor P80,000
Jane 120,000
Valkyrie 180,000

According to the partnership agreement, net income or loss will be divided among the respective
partners as follows:

 Annual Salaries of P12,000 for Thor, P10,000 for Jane, and P8,000 for Valkyrie.
 Interest of 8% on the average capital balances of Thor, Jane and Valkyrie during the year.
 Remainder divided equally.

Additional information:
 Net income of the partnership for the year-ended December 31, 2022 was P70,000.
 Thor invested an additional P20,000 in the partnership on July 1, 2022.
 Valkyrie withdrew P30,000 from the partnership on October 1, 2022.
 Thor, Jane and Valkyrie made regular drawings against shares of net income during the year of
P10,000 each.

19. Which of the following statements is correct?

A. In the computation of the average capital balances of the partners, P10,000 will be made as a
reduction, equivalent to the regular drawings made by the partners.
B. The interest on the average capital of Jane is P13,800.
C. Before distribution, the income summary account has a debit balance of 70,000.
D. Distribution of profit for the year will require a debit to the income summary account
for 70,000.

20. How much is the share of Valkyrie in the net income in 2022?
A. 22,333
B. 22,733
C. 24,934
D. 19,200

21. In the statement of partners’ equity, how much is the net increase in Thor’s capital account
in 2022, assuming that the profit or loss is closed to the partners’ capital accounts?
A. 32,333 increase
B. 20,000 increase
C. 42,333 increase
D. 10,000 increase
 Page 6

Numbers 22, 23, 24 and 25

On June 30, 2022, Steph, the sole proprietor of the Steph Company, expands the company and
established a partnership with Klay and Dray. The partners plan to share profits and losses as follows:
Steph, 50%; Klay, 25%; Dray, 25%. They also agree that the initial capital balances of the partnership
will reflect this same relationship.
Steph asked Klay to join the partnership because of his many business contacts are expected to be
valuable during the expansion. Klay is also contributing P28,000 cash. Dray is contributing P11,000
cash and marketable securities costing P42,000 to Dray but are currently worth P57,500.
Steph’s investment in the partnership is the Steph Company. He plans to pay off the notes with his
personal assets. The other partners have agreed that the partnership will assume the accounts payable.
The statement of financial position for the Steph Company follows:
Steph Company
Statement of Financial Position
June 30, 2022
Assets
Cash P10,000
Accounts receivable (net) 48,000
Inventory 72,000
Equipment (net of accumulated depreciation of P20,000) 70,000
Total Assets P200,000

Liabilities and Equity

Accounts payable P53,000
Notes payable 62,000
Steph, Capital 85,000
Total Liabilities and Equity 200,000
The partners agree that the inventory is worth P85,000, and the equipment is worth half its original
cost, and the allowance for doubtful account is correct.

22. Using the bonus method, how much is the initial capital balance of Dray?
A. 64,125
B. 42,375
C. 57,875
D. 71,125

23. Using the bonus method, how much is the total assets of the partnership at formation date?
A. 327,000
B. 284,500
C. 309,500
D. 271,500

24. Using the asset revaluation method, with Dray’s contributed capital as basis, how much is
implied asset revaluation to be recognized?
A. 42,500
B. (119,500)
C. 38,500
D. None

25. Using the asset revaluation method, with Dray’s contributed capital as basis, which of the
following statements is incorrect?
A. Recognizing the asset revaluation will require a credit to Steph’s capital balance for P2,000.
B. Recognizing the asset revaluation will require a credit to Dray’s capital balance for P42,500.
C. Recognizing the asset revaluation will increase Klay’s capital balance by P40,500.
D. Recognizing the asset revaluation will require the total capital balance to be increased to
P274,000.
 Page 7

Numbers 26 and 27
On June 30, 2022, the condensed balance sheet for the partnership of Jayson, Jaylen, and Marcus,
together with their respective profit and loss sharing percentages were as follows:

Assets, net of liabilities 320,000

Jayson, capital (50%) 160,000
Jaylen, capital (30%) 96,000
Marcus, capital (20%) 64,000
320,000

26. Jayson decided to retire from the partnership and by mutual agreement is to be paid
₱180,000 out of partnership funds for his interest. No goodwill is to be recorded. After
Jayson’s retirement, what are the capital balances of the other partners?
Jaylen Marcus
A. 84,000 56,000
B. 102,000 68,000
C. 108,000 72,000
D. 120,000 80,000

27. Assume instead that Jayson remains in the partnership and that Al is admitted as a new
partner with a 25% interest in the capital of the new partnership for a cash investment of
₱140,000. The bonus method shall be used to record the admission of Al. Immediately after
admission of Al, Jayson’s capital account balance should be
A. 280,000
B. 172,500
C. 160,000
D. 140,000

Number 28
During formation and in the absence of any agreed value, under the bonus method
A. Total partnership capital is equal to the fair value of the net contributions to the partnership.
B. Total partnership capital is less than the fair value of the net contributions to the partnership.
C. Total partnership capital is greater than the fair value of the net contributions to the partnership.
D. Total partnership capital is less than the fair value of the net contributions to the partnership if the
bonus is given to the incoming partner.

Number 29
Transactions between and among the partners are
A. Recorded in the partnership books
B. Not recorded in the partnership books
C. Either a or b
D. Neither a nor b

Number 30
If the partnership agreement does not specify how income is to be allocated, profits and losses should
be allocated
A. Equally
B. In proportion to the weighted average capital invested during the period
C. Equitably
D. In accordance with their original capital contributions
 Page 8

Numbers 31 and 32

The following condensed balance sheet is presented for the partnership of Love and Thunder, who
share profits and losses in the ratio of 60:40, respectively:
Cash 45,000
Other assets 625,000
Thunder, loan 30,000
700,000

Accounts payable 120,000

Love, capital 348,000
Thunder, capital 232,000
700,000

31. The assets and liabilities are fairly valued on the balance sheet. Love and Thunder decide to
admit Capp as a new partner with 20% interest. No revaluation or bonus is to be recorded.
What amount should Capp contribute in cash or other assets?
A. 110,000
B. 116,000
C. 140,000
D. 145,000

32. Instead of admitting a new partner, Love and Thunder decide to liquidate the partnership. If
the other assets are sold for ₱500,000, what amount of the available cash should be
distributed to Love?
A. 255,000
B. 273,000
C. 327,000
D. 348,000

Number 33

The statement of financial position of the partnership of A, B and C shows the following information:

Cash 22,400
Other assets 212,000
Total assets 234,400

Liabilities 38,400
A, capital (50%) 76,000
B, capital (25%) 64,000
C, capital (25%) 56,000
Total liabilities and equity 234,400

The partners realized ₱56,000 from the first installment sale of non-cash assets with total
carrying amount of ₱120,000. How much did B receive from the partial liquidation?
A. 25,000
B. 24,000
C. 16,000
D. 0
 Page 9

Number 34
The statement of financial position of the partnership of A, B and C shows the following information:

Cash 40,000
Other assets 720,000
Total assets 760,000

Liabilities 300,000
B, loan 64,000
C, loan 20,000
A, capital (50%) 250,000
B, capital (30%) 86,000
C, capital (20%) 40,000
Total liabilities and equity 760,000

The non-cash assets are sold for ₱320,000. Partner C is the only solvent partner. In the
settlement of the partners’ claims, how much additional contribution is required of Partner C?
A. 50,000
B. 30,000
C. 20,000
D. None

Number 35
In case of dissolution and the partnership assets and liabilities at date of dissolution needs to be
revalued to their fair values, any revaluation increase or decrease is
A. Allocated to all the existing partners, as at the date of dissolution
B. Allocated only to the partners existing after the dissolution
C. Allocated only to the partner ceasing to be associated with the partnership
D. No revaluation shall be made

Number 36
State the proper order of liquidation.
I. Outside creditors
II. Owner’s capital
III. Inside creditors
A. I, III, II
B. I, II, III
C. III, II, I
D. II, I, III

Number 37
A home office ships inventory to its branch at a mark-up of 125% based on cost. The required balance
of the unrealized intercompany account is P228,000. During the year, the home office sent
merchandise to the branch costing P1,440,000. At the start of the year, the branch's books showed
P288,000 of inventory on hand that was acquired from the home office.
Compute the realized mark-up
A. 1,960,000
B. 1,732,000
C. 189,600
D. 417,600
 Page 10

Number 38
GBR Trading Co. has a branch in Manila. On December 31, 2022, Investment in Manila Branch
account in the home office books showed a balance of P772,000. The interoffice accounts were in
agreement at the beginning of the year. For purposes of reconciling the reciprocal accounts, the
following facts were ascertained:

a. The home office erroneously recorded a remittance for P9,600 from its Pasig branch as a
remittance from its Manila branch.
b. The branch failed to take up a P3,000 debit memo from the home office representing its share in
marketing expenses.
c. Home office credit memo representing a discount on merchandise for P4,200 was not recorded by
the branch.
Compute the unadjusted balance of the Home Office Current account on December 31, 2022
A. 781,600
B. 782,800
C. 780.400
D. 763,600

Number 39
During the year 2022, goods billed at P520,000 were shipped to the branch at 130% of cost. The
account Loading in Branch Inventory has a balance of P196,000 before adjustment. The beginning
inventory of the branch from the home office at cost is P380,000; the beginning inventory of the
branch from outsiders is P86,400; purchases from outsiders is P232,000.
Compute the total goods available for sale of the branch from the home office
A. 849,333
B. 1,014,000
C. 1,294,400
D. 976,000

Number 40
The Home Office in Ortigas shipped merchandise costing P280,000 to the Alabang branch and paid for
the freight charges of P2,100. The home office bills the branch at 125% of cost. The Alabang branch
was subsequently instructed to transfer one-half of the merchandise to the Pasay branch wherein Pasay
branch paid for the P700 freight. If the shipment was made directly from Ortigas to Pasay, the freight
cost would have been P1,400.

By how much will the Alabang Branch charge the Home Office Current account?
A. 179,550
B. 177,100
C. 176,050
D. 176,750

Number 41
Which does not belong to the group?
A. Interest Payable
B. Liquidation Expenses
C. Wages Payable
D. Taxes Payable
 Page 11
Number 42
JKL Company has filed for liquidation. The following data is available:
Net free assets at realizable value 7,500,000
Unsecured liabilities per books 12,000,000
Unrecorded liabilities:
Trustee expense 450,000
Wages 750,000
Compute the expected percentage claim of the unsecured creditors
A. 52.50%
B. 62.50%
C. 69.36%
D. 56.82%

Number 43
They are always assured of payment.
A. Taxes Payable
B. Secured Portion of a Partially Secured Creditor
C. Priority claims
D. Liquidation Expenses

Number 44
Which of the following forms part of the unsecured liabilities?
A. Unsecured portion of partially secured creditors
B. Supplementary credit
C. Secured portion of partially secured creditors
D. The free portion of assets pledged to fully secured creditors

Number 45
When the home office ships merchandise to the branch at a mark-up based on cost, the debit to
Shipments from Home Office account is at
A. Billed price
B. Billed price plus freight
C. Cost plus freight
D. Cost

Number 46
QRS Company is currently experiencing severe financial difficulties and is considering the possibility
of liquidation. At this time, the company has the following assets at estimated realizable value and
liabilities:
Assets (pledged against liabilities of P175,000) 290,000
Assets (pledged against liabilities of P325,000) 125,000
Other Assets 200,000
Liabilities with priority 105,000
Unsecured without priority 500,000

Compute the estimated payment to partially secured creditors

A. 325,000
B. 125,000
C. 185,000
D. 500,000
 Page 12

Numbers 47, 48 and 49

JKL Corporation provided the following balances in July 1, 2022: Statement of Financial Position:

Cash 80,000 Accounts payable 140,000

Accounts receivable 20,000 Wages payable 36,000
Inventories 80,000 Tax payable 24,000
Furnitures 60,000 Notes payable 120,000
Equipment 120,000 Ordinary shares 60,000
Deficit/(RE) ( 20,000)

Total 360,000 Total 360,000

In the Statement of Realization and Liquidation the following data were ascertained for the month of
July:

▪ Interests not accrued for the month were for the notes payable P18,000.
▪ P8,000 of the existing accounts receivable at the beginning of the month was collected for only
P5,000.
▪ P48,000 of the total inventories were sold for P60,000 cash.
▪ Furniture was sold for P44,000.
▪ Administrative expenses of P10,000 were paid.
▪ Additional sales on account amounting to P38,000 were made for the remaining inventories.
▪ Remaining non-cash assets are to be realized and remaining liabilities are to be paid in the next
period(s) of liquidating JKL Corporation.

47. Compute the profit or (loss) of the trustee for the month of July
A. 11,000
B. (29,000)
C. (20,000)
D. 40,000

48. Compute the estate equity/(deficit) at the end of July

A. (49,000)
B. (20,000)
C. 40,000
D. 11,000

49. Compute the balance of cash at the end of July

A. 179,000
B. 217,000
C. 199,000
D. 157,000

Number 50

Which of the following transactions will increase the normal balance of the Investment in Branch
account in the separate statement of financial position of the home office?
A. Return of inventory from branch to home office
B. Payment by the branch of a home office liability
C. Receipt by the home office of a credit memo from the branch
D. Collection by the home office of branch receivable
 Page 13

Numbers 51, 52 and 53

The trial balances before the adjustment for the home office and branch of the TUV Company show
the following items on December 31. Differences in the shipments account balances result from the
home office policy of billing the branch at a 20% mark-up above cost.
Home Office books Branch books
Allowance for overvaluation of
Branch merchandise P252,000
Shipments to branch ?
Purchases (outsiders) P 175,000
Shipments from Home Office 672,000
Merchandise Inventory, January 1 1,050,000
Sales 2,100,000
Expenses 126,000

The ending inventory of the branch amounted to P700,000 composed of merchandise from the home
office, the cost of which amounted to P490,000. The remaining amount from outsiders.

51. By what amount did the Allowance for Overvaluation before adjustment increased during
the year?
A. 112,000
B. 154,000
C. 140,000
D. 252,000

52. In the books of the home office, compute for the amount of adjustment to Income Summary
– Branch account at the end of the year
A. 98,000
B. 154,000
C. 777,000
D. 170,332

53. Before closing, the Home Office Current account in the separate books of the branch is
understated by what amount?
A. 154,000
B. 112,000
C. 777,000
D. 931,000

Number 54

In the reconciliation of the Investment in Branch account and Home Office Current account, which of
the following reconciling items will require a debit to the reciprocal account in the books of the branch
for adjustment?
A. Merchandise in-transit from home office to branch at the end of the year
B. Collection by the Home Office of the branch receivable
C. Payment by the Home Office of the branch payable
D. Expenses allocated by the Home Office to the branch
 Page 14

Numbers 55, 56 and 57

AA Company uses job order costing system. The following costs were accumulated for the month of
November:
Costs added during November
Job No. November 1 Direct materials Direct labor
05 11,000 3,300 2,200
06 15,400 2,750 3,300
07 5,500 16,500 1,650
08 8,250 44,000 4,400
Direct labor rate was 10 per direct labor hour. It was the company's policy to apply overhead based on
direct labor hours with a rate of 5 per direct labor hour. Jobs 05, 06, and 07 were completed and Job 06
was sold to customers.

55. What is the amount cost of goods manufactured for the month end November 30, 2023?
A. 65,175
B. 124,025
C. 83,875
D. 118,250

56. What is the amount of cost of goods sold for the month end November 30, 2023?
A. 23,100
B. 7,700
C. 42,075
D. 65,175

57. What is the amount of work-in-process on November 30, 2023?

A. 83,325
B. 56,650
C. 47,575
D. 58,850

Numbers 58 and 59
The following information were extracted from Job 168:
Direct materials 175,000
Direct labor 262,500
Predetermined OH rate per unit (inclusive of allowance) 3.00
Predetermined OH rate per unit (exclusive of allowance) 2.25
Units produced 150,000
The total cost of the spoiled units was P45,600 if inclusive of allowance and P40,500 if exclusive of
allowance. It can be sold at a price of P17,000.

58. Assuming the spoilage is due to internal failure, what is the total cost transferred to finished
goods?
A. 887,500
B. 841,900
C. 729,400
D. 862,800

59. Assuming the spoilage is due to exacting specifications, what is the total cost transferred to
finished goods?
A. 775,000
B. 734,500
C. 758,000
D. 751,500
 Page 15

Numbers 60 and 61

BB Company had the following data for their service departments (maintenance and personnel) and
revenue producing departments (assembly and finishing):

Factory overhead cost

Maintenance 149,600
Personnel 72,000

Services provided to: Maintenance Personnel Assembly Finishing

Maintenance - 20% 40% 40%
Personnel 10% - 30% 60%

Based on the company's policy, the maintenance department has the most number of service support to
the other departments.

60. Assuming the Direct method is used to allocate the overhead cost, what is the total overhead
cost allocated to the Assembly Department?
A. 74,800
B. 24,000
C. 98,800
D. 81,440

61. Assuming the Step method is used to allocate the overhead cost, what is the total overhead
cost allocated to the Finishing Department?
A. 127,787
B. 103,040
C. 107,840
D. 132,960

Numbers 62 and 63

CC Company manufactured joint products A and B. Product Z was a by-product of the process. The
total cost up to the split-off point was P40,800 representing 4,000 units produced. It was the company's
policy to allocate the said cost to the main products using the net realizable method and the net
realizable value of the by-product will be accounted as additional sales revenue.

Product A Product B Product Z

Units produced 1,600 2,000 400
Units sold 1,400 1,500 300
Final sales price per unit 20 25 10
Further processing cost per unit 5 7 6

62. What is the amount of joint cost allocated to Product B?

A. 22,255
B. 24,878
C. 23,250
D. 24,480

63. What is the amount of total revenue recognized for the year end?
A. 65,500
B. 86,000
C. 66,700
D. 68,500
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Number 64

VV Company used Just-in-Time and Backflush costing system in accounting their costs. The following
transactions were available for the year.

 Purchased materials on account and all was requisitioned into production amounting to P168,000
 Direct labor costs was P156,000
 Actual factory overhead was P500,000
 Applied conversion cost totaled P680,000
 20,000 units were produced but only 18,000 was sold

Assuming VV Company used only one trigger point which is at the point of sale, the journal
entry to record the sale includes
A. Debit to Finished Goods Inventory in the amount of P848,000
B. Credit to Raw and In-Process in the amount of P168,000
C. Credit to Conversion Cost Control in the amount of P680,000
D. Debit to Finished Goods Inventory in the amount of P84,800

Number 65

In a job-order costing system, the 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
B. in process during the period
C. completed and sold during the period
D. completed during the period

Numbers 66 and 67

XX Corp. used standard costing to account its cost. The following data were extracted from its cost
accounting system:

 Number of units of materials purchased was 500 at a cost of P20 per unit
 All materials purchased were used into production
 Standard cost of materials per unit was P18 and it required 450 units of materials to produce the
goods
 Actual direct labor rate was P12 per hour
 Standard direct labor rate was P15 per hour
 Standard direct labor hours were 1,500 hours
 Direct labor efficiency variance was an unfavorable balance in the amount of P1,200

66. In recording the usage of materials into production, it involves a

A. Credit to material quantity variance in the amount of P900
B. Debit to work-in-process in the amount of P8,100
C. Credit to raw materials inventory in the amount of P10,000
D. Debit to work-in-process in the amount of P9,000

67. In recording the direct labor used into production, it involves a

A. Debit to work-in-process in the amount of P22,500
B. Credit to payroll account in the amount of P23,700
C. Debit to labor rate variance in the amount of P4,740
D. Credit to payroll account in the amount of P22,500
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Number 68
This documents provides the management with the summation of the total cost for a given product.
A. job-order cost sheet
B. employee time sheet
C. material requisition form
D. bill of lading

Number 69
When computing variances from standard costs, the difference between actual and standard price
multiplied by actual quantity purchased yields a
A. combined price-quantity variance
B. price variance
C. quantity variance
D. mix variance

Number 70
Joint costs are most frequently allocated based upon relative
A. profitability
B. conversion cost
C. prime cost
D. sales value

END