POLYTECHNIC UNIVERSITY OF THE PHILIPPINES
College of Accountancy and Finance
ACCO 202 – Cost Accounting and Control
Final Examination – February 7, 2024
INSTRUCTIONS: Choose the letter of your best answer for each item and shade it properly on your scannable answer sheet.
Strictly NO ERASURES allowed and keep it clean from unnecessary marks. Show all your supporting computations in the
worksheet provided. Always observe honesty and work independently during the examination. Any form of
communication and cheating will never be tolerated.
THEORIES
1. Which of the following statements about semi-variable costs is not true?
a. They are sometime called mixed costs.
b. They may remain constant over a range of production, then abruptly change.
c. They vary in direct proportion to volume changes.
d. They first must be broken down into their fixed and variable components before they can be used to predict costs
at different levels of volume.
2. The role of safety stock in an organization is to:
a. reduce the lead time for an order to be received. c. reduce the probability of a stock out.
b. reduce the order point. d. decrease the economic order quantity.
3. Which of the following costs is classified as a period cost?
a. The wages of a worker paid for idle time resulting from a machine breakdown in the molding department.
b. The payments for employee benefits paid on behalf of the workers in the manufacturing plant.
c. The wages paid to workers for reworking defective products that failed the quality inspection upon completion.
d. None of the above.
4. The principal reason for using more than one rate to apply overhead is:
a. to keep the individual rates low.
b. that overhead costs are driven by more than one activity.
c. that such rates recognize the seasonal nature of some costs.
d. to simplify the record-keeping.
5. A journal entry includes a debit to the Work in Process Inventory and a credit to the Raw Materials Inventory. The
explanation for this would be that:
a. indirect material was placed into production. c. raw material was purchased on account.
b. direct material was placed into production. d. direct labor was utilized for production.
6. A characteristic of a process cost accounting system is:
a. Work in process inventory is restated in terms of equivalent whole units.
b. It is used by a company manufacturing customized machinery.
c. Costs are accumulated by order.
d. None of these is correct.
7. All of the following could be included in the cost of a product located in the final production department of a multi-
step process except:
a. the costs of materials, labor, and overhead identifiable with that department.
b. marketing and distribution costs.
c. the costs of service departments that have been allocated to production departments.
d. the costs of prior production departments.
8. Which of the following would likely use the process costing system?
a. Print shop c. Public Accounting Firm
b. Aircraft machinery d. Beverage drink manufacturer
9. The weighted average method is thought by some accountants to be inferior to the FIFO method because it:
a. is more difficult to apply. c. commingles cost of two periods.
b. ignores work performed in subsequent periods. d. only considers the last units worked on.
.
10. Equivalent units of production are equal to the:
a. number of whole units that could have been completed if all work of the period had been used to produce whole
units.
b. identifiable units existing at the end of the period in a production department.
c. units completed by a production department in the period.
d. number of units worked on during the period by a production department.
11. Transferred-in cost represents the cost from:
a. the last department only. c. all prior departments.
b. the last production cycle. d. the current period only.
12. How do process costing systems allocate costs to products?
a. By dividing the total cost by cost drivers.
b. By adding total costs at each stage of the manufacturing process then dividing these costs by total number of units
produced.
c. By adding total costs for the manufacturing process then dividing by total number of units produced.
d. By dividing total costs of the manufacturing process by the total profits made in that financial period, then
multiplying that number by the profit margin for the product.
13. An item that does not appear on a cost of production report is:
a. Finished goods inventory, ending
b. Work in process, inventory, beginning
c. Materials used in the department
d. Cumulative costs through the end of departmental production
14. Spoilage that is an inherent result of particular production process and arises under efficient operating conditions are
referred to:
a. Ordinary spoilage b. Continuous spoilage c. Abnormal spoilage d. Normal spoilage
15. The cost of abnormal continuous losses is:
a. considered a product cost.
b. written off as a loss on an equivalent unit basis.
c. absorbed by all units past the inspection point.
d. absorbed by all units in ending inventory and transferred out on an equivalent unit basis.
16. Which of the following components of production are allocable as joint costs when a single manufacturing process
produces several salable products?
a. direct material, direct labor, and overhead c. direct material and direct labor only
b. direct labor and overhead only d. direct material and overhead only
17. A reason why a physical-measure to allocate joint costs is less preferred than the sales value at split-off is because:
a. a physical measure such as volume is difficult to estimate than sales value.
b. physical volume usually has little relationship to the revenue producing power of products.
c. a physical measure usually results in less costs being allocated to the product that weighs the most.
d. customers will easily understand that the products are overpriced.
18. A product may be processed beyond the split-off point if management believes that:
a. its marketability will be enhanced.
b. the incremental cost of further processing will be less than the incremental revenue of further processing.
c. the joint cost assigned to it is not already greater than its prospective selling price.
d. both a and b.
19. A method that assigns predetermined weight factors to each unit of various joint products for the purpose of allocating
joint cost is known as:
a. average unit cost method. c. hypothetical market value method.
b. sales value method. d. weighted average method.
20. When a company produces two different products through a common production process, the factor that determines
whether the two products are joint products or one main product and one by-product is the:
a. management policy about individual products.
b. relative sales value of individual products.
c. potential marketability for individual products.
d. amount of work done in the production of individual products.
21. Which of the following statements is true regarding by-products?
a. Process costing is the only method that should result in by-products.
b. Job order costing systems will never have by-products.
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c. Job order costing systems may have instances where by-products result from the production process.
d. Process costing will never have by-products from the production process.
22. Which of the following statements about the accounting treatment of a by-product is correct?
a. The sales revenue of by-product is reported in the income statement as other income.
b. The sales revenue of by-product is reported in the income statement as additional sales revenue.
c. The sales revenue of by-product is reported as a reduction from the joint costs.
d. All of the above statements are correct.
23. A primary purpose of using a standard cost system is:
a. to make things easier for managers in the production facility.
b. to provide a distinct measure of cost control.
c. to minimize the cost per unit of production.
d. b and c are correct.
24. The most effective standards are set following a careful study of products and operating conditions by the:
a. Accounting Department, central management, and the Industrial Engineering Department.
b. Central management and the employees whose performance is being evaluated.
c. Industrial Engineering Department and the employees whose performance is being evaluated.
d. Central management and the Industrial Engineering Department.
25. Which of the following statements regarding standard cost systems is true?
a. Favorable variances are not necessarily good variances.
b. Managers will investigate all variances from the standard.
c. The production supervisor is generally responsible for material price variances.
d. Standard costs cannot be used for planning purposes since costs normally change in the future.
26. In a standard cost system, Work in Process Inventory is ordinarily debited with:
a. actual costs of material and labor and a predetermined overhead cost for overhead.
b. standard costs based on the level of input activity (such as direct labor hours worked).
c. standard costs based on production output.
d. actual costs of material, labor, and overhead.
27. A total variance is best defined as the difference between total:
a. actual cost and total cost applied for the standard output of the period.
b. standard cost and total cost applied to production.
c. actual cost and total standard cost of the actual input of the period.
d. actual cost and total cost applied for the actual output of the period.
28. Which of the following factors should not be considered when deciding whether to investigate a variance?
a. magnitude of the variance
b. trend of the variances over time
c. likelihood that an investigation will reduce or eliminate future occurrences of the variance
d. whether the variance is favorable or unfavorable
29. At the end of a period, a significant material quantity variance should be:
a. closed to Cost of Goods Sold.
b. allocated among Raw Material, Work in Process, Finished Goods, and Cost of Goods Sold.
c. allocated among Work in Process, Finished Goods, and Cost of Goods Sold.
d. carried forward as a balance sheet account to the next period.
30. A favorable fixed overhead volume variance occurs if:
a. there is a favorable labor efficiency variance. c. production is less than planned.
b. there is a favorable labor rate variance. d. production is greater than planned.
PROBLEMS
AFGHANISTAN Company is a manufacturer of PUP souvenirs. The following are the cost information during the current
month of operations: Direct Materials - P515,515; Indirect Materials - P212,212; Direct Labor - P1,240,240; Indirect Labor
- P623,326; Factory Utilities - P268,268; Advertising Costs - P97,650; Sales Commissions - P169,690; Depreciation on
administrative building - P81,081; Salaries of administrative personnel - P318,813; Depreciation of delivery equipment -
P56,560; Overtime pay of production workers - P65,600; and Rework cost on defective product discovered during quality
inspection - P24,420.
31. How much is the total product costs?
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a. P2,859,561 b. P2,925,161 c. P2,949,581 d. P3,006,141
BRUNEI Company acquired raw materials to be used in the production of a variety of its products. Movements in the
inventory of Product A during the month of January are as follows: January 1, beginning inventory – 1,000 units @ P21
each; January 7 - purchased 2,500 units @ P17 each; January 12 - used 2,000 units in the production; and January 21 -
purchased another 1,000 units @ P22 each.
32. How much is the ending inventory under the weighted average cost formula, when the average is computed on a
periodic basis?
a. P36,286 b. P47,500 c. P38,000 d. P49,214
CAMBODIA Company is a manufacturer of ready to wear shirts. The following are the amounts paid to its employees:
Regular payroll of factory workers - P580,000; Regular payroll of factory supervisors and utility team - P134,000; COLA &
other monetary benefits of factory workers - P22,000; 13th month pay of factory workers - P48,000; 13th month pay of
factory supervisors and utility team - P11,500; Overtime pay to the extent of the regular wage rate of factory workers -
P28,800; and Overtime pay premium (excess of the regular wage rate) of factory workers - P7,200.
33. How much is the Total Direct Labor?
a. P664,000 b. P831,500 c. P678,800 d. P686,000
CHINA Company is working on a customized conference table. The job (CT100) was started in October. At the end of
October, the job cost sheet showed direct materials of P17,000, direct labor of 48 hours at P200 per hour, and overhead
of P4,800. During November, a new job (CT200) was accepted. Direct materials of P6,000 and P5,000 were added to Job
CT100 and Job CT200, respectively. The time ticket showed 15 hours on Job CT100 and 12 hours on Job CT200. Both jobs
were completed on November 30.
34. How much is the total overhead applied to Job CT100?
a. P6,000 b. P6,300 c. P5,800 d. P5,040
GEORGIA Company has two operating departments – Programming and Fitness. There are also two service centers –
Janitorial and Cafeteria. Janitorial costs are allocated based on square footage, while Cafeteria costs are allocated based
on number of employees. The costs traceable to the operating and service centers during 2023 were as follows:
Janitorial Cafeteria Programming Fitness
Overhead Costs 130,000 540,000 348,000 245,000
Square footage 1,600 8,000 24,000 32,000
No. of Employees 5 14 19 6
35. Using the algebraic method, how much is the total cost of the Programming Department after the allocation?
a. P814,114 b. P792,043 c. P470,957 d. P784,286
INDIA Company is a manufacturer of shoes. The beginning balance of the Work in Process Inventory was P110,000
consisting of Job 01 with a cost of 50,000; Job 02 costing 10,000, and Job 03. During the period, the company purchased
raw materials amounting to P400,000. The total payroll for production was P200,000 net of P20,000 deductions for SSS,
PHIC, and HDMF. The Raw Materials Inventory had an increase of P120,000 and the indirect materials used amounted to
P50,000. The indirect labor cost incurred was P10,000. The overhead cost was applied at 50% of the direct labor cost. At
the end of the period, only Job 03 was still incomplete where total direct labor cost and direct materials of P40,000 and
P60,000, respectively, were added during the period.
36. How much is the Cost of Goods Manufactured?
a. P550,000 b. P520,000 c. P540,000 d. P600,000
INDONESIA Company manufactures leather bags and uses the job order cost system. Its work in process transactions are
as follows: Direct materials used - P341,000; Direct labor cost - P324,500; Factory overhead - P259,600; and Transferred to
finished goods - P825,000. Two jobs are still in process, upon which direct materials of P70,400 have been expended.
Factory overhead was applied at a predetermined percentage of direct labor cost.
37. How much is the direct labor cost component on the jobs transferred to the finished goods?
a. P246,400 b. P259,600 c. P248,400 d. P308,000
For Numbers 38 to 39:
JAPAN Company processes its product in three consecutive departments, A, B, and C. The following data are given on the
third department’s production for June 2023. All the cost elements are evenly distributed. The company uses the FIFO
method.
In process, June 1 (4/5 complete) 5,000
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Transferred in 22,000
In process, June 30 (3/4 complete) 8,000
The following are the cost data: In process, June 1 - P61,220; Transferred in - P220,000; and Cost added in June: Materials
- P31,500; Labor - P16,800; and Overhead - P12,600.
38. What is the Equivalent Unit of Production (EUP) for all the cost elements?
a. 19,000 units b. 21,000 units c. 25,000 units d. 27,000 units
39. How much is the cost of the completed units?
a. P104,720 b. P183,500 c. P244,720 d. P245,100
For Numbers 40 to 41:
KAZAKHSTAN Company manufactures a standard recliner. During December, the firm’s Assembly Department started
production of 75,000 chairs. During the month, the company completed 80,000 chairs and transferred them to the
Finishing Department. The company ended the month with 10,000 chairs in ending inventory that are 80% completed.
There were 15,000 chairs in beginning inventory that are 30% completed. All direct materials costs are added at the
beginning of the production cycle, and conversion costs are added uniformly throughout the process. The FIFO method is
used.
Materials Conversion
Beginning Inventory 84,000 122,500
Costs Added during the period 588,000 970,270
40. The equivalent units for conversion costs during December is:
a. 75,000 units b. 77,500 units c. 83,500 units d. 88,000 units
41. The total cost of completed units during December is:
a. P1,264,900 b. P1,471,400 c. P1,556,800 d. P1,593,410
For Numbers 42 to 43:
LEBANON Company manufactures a variety of natural fabrics for the clothing industry. The following data pertain to the
Weaving Department for September 2022:
• Work in Process beginning (20,000 units): Materials - P94,000 and Conversion - P44,400
• Cost incurred during the period: Materials - P164,000 and Conversion - P272,800
• Units completed and transferred out - 50,000 units
Below are the Equivalent Units of Production (EUP) for both methods:
WAVE FIFO
Materials 60,000 40,000
Conversion 52,000 44,000
42. How many units are added during the period?
a. 50,000 units b. 40,000 units c. 60,000 units d. 30,000 units
43. Using the WAVE method, how much is the Work in Process Ending?
a. P55,200 b. P53,400 c. P60,200 d. P50,400
For Numbers 44 to 45:
MYANMAR Company manufactures plastic chairs in its Processing Department. Direct materials are included at the
inception of the process. Conversion costs are incurred evenly throughout the process. Inspection takes place when the
units are 60% completed. 80% of the total spoiled units are considered normal. The company uses FIFO to accumulate
costs. Data provided for September 2022 are as follows:
• Work in Process beginning (Materials - 100% and Conversion - 80%) - 30,000 units
• Started - 80,000 units
• Completed and transferred - 86,000 units
• Work in Process ending (Materials - 100% and Conversion - 75%) - 20,000 units
• Cost of Work in Process beginning: Materials - P70,000 and Conversion - P40,000
• Cost Added during the period: Materials - P160,000 and Conversion - P122,480
44. How much is the Work in Process Ending?
a. P64,723 b. P63,139 c. P64,653 d. P62,965
45. How much is the Loss from Spoilage?
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a. P0 (NIL) b. P2,519 c. P2,250 d. P2,340
For Numbers 46 to 47:
MALAYSIA Company applies process costing in the manufacture of its product. Manufacturing starts in Department 1
where materials are all added at the start of the process. The good units are then transferred to Department 2. All the
incremental materials needed for its completion are added at the start of Department 2. In Department 1, units are
inspected at the end of the process while in Department 2, inspection takes place when the units are 90% completed. The
company used the weighted average method in costing. The production data in Department 1 for June 2022 shows the
following:
Work in Process beginning (60% incomplete) 8,000
Work in Process ending (70% complete) 12,000
Started in process during the period 60,000
Normal spoilage 4% of units started
Abnormal spoilage 1/2 of normal spoilage
The following are the costs information:
• Work in process beginning: Materials – P54,000 and Conversion – P39,000.
• Cost added during the period: Materials – P792,000 and Conversion – P1,235,520.
46. How much is the Completed and Transferred?
a. P1,694,779 b. P1,770,312 c. P1,767,626 d. P1,783,920
47. How much is the Work in Process Ending?
a. P329,651 b. P316,470 c. P322,468 d. P318,371
For Numbers 48 to 49:
OMAN Company produces two products from a joint process: X and Z. Joint processing costs for this production cycle are
P80,000. Below are the additional information:
Product Yards Sales Price at SOP Disposal Cost at SOP Separable Costs Final Sales Price
X 1,500 6.00 3.50 1.00 7.50
Y 2,200 9.00 5.00 3.00 12.25
48. Using the physical measure, how much is the joint cost allocated to Product X?
a. P31,250 b. P29,450 c. P29,880 d. P40,541
49. Using the sales value method, how much is the unit cost of Product Y?
a. P35.07 b. P34.25 c. P30.03 d. P34.87
For Numbers 50 to 52:
PAKISTAN Company produces three products (Alpha, Beta, and Charlie) from the same process. Joint costs for this
production are P500,000. Below are the additional information:
Product Qty Produced Qty Sold Weight Separable Final SP
Alpha 120,000 115,000 5 0.50 5.00
Beta 110,000 90,000 3 1.00 6.00
Charlie 150,000 120,000 2 1.50 4.00
50. Using the hypothetical market value, how much is the total cost of Product Alpha?
a. P297,713 b. P288,710 c. P244,300 d. P303,902
51. Using the constant margin approach, how much is the unit cost of Product Beta?
a. P2.71 b. P2.89 c. P2.35 d. P2.22
52. Using the weighted average method, how much is the ending inventory of Product Charlie?
a. P69,390 b. P70,597 c. P57,742 d. P54,130
For Numbers 53 to 54:
QATAR Company manufactures two main products (Alpha and Beta) from a joint process that also yields a by-product
(Echo). The by-product is treated as other income. One production run costs P539,200 resulting in 1,000 units of Alpha,
4,000 units of Beta, and 500 units of Echo. Neither product is saleable at split off, they must be further processed such that
the separable cost for Alpha is P120 per unit and for Beta is P80 per unit. The final market value for Alpha is P480 and for
Beta is P360. The by-products can be sold for P100 each.
53. The joint costs allocated to each product (Alpha and Beta) using the constant margin method is:
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a. P124,800 and P414,400 c. P134,800 and P404,400
b. P244,800 and P734,400 d. P131,200 and P408,000
54. How much is the gross profit during the period?
a. P940,800 b. P920,500 c. P990,800 d. P960,200
For Numbers 55 to 56:
The following information is available for RUSSIA Company for May 2022: Actual materials used (in pounds) - 3,150;
Standard materials (in pounds) - 3,000; Materials quantity variance (unfavorable) – P900; Standard direct labor rate - P3.75;
Actual direct labor rate - P3.50; Standard direct labor hours - 10,000; and Labor efficiency variance (favorable) - P4,200.
55. How much is the standard price for materials?
a. P5.50 b. P8.00 c. P6.00 d. P7.50
56. How many is the actual hours worked for the period?
a. 8,880 hours b. 8,000 hours c. 11,120 hours d. 10,500 hours
For Numbers 57 to 59:
SINGAPORE Company has a budgeted normal monthly capacity of 5,000 labor hours with a standard production of 4,000
units at this capacity. Standard costs are: Materials - 2 kilos at P1.00; Labor - P8.00 per hour; Fixed overhead - P5,000; and
Variable overhead - P1.50 per labor hour. During November, actual factory overhead amounted to P11,250 and 4,500 labor
hours were utilized costing P33,750. Production during the month was 3,500 units using 7,200 kilos of materials at a cost
of P1.20 per kilo.
57. How much is the Materials Price Variance?
a. P1,440 UF b. P1,640 UF c. P1,640 F d. P1,440 F
58. How much is the Materials Quantity Variance?
a. P1,000 F b. P1,000 UF c. P200 F d. P200 UF
59. The entry to record the issuance of materials would include:
a. Debit to Work in Process Inventory – P8,640 c. Debit to Materials Price Variance – P1,440
b. Credit to Materials Quantity Variance – P1,000. d. Credit to Raw Materials Inventory – P7,000
For Numbers 60 to 62:
TAIWAN Company uses a standard cost system in accounting for the costs of production of its only product. The standards
for the production of one unit of Product A are as follows:
• Direct materials: 10 feet of Item 1 at P.78 per foot and 3 feet of Item 2 at P1 per foot
• Direct labor: 4 hours at P3.60 per hour
• Factory overhead: applied at 150% of standard direct labor costs
Following is a summary of costs and related data during the year:
• 100,000 feet of Item 1 were purchased at P.75 per foot.
• 30,000 feet of Item 2 were purchased at P.90 per foot.
• 8,000 units of were produced that required 78,000 feet of Item 1, 26,000 feet of Item 2, and 31,000 hours of direct
labor at P3.50 per hour.
• 6,000 units of Product A were sold.
60. How much is the Labor Rate Variance?
a. P3,600 F b. P3,600 UF c. P3,100 F d. P3,100 UF
61. How much is the Labor Efficiency Variance?
a. P3,600 F b. P3,600 UF c. P3,100 F d. P3,100 UF
62. The entry to record the labor would include:
a. Debit to Factory Labor – P115,200. c. Debit to Labor Rate Variance – P3,100.
b. Credit to Labor Efficiency Variance – P3,100. d. Credit to Labor Rate Variance – P3,600.
For Numbers 63 to 65:
THAILAND Company has made the following information available for its production facility for April 2022. Fixed overhead
was estimated at 19,000 machine hours for the production cycle. The following are the standard costs:
Direct materials 20 pieces at P4.00 per piece
Direct labor 1.5 hours at P6.00 per hour
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Variable overhead (applied on machine hour basis) 4.8 hours at P2.50 per hour
Fixed overhead (applied on machine hour basis) 4.8 hours at P3.00 per hour
Actual machine hours for the period were 18,900, which generated 3,900 units. Other actual information are as follows:
Materials purchased and issued (73,600 pieces) 288,880
Labor (5,900 hours) 40,120
Variable overhead 47,628
Fixed overhead 60,000
63. How much is the Budget/Controllable Variance?
a. P3,828 F b. P3,828 UF c. P4,128 F d. P4,128 UF
64. How much is the Volume/Non-Controllable Variance?
a. P540 F b. P540 UF c. P840 F d. P840 UF
65. The entry to record the overhead would include:
a. Debit to Budget Variance – P4,128. c. Credit to Volume Variance – P540.
b. Debit to Work in Process Inventory – P102,960. d. Credit to Manufacturing Overhead – P103,800.
***END OF EXAMINATION***
“Don’t wish it were easier; wish you were better.”
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