University of Saint Louis Tuguegarao

Tuguegarao, City

Management Advisory Services

Local Mockboard Examination
MULTIPLE CHIOCE: MARK FULLY with Pencil No. 2 the letter of your chioce on the answer sheet
provided. Make the mark DARK but do not use too much pressure. ERASURES ARE STRICTLY NOT
ALLOWED.
1.In comparing financial and management accounting, which of the following more accurately describes
management accounting information?
a. historical, precise, useful
b. required, estimated, internal
c. budgeted, informative, adaptable
d. comparable, verifiable, monetary

2.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

3.Which of the following is more characteristic of a decentralized than a centralized business structure?
a. The firm's environment is stable.
b. There is little confidence in lower-level management to make decisions.
c. The firm grows very quickly.
d. The firm is relatively small.

4.Which of the following statements is false?

a. A primary purpose of cost accounting is to determine valuations needed for external
financial statements.
b. A primary purpose of management accounting is to provide information to managers for
use in planning, controlling, and decision making.
c. The act of converting production inputs into finished products or services necessitates cost
accounting.
d. Two primary hallmarks of cost and management accounting are standardization of
procedures and use of generally accepted accounting principles.

5.In a global economy,

a. the trade of goods and services is focused on trade between or among countries on the
same continent.
b. the international movement of labor is prohibited except for multilingual persons.
c. the international flows of capital and information are common.
d. all of the above happen in a global economy.

6.A cost driver

a. causes fixed costs to rise because of production changes.
b. has a direct cause-effect relationship to a cost.
c. can predict the cost behavior of a variable, but not a fixed, cost.
d. is an overhead cost that causes distribution costs to change in distinct increments with
changes in production volume.

7.Period costs include

distribution costs outside processing costs sales commissions

a. yes no yes
b. no yes yes
c. no no no
d. yes yes yes

8.The distinction between direct and indirect costs depends on whether a cost
a. is controllable or non-controllable.
b. is variable or fixed.
c. can be conveniently and physically traced to a cost object under consideration.
d. will increase with changes in levels of activity.

9.Costs that are incurred to preclude defects and improper processing are:
a. prevention costs
b. detection costs
c. appraisal costs
d. failure costs

10.Costs that are incurred for monitoring and inspecting are:

a. prevention costs
b. detection costs
c. appraisal costs
d. failure costs
Brandt Company.

Brandt Company manufactures wood file cabinets. The following information is available for June 2001:

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

11.Refer to Brandt Company. Direct labor is $9.60 per hour and overhead for the month was $9,600. Compute
total manufacturing costs for June, if there were 1,500 direct labor hours and $21,000 of raw material was
purchased.
a. $58,500
b. $46,500
c. $43,500
d. $43,100

12.Refer to Brandt Company. Direct labor is paid $9.60 per hour and overhead for the month was $9,600. What
are prime costs and conversion costs, respectively if there were 1,500 direct labor hours and $21,000 of raw
material was purchased?
a. $29,100 and $33,900
b. $33,900 and $24,000
c. $33,900 and $29,100
d. $24,000 and $33,900

13.Refer to Brandt Company. Direct labor is paid $9.60 per hour and overhead for the month was $9,600. If
there were 1,500 direct labor hours and $21,000 of raw material purchased, how much is Cost of Goods Sold?
a. $64,500.
b. $59,800.
c. $38,800.
d. $53,800.

14.Which of the following is not a reason to use predetermined overhead rates?

a. to overcome the problems of assigning overhead to diverse types of products
b. to compensate for fluctuations in monthly overhead costs
c. to provide a means for assigning overhead during the period rather than at the end of the
period
d. to smooth out the amount of overhead cost assigned to products when monthly production
activity differs

15.The estimated maximum potential activity for a specified time is:

a. theoretical capacity
b. practical capacity
c. normal capacity
d. expected capacity

Zenith Corporation
The records of Zenith Corporation revealed the following data for the current year.

Work in Process $ 73,150

Finished Goods 115,000
Cost of Goods Sold 133,650
Direct Labor 111,600
Direct Material 84,200

16.Refer to Zenith Corporation. Assume that Zenith has underapplied overhead of $37,200 and that this amount
is material. What journal entry is needed to close the overhead account? (Round decimals to nearest whole
percent.)
a. Debit Work in Process $8,456; Finished Goods $13,294; Cost of Goods Sold $15,450 and
credit Overhead $37,200
b. Debit Overhead $37,200 and credit Work in Process $8,456; Finished Goods $13,294;
Cost of Goods Sold $15,450
c. Debit Work in Process $37,200 and credit Overhead $37,200
d. Debit Cost of Goods Sold $37,200 and credit Overhead $37,200

17.Refer to Zenith Corporation. Assume that Zenith has overapplied overhead of $25,000 and that this amount is
material. What is the balance in Cost of Goods Sold after the overapplied overhead is closed?
a. $123,267
b. $144,033
c. $158,650
d. $108,650

18.A company producing which of the following would be most likely to use a time standard for labor?
a. mattresses
b. picture frames
c. floral arrangements
d. stained-glass windows

19.A job order costing system is likely to provide better

(1) inventory valuations for financial statements.

(2) control over inventory.
(3) information about ability to accept additional production work.

(1) (2) (3)

a. yes no no
b. no yes yes
c. no no no
d. yes yes yes

20.Cajun Company. uses a job order costing system. During April 20X6, the following costs appeared in the
Work in Process Inventory account:

Beginning balance $ 24,000

Direct material used 70,000
Direct labor incurred 60,000
Applied overhead 48,000
Cost of goods manufactured 185,000

Cajun Company applies overhead on the basis of direct labor cost. There was only one job left in Work in
Process at the end of April which contained $5,600 of overhead. What amount of direct material was included in
this job?
a. $4,400
b. $4,480
c. $6,920
d. $8,000

Alpha Company

Alpha Co. uses a job order costing system. At the beginning of January, the company had two jobs in process
with the following costs:
 Direct Material Direct Labor Overhead
Job #456 $3,400 $510 $255
Job #461 1,100 289 ?

Alpha pays its workers $8.50 per hour and applies overhead on a direct labor hour basis.

21.Refer to Alpha Company. How much overhead was included in the cost of Job #461 at the beginning of
January?
a. $144.50
b. $153.00
c. $2,200.00
d. $2,456.50

22.Refer to Alpha Company. During January, Alpha’s employees worked on Job #649. At the end of the month,
$714 of overhead had been applied to this job. Total Work in Process at the end of the month was $6,800 and all
other jobs had a total cost of $3,981. What amount of direct material is included in Job #649?
a. $677.00
b. $1,391.00
c. $2,142.00
d. $4,658.00

23.Products at Redd Manufacturing are sent through two production departments: Fabricating and Finishing.
Overhead is applied to products in the Fabricating Department based on 150 percent of direct labor cost and $18
per machine hour in Finishing. The following information is available about Job #297:

Fabricating Finishing
Direct material $1,590 $580
Direct labor cost ? 48
Direct labor hours 22 6
Machine hours 5 15
Overhead applied 429 ?

What is the total cost of Job #297?

a. $2,647
b. $3,005
c. $3,093
d. $3,203

24.Overhead is applied to jobs in a job order costing system

a. at the end of a period.
b. as jobs are completed.
c. at the end of a period or as jobs are completed, whichever is earlier.
d. at the end of a period or as jobs are completed, whichever is later.

25.Underapplied overhead resulting from unanticipated and immaterial price increases for overhead items should
be written off by
a. decreasing Cost of Goods Sold.
b. increasing Cost of Goods Sold.
c. decreasing Cost of Goods Sold, Work in Process Inventory, and Finished Goods Inventory.
d. increasing Cost of Goods Sold, Work in Process Inventory, and Finished Goods Inventory.

26.Equivalent units of production are equal to the

a. units completed by a production department in the period.
b. number of units worked on during the period by a production department.
c. number of whole units that could have been completed if all work of the period had been
used to produce whole units.
d. identifiable units existing at the end of the period in a production department.

27.The difference between EUP calculated using FIFO and EUP calculated using weighted average is the
equivalent units
a. started and completed during the period.
b. residing in beginning Work in Process Inventory.
c. residing in ending Work in Process Inventory.
d. uncompleted in Work in Process Inventory.
28.Bush Company had beginning Work in Process Inventory of 5,000 units that were 40 percent complete as to
conversion costs. X started and completed 42,000 units this period and had ending Work in Process Inventory of
12,000 units. How many units were started this period?
a. 42,000
b. 47,000
c. 54,000
d. 59,000

29.Taylor Company uses a weighted average process costing system and started 30,000 units this month. Taylor
had 12,000 units that were 20 percent complete as to conversion costs in beginning Work in Process Inventory
and 3,000 units that were 40 percent complete as to conversion costs in ending Work in Process Inventory. What
are equivalent units for conversion costs?
a. 37,800
b. 40,200
c. 40,800
d. 42,000

Forrest Company

Forrest Company uses a standard cost system for its production process and applies overhead based on direct
labor hours. The following information is available for August when Forrest made 4,500 units:

Standard:
DLH per unit 2.50
Variable overhead per DLH $1.75
Fixed overhead per DLH $3.10
Budgeted variable overhead $21,875
Budgeted fixed overhead $38,750

Actual:
Direct labor hours 10,000
Variable overhead $26,250
Fixed overhead $38,000
30.Refer to Forrest Company. Using the one-variance approach, what is the total overhead variance?
a. $6,062.50 U
b. $3,625.00 U
c. $9,687.50 U
d. $6,562.50 U

31.Refer to Forrest Company. Using the two-variance approach, what is the controllable variance?
a. $5,812.50 U
b. $5,812.50 F
c. $4,375.00 U
d. $4,375.00 F

32.Refer to Forrest Company. Using the two-variance approach, what is the noncontrollable variance?
a. $3,125.00 F
b. $3,875.00 U
c. $3,875.00 F
d. $6,062.50 U

33.Ebony Company has the following expected pattern of collections on credit sales: 70 percent collected in the
month of sale, 15 percent in the month after the month of sale, and 14 percent in the second month after the
month of sale. The remaining 1 percent is never collected. At the end of May, Ebony Company has the following
accounts receivable balances:

From April sales $21,000

From May sales 48,000

Ebony's expected sales for June are $150,000. What were total sales for April?
a. $150,000
b. $72,414
c. $70,000
d. $140,000
34.Budgeted sales for the first six months for Porter Corp. are listed below:

JANUARY FEBRUARY MARCH APRIL MAY JUNE

UNITS: 6,000 7,000 8,000 7,000 5,000 4,000

Porter Corp. has a policy of maintaining an inventory of finished goods equal to 40 percent of the next month's
budgeted sales. If Porter Corp. plans to produce 6,000 units in June, what are budgeted sales for July?
a. 3,600 units
b. 1,000 units
c. 9,000 units
d. 8,000 units

35Weaver Co. manufactures card tables. The company has a policy of maintaining a finished goods inventory
equal to 40 percent of the next month's planned sales. Each card table requires 3 hours of labor. The budgeted
labor rate for the coming year is $13 per hour. Planned sales for the months of April, May, and June are
respectively 4,000; 5,000; and 3,000 units. The budgeted direct labor cost for June for Weaver Co. is $136,500.
What are budgeted sales for July for Weaver Co.?
a. 3,500 units
b. 4,250 units
c. 4,000 units
d. 3,750 units

Value Pro

Value Pro produces and sells a single product. Information on its costs follow:

Variable costs:
SG&A $2 per unit
Production $4 per unit
Fixed costs:
SG&A $12,000 per year
Production $15,000 per year

36.Refer to Value Pro. Assume Value Pro produced and sold 5,000 units. At this level of activity, it produced a
profit of $18,000. What was Value Pro's sales price per unit?
a. $15.00
b. $11.40
c. $9.60
d. $10.00

37.Refer to Value Pro. In the upcoming year, Value Pro estimates that it will produce and sell 4,000 units. The
variable costs per unit and the total fixed costs are expected to be the same as in the current year. However, it
anticipates a sales price of $16 per unit. What is Value Pro's projected margin of safety for the coming year?
a. $7,000
b. $20,800
c. $18,400
d. $13,000

38.A cost is sunk if it

a. is not an incremental cost.
b. is unavoidable.
c. has already been incurred.
d. is irrelevant to the decision at hand.

39.When a scarce resource, such as space, exists in an organization, the criterion that should be used to
determine production is
a. contribution margin per unit.
b. selling price per unit.
c. contribution margin per unit of scarce resource.
d. total variable costs of production.
40.Knox Company uses 10,000 units of a part in its production process. The costs to make a part are: direct
material, $12; direct labor, $25; variable overhead, $13; and applied fixed overhead, $30. Knox has received a
quote of $55 from a potential supplier for this part. If Knox buys the part, 70 percent of the applied fixed
overhead would continue. Knox Company would be better off by
a. $50,000 to manufacture the part.
b. $150,000 to buy the part.
c. $40,000 to buy the part.
d. $160,000 to manufacture the part.

41.Paulson Company has only 25,000 hours of machine time each month to manufacture its two products.
Product X has a contribution margin of $50, and Product Y has a contribution margin of $64. Product X requires
5 hours of machine time, and Product Y requires 8 hours of machine time. If Paulson Company wants to dedicate
80 percent of its machine time to the product that will provide the most income, the company will have a total
contribution margin of
a. $250,000.
b. $240,000.
c. $210,000.
d. $200,000.

42.Joint costs are allocated to joint products to

a. obtain a cost per unit for financial statement purposes.
b. provide accurate management information on production costs of each type of product.
c. compute variances from expected costs for each joint product.
d. allow the use of high-low analysis by the company.

43.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
b. direct material and direct labor only
c. direct labor and overhead only
d. overhead and direct material only

Gordon Company

Gordon Company produces three products: A, B, and C from the same process. Joint costs for this production
run are $2,100.

Disposal
Sales price cost per Further Final
per lb. at lb. at processing sales price
Pounds split-off split-off per pound per pound
A 800 $6.50 $3.00 $2.00 $ 7.50
B 1,100 8.25 4.20 3.00 10.00
C 1,500 8.00 4.00 3.50 10.50

If the products are processed further, Gordon Company will incur the following disposal costs upon sale: A,
$3.00; B, $2.00; and C, $1.00.

44.Refer to Gordon Company. Using a physical measurement method, what amount of joint processing cost is
allocated to Product A (round to the nearest dollar)?
a. $700
b. $679
c. $927
d. $494

45.Refer to Gordon Company. Using a physical measurement method, what amount of joint processing cost is
allocated to Product B (round to the nearest dollar)?
a. $494
b. $679
c. $927
d. $700

46.Which of the following is a primary element of a cost management system?

Information Reporting Motivation Evaluation

a. yes yes yes yes
b. no yes yes no
c. yes no no yes
d. yes yes yes no

Diller Corporation

Diller Corporation has three production departments A, B, and C. Diller Corporation also has two service
departments, Administration and Personnel. Administration costs are allocated based on value of assets
employed, and Personnel costs are allocated based on number of employees. Assume that Administration
provides more service to the other departments than does the Personnel Department.

Dept. Direct Costs Employees Asset Value

Admin. $900,000 25 $450,000
Personnel 350,000 10 600,000
A 700,000 15 300,000
B 200,000 5 150,000
C 250,000 10 800,000

47.Refer to Diller Corporation. Using the direct method, what amount of Administration costs is allocated to A
(round to the nearest dollar)?
a. $216,000
b. $150,000
c. $288,000
d. $54,000

48.Refer to Diller Corporation. Using the direct method, what amount of Personnel costs is allocated to B (round
to the nearest dollar)?
a. $50,000
b. $43,750
c. $26,923
d. $58,333

49.Refer to Diller Corporation. Using the direct method, what amount of Administration costs is allocated to C
(round to the nearest dollar)?
a. $576,000
b. $ 54,000
c. $108,000
d. $150,000

50.Refer to Diller Corporation. Using the step method, what amount of Administration costs is allocated to
Personnel (round to the nearest dollar)?
a. $72,973
b. $291,892
c. $145,946
d. $389,189

TAPOS NA...MAHIRAP BA MGA CCC ?

TIYAGA LANG?

PRAY HARD, STUDY

HARD, NEVER DOUBT
MAS
1.C
2.A
3.C
4.D
5.C
6.B
7.A
8.C
9.A
10.C
11.C
12.B
13.D
14.A
15.A
16.A
17.A
18.A
19.D
20.A
21.A
22.A
23.D
24.C
25.B
26.C
27.B
28.C
29.B
30.C
31.A
32.B
33.D
34.C
35.B
36.A
37.B
38.C
39.C
40.C
41.B
42.A
43.A
44.D
45.B
46.D
47.A
48.D
49.A
50.B