College of Business and Accountancy

Notre Dame University

Cotabato City

Acctg 106-Cost Accounting

Final Examination

Name:______________________
Name:____________________________________
___________________ 
_____ 
GENERAL INSTRUCTIONS: You are given 3 hours to answer all the questions. Shade the box corresponding to the letter of
your choice in the answer sheet. A BSOLUTELY NO ERASURES in the answer sheet, any erasure will be marked as wrong.

1.) I - A standar
standardd cost card
card is prepared
prepared after
after manufa
manufactu
cturin
ringg standar
standards
ds have
have been devel
develope
opedd for direct
direct mater
material
ials,
s,
direct labor, and factory overhead
II - The total variance can provide useful information about the source of cost differences
a. I is true c. both are true
b. II is true d. both are false
2.)
2.) I - The
The form
formul
ulaa for
for pri
price
ce/r
/rat
atee var
varia
ianc
ncee is (AP
(AP - SP)
SP) x AQ
II - The formula for price/rate variance is (AP - SP) x SQ
a. I is true c. both are true
b. II is true d. both are false
3.) I - The price
price varianc
variancee reflect
reflectss the differ
differenc
encee between
between the
the price
price paid for
for inputs
inputs and
and the stand
standard
ard price
price for
for those
those
inputs
II - The usage variance reflects the difference between the price paid for inputs and the standard price for those
inputs
a. I is true c. both are true
b. II is true d. both are false
4.)
4.) I - The
The for
formu
mula
la for
for usa
usage
ge vari
varian
ance
ce is (AQ - SQ)
SQ) * SP
II - The formula for usage variance is (AQ - SQ) * AP
a. I is true c. both are true
b. II is true d. both are false

5.) I - The differ

differenc
encee betwee
betweenn the actua
actuall wages
wages paid
paid to employe
employees
es and the
the stand
standard
ard wages
wages for
for all hours
hours worked
worked is
the labor rate variance
II - The difference between the standard hours worked for a specific level of production and the actual hours
 worked is the labor efficiency variance
a. I is true c. both are true
b. II is true d. both are false
6.) I - The
The differenc
differencee between
between actual
actual variable
variable overhe
overhead
ad and
and budgeted
budgeted variable
variable overhea
overheadd based
based upon
upon actual
actual hours is
referred to as the variable overhead spending variance
II - The difference between budgeted variable overhead for actual hours and standard overhead is the variable
overhead efficiency variance
a. I is true c. both are true
b. II is true d. both are false
7.) I - A fixe
fixedd over
overhea
headd volu
volume
me varian
variance
ce is a contro
controlla
llable
ble varian
variance
ce
II - A one-variance approach calculates only a total overhead variance
a. I is true c. both are true
b. II is true d. both are false
8.) I - The effect
effect of substit
substituti
uting
ng a non-sta
non-standa
ndard
rd mix of materi
materials
als during
during the
the product
production
ion proce
process
ss is referr
referred
ed to as a
material yield variance
II - When multiple labor categories are used, the financial effect of using a different mix of workers in a
production process is referred to as a labor yield variance
a. I is true c. both are true
b. II is true d. both are false
9.) I - When
When multiple
multiple labor categories
categories are used,
used, the monetary
monetary impact
impact of
of using
using a higher
higher or lower
lower number
number of hours than
a standard allows is referred to as a labor mix variance
II - When multiple labor categories are used, the monetary impact of using a higher or lower number of hours
than a standard allows is referred to as a labor yield variance
a. I is true c. both are true
b. II is true d. both are false
10.)
10.) I - Busine
Business
ss valu
value-a
e-adde
ddedd activ
activitie
itiess add
add value
value to a produc
productt
II - Business value-added activities increase the value of a product without increasing production time
a. I is true c. both are true
b. II is true d. both are false
11.) I - A company
company should
should strive to reduce
reduce all non-valu
non-valuee added
added activiti
activities
es to a minimum
minimum
II - When non-value added time is greater, manufacturing cycle efficiency is higher.
 a. I is true c. both are true
b. II is true d. both are false
12.) I - Direct materials are normally considered as unit-level costs.
II - Unit level costs occur once for each unit produced.
a. I is true c. both are true
b. II is true d. both are false
13.) I - Machine setup is normally considered a batch-level cost
II - Building depreciation is generally considered an organizational or facility cost.
a. I is true c. both are true
b. II is true d. both are false
14.) I - Building depreciation is generally considered an product or process level cost.
II - Activity-based costing i s appropriate for a company that manufactures a si ngle product
a. I is true c. both are true
b. II is true d. both are false
15.) I - Activity-based costing is appropriate for a company that has low overhead costs that are proportional to the
unit volumes of products
II - Activity-based costing conforms to GAAP with regard to which costs should be expensed
a. I is true c. both are true
b. II is true d. both are false

16.) I - Financial accounting is most concerned with meeting the needs of internal users.
II - Managerial accounting is most concerned with addressing the needs of the firm as a whole
a. I is true c. both are true
b. II is true d. both are false
17.) I - The relevant range is valid for all levels of activity
II - An indirect cost can be easily traced to a cost object
a. I is true c. both are true
b. II is true d. both are false
18.) The term "relevant range" as used in cost accounting means the range over which
a. costs may fluctuate.
b. cost relationships are valid.
c. production may vary.
d. relevant costs are incurred.
19.) Predetermined overhead rates are computed based on
estimated overhead costs estimated level of activity
a. yes yes
b. yes no
c. no yes
d. no no
20.) One reason annual overhead application rates are used is
a. because of seasonal variability of overhead costs.
b. To help budget overhead costs.
c. To minimize the overhead cost assigned to products.
d. To maximize the overhead cost assigned to products.
21.) Which of the following could not be used in job order cos ting?
a. Standards
b. An average cost per unit for all jobs
c. normal costing
d. overhead allocation based on the job's direct labor hours
22.) 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
23.) I - The FIFO method combines beginning inventory and current production to compute cost per unit of production
II - The weighted average method separates beginning inventory and current production to compute cost per unit
of production
a. I is true c. both are true
b. II is true d. both are false
24.) In a FIFO process costing system, which of the following are assumed to be completed first in the current period?
 a. units started this period
b. units started last period
c. units transferred out
d. units still in process

25.) I - Efficient inventory management relies largely on cost-minimization strategies

II - In a pull system of production control, inventory is produced in anticipation of customer or work
center demand
a. I is true c. both are true
b. II is true d. both are false

26.) I - Economic order quantity (EOQ) is compatible with just-in-time systems

II - The EOQ formula can be modified to calculate the number of units that should be manufactured in
a production run
a. I is true c. both are true
b. II is true d. both are false
27.) I - Joint costs occur after the split-off point in a production process
II - Under the net realizable value approach, no value is recognized for by-products or scrap until they are
actually sold
a. I is true c. both are true
b. II is true d. both are false
28.) I - Joint costs are allocated to by-products as well as primary products
II - The net realizable value approach is used to account for scrap and by-products when the net realizable value
is insignificant
a. I is true c. both are true
b. II is true d. both are false
29.) I- The primary distinction between by-products and scrap is the difference in volume produced
II -The point at which individual products are first identifiable in a joint process is referred to as the split-off point
a. I is true c. both are true
b. II is true d. both are false
30.) I - Joint costs include all materials, labor and overhead that are incurred before the split-off point
II - Two methods of allocating joint costs to products are physical measure allocation and monetary allocation.
a. I is true c. both are true
b. II is true d. both are false
31.) I - A decision that must be made at split-off is to sell a product or process it further.
II - Allocating joint costs based upon a physical measure considers the revenue-generating ability of individual
products
a. I is true c. both are true
b. II is true d. both are false
32.) I - Net realizable value equals product sales revenue at split-off minus any costs necessary to prepare and
dispose of the product
II - Monetary allocation measures recognize the revenue generating ability of each product in a j oint process.
a. I is true c. both are true
b. II is true d. both are false
33.) I - The relative sales value method requires a common physical unit for measuring the output of each product.
II - Joint costs are allocated to main products, but not to by-products
a. I is true c. both are true
b. II is true d. both are false
34.) I - If incremental revenues beyond split-off are less than incremental costs, a product should be sold at the split-
off point
II - If incremental revenues beyond split-off exceed incremental costs, a product should be processed further
a. I is true c. both are true
b. II is true d. both are false
35.) I - The net realizable value approach requires that the net realizable value of by-products and scrap be treated as
a reduction in joint costs allocated to primary products
II - Net realizable value is considered to be the best measure of the expected contribution of each product to the
coverage of joint costs
a. I is true c. both are true
b. II is true d. both are false
36.) I - Specifications for materials are compiled on a purchase requisition
II - An operations flow document shows all processes necessary to manufacture one unit of a product
a. I is true c. both are true
b. II is true d. both are false
37.) Duck Company manufactures 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.
38.) The following information has been taken from the cost records of Witch Company for the past year:
Raw material used in production P326
Total manufacturing costs charged to production during the year (includes direct material, 686
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 Material P75 P 85
Work in Process 80 30
Finished Goods 90 110
The cost of raw material purchased during the year was:
a. P316.
b. P336.
c. P360.
d. P411.
39.) A firm has fixed costs of P200,000 and variable costs per unit of P6. It plans on selling 40,000 units in the coming
year. To realize a profit of P20,000, the firm must have a sales price per unit of at least
a. P11.00.
b. P11.50.
c. P10.00.
d. P10.50.
40.) Chippy Company. uses a job order costing system. During April 20X6, the following costs appeared in the Work
in Process Inventory account:
Beginning balance P 24,000
Direct material used 70,000
Direct labor incurred 60,000
Applied overhead 48,000
Cost of goods manufactured 185,000
Chippy Company applies overhead on the basis of direct labor cost. There was only one j ob left in Work in
Process at the end of April which contained P5,600 of overhead. What amount of direct material was included in
this job?
a. P4,400
b. P4,480
c. P6,920
d. P8,000

Turtle Company has a job order costing system and an overhead application rate of 120 percent of direct labor cost.
Job #63 is charged with direct material of P12,000 and overhead of P7,200. Job #64 has direct material of P2,000 and
direct labor of P9,000.

41.) Refer to Turtle Co. What amount of direct labor cost has been charged to Job #63?
a. P 6,000
b. P 7,200
c. P 8,640
d. P14,400
42.) Refer to Turtle Company. What is the total cost of Job #64?
a. P10,800
b. P11,000
c. P21,800
d. P30,200
43.) Green Company started 9,000 units in February. The company transferred out 7,000 finished units and ended
the period with 3,500 units that were 40 percent complete as to both material and conversion c osts. Beginning
Work in Process Inventory units were
a. 500.
b. 600.
c. 1,500.
d. 2,000.
 The Houston Company makes wreaths in two departments: Forming and Decorating. Forming began the month with
500 wreaths in process that were 100 percent complete as to material and 40 percent complete as to conversion.
During the month, 6,500 wreaths were started. At month end, Forming had 2,100 wreaths that were still in process that
 were 100 percent complete as to material and 50 percent complete as to conversion. Assume Forming uses the
 weighted average method of process costing. Costs in the Forming Department are as follows:

Beginning Work in Process Costs:

Material P1,000
Conversion 1,500
Current Costs:
Material P3,200
Conversion 5,045

The Decorating Department had 600 wreaths in process at the beginning of the month that were 80 percent complete
as to material and 90 percent complete as to conversion. The department had 300 units in ending Work in Process that
 were 50 percent complete as to material and 75 percent complete as to conversion. Decorating uses the FIFO method
of process costing, and costs associated with Decorating are:

Beginning WIP Inventory:

Transferred In P1,170
Material 4,320
Conversion 6,210
Current Period:
Transferred In ?
Material P67,745
Conversion 95,820

44.) Refer to Houston Company. How many units were transferred to Decorating during the month?
a. 600
b. 4,900
c. 5,950
d. 7,000
45.) Refer to Houston Company. What was the cost transferred out of Forming during the month?
a. P5,341
b. P6,419
c. P8,245
d. P8,330

Zebra Corporation

Zebra Corporation's EOQ for Material A is 500 units. This EOQ is based on:
Annual demand 5,000 units
Ordering costs P12.50

46.) Refer to Zebra Corporation. What is the annual carrying cost per unit for Material A?
a. P0.50
b. P2.00
c. P2.50
d. P5.00
47.) Refer to Zebra Corporation. What are Zebra’s Corp.'s total annual ordering costs for Material A?
a. P6,000
b. P600
c. P125
d. P1,000

Snacks Company

Snacks Company produces two products (A and B). Direct material and labor costs for Product A total P35 (which reflects 4
direct labor hours); direct material and labor costs for Product B total P22 (which reflects 1.5 direct labor hours). Three
overhead functions are needed for each product. Product A uses 2 hours of Function 1 at P10 per hour, 1 hour of Function 2
at P7 per hour, and 6 hours of Function 3 at P18 per hour. Product B uses 1, 8, and 1 hours of Functions 1, 2, and 3,
respectively. Snacks produces 800 units of A and 8,000 units of B each period.

48.) Refer to Snacks Company If total overhead is assigned to A and B on the basis of units produced, Product A will
have an overhead cost per unit of
a. P 88.64.
b. P123.64.
c. P135.00.
d. None of the responses are correct.
 49.) Refer to Snacks Company If total overhead is assigned to A and B on the basis of units produced, Product B will
have an overhead cost per unit of
a. P84.00.
b. P88.64.
c. P110.64.
d. None of the responses are correct.
50.) Refer to Snacks Company If total overhead is assigned to A and B on the basis of direct labor hours, Product A
 will have an overhead cost per unit of
a. P51.32.
b. P205.28.
c. P461.88.
d. None of the responses are correct.
51.) Refer to Snacks Company If total overhead is assigned to A and B on the basis of direct labor hours, Product B
 will have an overhead cost per unit of
a. P51.32.
b. P76.98.
c. P510.32.
d. None of the responses are correct.
52.) Refer to Snacks Company If total overhead is assigned to A and B on the basis of overhead activity hours used,
the total product cost per unit assigned to Product A will be
a. P86.32.
b. P95.00.
c. P115.50.
d. None of the responses are correct.
53.) Refer to Snacks Company If total overhead is assigned to A and B on the basis of overhead activity hours used,
the total product cost per unit assigned to Product B will be
a. P115.50.
b. P73.32.
c. P34.60.
d. None of the responses are correct.

Hazel Company

Hazel Company uses activity-based costing. The company produces two products: coats and hats. The annual production
and sales volume of coats is 8,000 units and of hats is 6,000 units. There are three activity cost pools with the following
expected activities and estimated total costs:

Activity Estimated Expected Expected

Cost Pool Cost Activity Activity
Coats Hats Total
Activity 1 P20,000 100 400 500
Activity 2 P37,000 800 200 1,000
Activity 3 P91,200 800 3,000 3,800

54.) Refer to Hazel Company. Using ABC, the cost per unit of coats is approximately:
a. P2.40 c. P 6.60
b. P3.90 d. P10.59
55.) Refer to Hazel Company. Using ABC, the cost per unit of hats is approximately:
a. P2.40 c. P12.00
b. P3.90 d. P15.90

Loft Savings and Loan

Loft Savings and Loan had the following activities, traceable costs, and physical flow of driver units:

Activities Traceable Costs Physical flow of Driver Units

Open new accounts P50,000 1,000 accounts
Process deposits 36,000 400,000 deposits
Process withdrawals 15,000 200,000 withdrawals
Process loan applications 27,000 900 applications

The above activities are used by the Jennings branch and the Crowley branch:

Jennings Crowley
New accounts 200 400
Deposits 40,000 20,000
 Withdrawals 15,000 18,000
Loan applications 100 160

56.) Refer to Loft Savings and Loan. What is the cost per driver unit for new account activity?
a. P0.09 c. P30.00
b. P0.075 d. P50.00
57.) Refer to Loft Savings and Loan. What is the cost per driver unit for the deposit activity?
a. P0.09 c. P30.00
b. P0.075 d. P50.00
58.) Refer to Loft Savings and Loan. What is the cost per driver unit for the withdrawal activity?
a. P0.09 c. P30.00
b. P0.075 d. P50.00
59.) Refer to Loft Savings and Loan. What is the cost per driver unit for the loan application activity?
a. P0.09 c. P30.00
b. P0.075 d. P50.00
60.) Refer to Loft Savings and Loan. How much of the loan application cost will be assigned to the Jennings branch?
a. P3,000 c. P 7,800
b. P4,800 d. P27,000
61.) Refer to Loft Savings and Loan. How much of the deposit cost will be assigned to the Crowley branch?
a. P1,800 c. P 5,400
b. P3,600 d. P36,000
62.) Refer to Loft Savings and Loan. How much of the new account cost will be assigned to the Crowley branch?
a. P10,000 c. P30,000
b. P20,000 d. P50,000

Barley Company

The following July information is for Barley Company:

Standards:
Material 3.0 feet per unit @ P4.20 per foot
Labor 2.5 hours per unit @ P7.50 per hour

Actual:
Production 2,750 units produced during the month
Material 8,700 feet used; 9,000 feet purchased @ P4.50 per foot
Labor 7,000 direct labor hours @ P7.90 per hour
(Round all answers to the nearest peso.)

63.) Refer to Barley Company. What is the material price variance (calculated at point of purchase)?
a. P2,700 U
b. P2,700 F
c. P2,610 F
d. P2,610 U
64.) Refer to Barley Company. What is the material quantity variance?
a. P3,105 F
b. P1,050 F
c. P3,105 U
d. P1,890 U
65.) Refer to Barley Company. What is the labor rate variance?
a. P3,480 U
b. P3,480 F
c. P2,800 U
d. P2,800 F
66.) Refer to Barley Company. What is the labor efficiency variance?
a. P1,875 U
b. P938 U
c. P1,875 U
d. P1,125 U
Fischer Company

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

Standard:
 DLH per unit 2.50
Variable overhead per DLH P1.75
Fixed overhead per DLH P3.10
Budgeted variable overhead P21,875
Budgeted fixed overhead P38,750

Actual:
Direct labor hours 10,000
Variable overhead P26,250
Fixed overhead P38,000

67.) Refer to Fischer Company. Using the one-variance approach, what is the total overhead variance?
a. P6,062.50 U
b. P3,625.00 U
c. P9,687.50 U
d. P6,562.50 U
68.) Refer to Fischer Company. Using the two-variance approach, what is the controllable variance?
a. P5,812.50 U
b. P5,812.50 F
c. P4,375.00 U
d. P4,375.00 F
69.) Refer to Fischer Company. Using the two-variance approach, what is the noncontrollable variance?
a. P3,125.00 F
b. P3,875.00 U
c. P3,875.00 F
d. P6,062.50 U
70.) Refer to Fischer Company. Using the three-variance approach, what is the spending variance?
a. P4,375 U
b. P3,625 F
c. P8,000 U
d. P15,750 U
71.) Refer to Fischer Company. Using the three-variance approach, what is the efficiency variance?
a. P9,937.50 F
b. P2,187.50 F
c. P2,187.50 U
d. P2,937.50 F
Rodent Company

Rodent Company produces four solvents from the same process: C, D, E, and G. Joint product costs are $9,000. (Round all
answers to the nearest dollar.)

Disposal Final
Sales price cost Further sales
per barrel per barrel processing price
Barrels at split-off at split-off costs per barrel
C 750 $10.00 $6.50 $2.00 $13.50
D 1,000 8.00 4.00 2.50 10.00
E 1,400 11.00 7.00 4.00 15.50
G 2,000 15.00 9.50 4.50 19.50

If Rodent sells the products after further processing, the following disposal costs will be incurred: C, $2.50; D, $1.00; E,
$3.50; G, $6.00.

72. Refer to Rodent Company. Using a physical measurement method, what amount of joint processing cost is
allocated to Product D?
a. $1,748
b. $2,447
c. $1,311
d. $3,495

73.Refer to Rodent Company. Using a physical measurement method, what amount of j oint processing cost is
allocated to Product E?
a. $3,495
b. $2,447
c. $1,748
d. $1,311
74.Refer to Rodent Company. Using a physical measurement method, what amount of j oint processing cost is
allocated to Product C?
a. $3,495
b. $2,447
c. $1,748
d. $1,311
75.Refer to Rodent Company. Using a physical measurement method, what amount of j oint processing cost is
allocated to Product G?
a. $3,495
b. $2,447
c. $1,748
d. $1,311

76. Refer to Rodent Company. Using sales value at split-off, what amount of joint processing cost is allocated to
Product D?
a. $4,433
b. $2,276
c. $1,108
d. $1,182

77. Refer to Rodent Company. Using sales value at split-off, what amount of joint processing cost is allocated to
Product C?
a. $4,433
b. $2,276
c. $1,108
d. $1,182

78. Refer to Rodent Company. Using sales value at split-off, what amount of joint processing cost is allocated to
Product G?
a. $4,433
b. $1,182
c. $1,108
d. $2,276

79.Refer to Rodent Company. Using sales value at split-off, what amount of joint processing cost is allocated to
Product E?
a. $4,433
b. $1,182
c. $1,108
d. $2,276

80.Refer to Rodent Company. Using net realizable value at split-off, what amount of joint processing cost is allocated
to Product C?
a. $1,550
b. $1,017
c. $4,263
d. $2,170